A Brief Introduction

to Recovery Liability
Assessment (RLA): Process
Flow & Methodology

Final Version (v1.0) for

External Sharing, March 2022
INTRODUCTION _______________________
This document briefly outlines the definitions & procedures for Recovery Liability Assessment (RLA). The purpose of
such an assessment is to determine the area of forest, peat forest, and/or peat cleared by oil palm plantation
companies after the industry’s December 31, 2015 cut-off date. This assessment is required to determine the extent &
type of compensation efforts that will be required to offset all Recovery Liability.

When a RLA is done by qualified assessors, the findings should be presented for due hearing to those companies who
have violated NDPE-policy commitments. The final goal is to see companies publicly confirm the assessment findings
& undertake necessary Corrective Action (e.g., fulfilment of Re-entry Criteria & the implementation of a Recovery
Plan), so that they may re-enter or remain in the NDPE-policy supply chain.

This document was prepared for Earthqualizer Foundation’s (EQ) partners & other parties interested in the Recovery
Agenda. Our goal for this briefing is to:

1. Clarify why RLAs are necessary for the industry;

2. Explain how RLAs are conducted;
3. Highlight key next steps for the Recovery Agenda.

We note that this document offers a description of the main approach & some of the challenges recognized by EQ.
There are additional dilemmas / challenges not covered here & we look forward to addressing those over time with
key stakeholders.
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 WHO IS CONDUCTING RLAs?__________

• At present, EQ is conducting RLAs in line with the

methodology detailed in this document. EQ uses its
own interpretation of the 2019 Sundaland Working
Group & its long-term dataset as a basis for assessment;
• It is also possible that some buyers may be doing
liability assessments for their suppliers & some service
providers have started to assess liability for non-
compliant growers;
• We anticipate that RLAs will shortly become a critical
component of the NDPE-policy supply chain, ultimately
requiring:
• A common understanding of methodologies,
terms, definitions & policy references;
• A platform for external / multistakeholder
oversight & a means for appeal;
• A platform for sharing RLA status & outcomes.

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 RLA WORKFLOW & RESPONSIBLE PARTIES ____________________
Recovery Liability Review Committee
Assessing Organization
Focal Company
RLA Status
Screening Verification Confirmation
Reporting

No Response Suspension

0
Unchallenged / Corrective
Confirmed Action

Under
Challenged
Investigation

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 SCREENING ____________________________

The first step in RLA is Screening, which involves the overlay of

baseline geospatial data, with a time-series of geospatial data
depicting the situation since the industry’s December 31, 2015 cut-
off date. If land use change took place in forest and/or peat, then it
is mapped as Indicative Recovery Liability. Screening can be done
at the level of an individual plantation concession, a specific
landscape, a company group, and/or other various levels across the
sector.
Key Data Layers
Several data layers are key for the Screening Phase, including forest
• Forest Cover: Derived from high-resolution satellite imagery
cover, peatland extent, oil palm planted area, oil palm concession • Peatland Extent: Best available dataset (e.g., EQ database)
boundaries, & company ownership. Combined, these data layers • Oil Palm Planted Area: Derived from high-resolution satellite imagery
help depict a company’s land bank. • Oil Palm Concession Boundaries: Best available dataset (e.g., EQ database)
• Company Ownership: Best available dataset (e.g., EQ database)
Any remaining forest, peat, and/or peat forest within a company’s
land bank is referred to as stranded land, representing the portion Using high-resolution satellite imagery, a time series of land use
of the land bank that cannot be developed for plantations without change is created from the industry’s cut-off date to present. Any
violating NDPE-policy. detected non-compliant land use change that overlaps with a
concession’s stranded land baseline is tentatively designated as
Indicative Recovery Liability using three primary categories (i.e.,
drained/not cleared, cleared/not planted, or cleared/planted).
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 The results of the Verification Phase are summarized in a Recovery Liability
Assessment table, as follows:

VERIFICATION __________________________
Land use change type Land cover type (ha) Liability (ha)
- Forest Peat forest Peat Unweighted Weighted
Drained, not cleared n.a. 3,571 0 3,571 3,571
Cleared, not planted 0 257 0 257 514
Cleared, planted 0 821 0 821 1,642
Total liability 0 4,649 0 4,649 5,984
The next phase in a RLA is the Verification Phase. During this step,
each case identified during the Screening Phase is granted a closer
look with the aim to increase the precision of the assessment.

In addition to an in-depth review of baseline layers & aggravating

factors, the findings are also synchronized with available HCV
and/or HCS assessments. It is also important to note whether a
case was previously reported as a non-compliance & whether this
triggered any relevant responses (e.g., the issuance of a Stop Work
Order [SWO]). It may be necessary to reconfirm that a reviewed
case is still owned by the company that created the liability & to
verify that the land clearing was intended for the planting of oil
palm.

Once all Indicative Recovery Liability has been internally verified, a

total area of Unweighted Liability is calculated. In cases where peat
was cleared or developed, a weighting of 2:1 is used to derive a
weighted total of Recovery Liability, due to the extensive long-term
CO2 emissions that occur when peat is cleared & drained.

Sample Recovery Liability Assessment Map

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 Documents included within a standard Confirmation Packet:

• Cover Letter & Accompanying Notes (PDF)

CONFIRMATION _______________________ •
•
Recovery Liability Assessment Methodology (PDF)
Company Group Confirmation Response Form (PDF)
• Recovery Liability Map (Shapefile & PDF)
• Recovery Liability Assessment Table (PDF)
• Company Group Land Bank Map (Shapefile & PDF)
The final phase of a RLA is the Confirmation Phase. During this
phase, a Confirmation Packet is provided to a focal company for
review & response.

• In cases where there is no response, companies will be

recommended for immediate suspension from NDPE-policy
supply chains, if they are not already suspended;
• For unchallenged / confirmed cases, the company will be
expected to publicly report their Confirmed Recovery Liability
& commit to undertaking Corrective Action;
• When cases are challenged, companies will have the
opportunity to provide information relevant to their
Confirmation Procedure. This information will be reviewed by
the entity undertaking the RLA for further Verification. The
engagement & review process will proceed until the case in
no longer challenged (i.e., the liability is confirmed) or it will
eventually be categorized as ‘under investigation’, if for some
reason the liability cannot be mutually confirmed by the
assessing entity & focal company.

Sample Recovery Liability Assessment Documents

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 EXTERNAL REVIEW _____________________
Companies’ feedback to a RLA will require the assessment team to
make decisions regarding the acceptability of (counter) evidence
provided, including what amendments to make & what facts or
arguments to disregard.

Because these decisions can have significant material & financial

impact, it may be important to introduce a practical safeguard that
keeps the assessment team focused on adherence to the rules &
companies aware that their case may be subject to external review.
Importantly, those conducting RLAs should not be held responsible
for resolving Confirmation Procedures that have stalled due to a
company challenge.

To help facilitate the RLA process in the future, we propose that a

multi-stakeholder Recovery Liability Review Committee (RLRC)
should be created to serve this safeguard function. This committee
will be tasked with regular (e.g., half-yearly) reviews of individual
RLAs & Confirmation Procedure outcomes.

In due time, the RLRC could develop a separate panel tasked with
the review of any resultant Corrective Action.

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 RLA STATUS REPORTING_______________
The RLA Confirmation Procedure can be a time-consuming process
that draws focus away from other forward-looking efforts such as
the development of a Recovery Plan. It is therefore important that
companies go through the process only once. This requires that the
information about a supplier’s RLA status is made public.

As of January 2022, the EQ Transform Platform has records of 287

different palm oil supplier groups' Recovery Liability in its database.
Each group has been assigned an RLA status (e.g., Verified,
Confirmed, Challenged, Under Investigation, & No Response).
Buyers with NDPE policies are requested to update their grievance
records accordingly. Individual supplier company groups are
required to acknowledge their total liabilities through public
progress reports & announce their commitment to a Recovery
Plan. Other assessors are also encouraged to contribute the results
of their RLAs to the EQ Transform Platform.

Detailed assessment & confirmation data will only be made

available on the EQ Transform Platform with the approval of the
focal supplier group.

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DEFINITIONS ___________________________
Term Definition
Aggravating factors Typical aggravating factors associated with non-compliant land development are clearing of riparian buffers along rivers
and streams, encroachment in protection forests & buffers or other types of forestland, clearing of steep slopes and/or
identified HCV and/or HCS areas, fire outbreak, documented rescue of endangered species, land conflicts with local
communities & smallholders, etc. Aggravating factors can be identified during the Verification Phase & should be
reported during Confirmation Procedure. Whilst aggravating factors may not add to a company’s liability estimate in
terms of total hectarage, confirmed non-compliance should be addressed in the company’s Recovery Plan.

Cleared, not planted Any non-compliant forest clearance on mineral soils & peat for oil palm plantation development. This category is not
(yet) planted with oil palm.

Cleared, planted The total area planted with oil palm in non-compliant land clearings.

Compliant No liability is accumulated when plantation development: 1) took place on mineral soil without forest cover & 2)
adhered to the recommendations of a credible High Conservation Value (HCS) – High Carbon Stock (HCS) study.
Replanting of existing plantations does not generally result in liability but an HCV-HCS study would be required if the
existing plantations were abandoned for a prolonged period (e.g., >10 years).

Concession boundary A concession’s outer boundary delineating the area that a company can legally develop (make accessible, drain, clear &
plant with oil palm & develop associated infrastructure & facilities). As such, RLA must be based on the concession
boundary map that guided the company’s land development activity after December 31, 2015. Legal permission to
develop land is often granted to companies, well in advance of the issuance of final, long-term land use rights. Such
rights may not be issued over contested land that was already planted. A company’s Recovery Liability is not diminished
as a result of excision certain parts of the original area allocated for plantation development, or by divestment from the
whole project/subsidiary. Development for schemed smallholders is included in the scope of RLA.

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DEFINITIONS, CONT. ___________________
Term Definition
Corporate Group Any legal entities that are affiliated through common control. Our delineation of a group is guided by the Accountability
Framework initiative (AFi) & Round Table on Sustainable Palm Oil (RSPO) definitions, in addition to relevant National
Standards (e.g., Indonesia, Malaysia, & Papua New Guinea).

Corrective Action A term used for those actions taken to address non-compliance. These include, the Re-entry Criteria detailed during the
multistakeholder Sundaland Working Group that was held in Q1-2019. A draft document titled “Minimum requirements
for supply chain re-entry after suspension due to NDPE non-compliance” was created by the aforementioned working
group. Corrective action also includes Recovery (in some cases referred to as compensation, remediation, or restoration),
which is the action of compensating for and/or rehabilitating land that was cleared or degraded for the expansion of
plantation land banks after the cut-off date.

Cut-off date A cut-off date of 31st December 2015 is applied. This cut-off grants leeway for a two-year policy socialization period after
the launch of the first NDPE policy commitments.

Drained, not cleared Any canals developed in peatland for the purpose of groundwater drainage. The approximate area of peat that these
canals aim to drain translates into liability. Note that canals in low laying mineral soils do not create liability, unless forest
was cleared.

Forest Any natural vegetation dominated by tree cover species, regardless of impact by logging, shifting cultivation, or fires.
Our delineation of forest is guided by the definitions presented by the Accountability Framework initiative (AFi) and
Food and Agricultural Organisation of the United Nations (FAO).

NDPE-policy No Deforestation, No Peat, No Exploitation policy for the production and/or procurement of commodities. For oil palm,
such policies were first introduced in December 2013 & January 2014.

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DEFINITIONS, CONT. ___________________
Term Definition
Non-compliant Land clearing is considered non-compliant with NDPE-policy if it was cleared at the expense of natural forest and/or
peat for plantation development after a specified cut-off date (for oil palm: December 31, 2015), & no HCV and/or HCS
assessments or other evidence are available to prove the contrary.

Peat A layer of partially decomposed vegetation with a high proportion of organic matter. Our delineation of peat is guided
by the definition presented by the Round Table on Sustainable Palm Oil (RSPO).

Peat forest Any natural forest on peat.

Planted area Any area that is planted with oil palm.

Recovery Liability Recovery Liability is the total area (expressed in hectares) of land (mineral soils or peat) that was cleared at the expense
of natural forest and/or peat for plantation development after a specified cut-off date (for oil palm: December 31, 2015).
Recovery Liability remains Indicative Recovery Liability until it has been subject to the Confirmation Procedure (i.e., until
it is Confirmed Recovery Liability).

Recovery Liability Assessment A supplier group’s publicly reported progress with regards to the RLA process. There are a total of five RLA Status
(RLA) Status categories, including Verified (i.e., Recovery Liability has been verified by an assessor), Confirmed (i.e., Recovery Liability
has been confirmed following a Confirmation Procedure), Challenged (i.e., Indicative Recovery Liability figures have been
challenged during a Confirmation Procedure), Under Investigation (i.e., Indicative Recovery Liability figures have been
challenged during a Confirmation Procedure & the focal company group & assessor are unable to mutually resolve the
challenge), & No Response (i.e., the focal company group did not respond to a Confirmation Procedure).
Stranded land Any remaining forest, peat, and/or peat forest within a company’s land bank, representing the portion of the land bank
that cannot be developed for plantations without violating NDPE-policy.

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DEFINITIONS, CONT. ___________________
Term Definition
Stop-Work Order (SWO) or Whether the supplier company’s management has issued a management directive, with an effective date to declare a
Group-Wide Moratorium company group-wide suspension of land clearing, peatland development & planting. Commonly referred to as a Stop
Work Order (SWO). In order to ensure that all estate managers within the company group adhere with a SWO, the scope
of an SWO should affect all plantation development (= land clearing including replanting) at company group level, not
just the subsidiary or estate where a non-compliance was identified.

Unweighted Liability This is the total acreage (expressed in hectares) of non-compliant land development after December 31, 2015. It includes
any forested land & peat (regardless of depth) that was opened with drainage canals, that was cleared but not yet
planted, & land that was cleared & planted.

Weighted Liability This is the total acreage (expressed in hectares) of non-compliant land development after December 31, 2015, whereby
clearing of peat is weighted twice the actual area cleared and/or planted. The 2:1 ratio for peat is employed due to the
extensive long-term CO2 emissions that occur when peat is cleared & drained (e.g., Agus et al. 2013; Anshari et al. 2022;
Carlson et al. 2015; Cooper et al. 2020; Hergoualc’h & Verchot 2011; Hergoualc’h et al. 2017; Hooijer et al. 2010, 2012;
IPCC-EFDB 2020; Miettinen et al. 2017).

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