The conservation need

Indonesia experiences high rates of primary forest loss, significantly affecting biodiversity and greenhouse gas (GHG) emissions. Small-scale agriculture and plantations contribute nearly 20% of deforestation. On Java, where Nb Lestari operates, only 5% of the Western Java Rainforest remains, home to critically endangered species like the Javan rhinoceros. The region hosts 101 mammal species, 350 bird species, and 3,800 plant species, many endemic.

Protected areas cover only 7%, yet illegal farming and logging persist. Community forestry can contribute to sustainable management and poverty alleviation. Nb Lestari supports smallholders in obtaining FSC certification, which mandates ecosystem conservation and species protection.

Describing how the blueprint contributes to conservation goals

Overall statement

Nb promotes sustainable community forestry by purchasing timber from smallholders at fair prices and offering technical support. A district-level timber hub coordinates harvesting, processing, and FSC certification. With a processing capacity of 500m³ per month, the hub enables certification, improved silviculture, and better seed stock.

By providing sustainable alternatives, Nb reduces reliance on natural forests. It supplies acacia to Japanese markets, replacing forest-sourced timber, and substitutes Meranti with Albizia for veneer production. The project introduces 40+ agroforestry species to support biodiversity and helps smallholders resist encroachment from limestone mining.

Key outcomes include:

• Certification of 50 ha per month
• Establishment of a certified supply chain
• Increasing timber recovery rates from 45% to 70%

STAR Analysis

In Sumedang, Nb’s approach could reduce Indonesia’s total species extinction risk by 0.16%. The area hosts 67 globally threatened species, impacted by resource extraction and agriculture.

The business model

Organisation and governance

Nb is a local social enterprise with five divisions:

• Supply division – Identifies timber and manages harvesting.
• Processing division – Handles grading, milling, and drying.
• Marketing and product development – Manages customer relationships and logistics.
• Group certification – Ensures compliance with FSC standards.
• Administration – Oversees finance, HR, and training.

The certification process ensures transparent governance, indigenous rights protection, and legal compliance.

Products and services being sold

Nb processes timber into veneer, furniture, and construction materials. Markets include premium exports (US, Europe, Japan) and mass markets (China, India). It aims to expand to 30 communities and control 3% of Indonesia’s FSC-certified Mahogany market.

Cash flows and commercial sustainability

Nb generates fast returns by working with standing trees. A hectare purchased for US$3,000 can be harvested and processed for US$2,000, selling for US$5,500-6,000 within three months.

During the proof-of-concept phase, Nb purchased 1,200m³ of trees at US$56/m³, processed at US$32/m³, and earned US$122,000 in sales, yielding a 20% trading profit. Investment is sought as debt rather than equity, targeting a 7.5% financial return with a total impact equivalent to a 22.5% return.

Expansion aims to increase log production from 18,000m³ in Year 1 to 120,000m³ by Year 5.

External dependencies

Regulatory and market conditions

Deregulation in Indonesia has facilitated Nb’s model, but international regulations (FLEGT, U.S. Lacey Act) require legal verification, favouring FSC-certified timber. Partnerships with NGOs enhance scalability.

Risk management

Grower risk mitigation

Smallholders often sell timber early due to financial need. Nb’s FSC certification scheme allows them to receive 60% upfront while delaying harvest for better returns.

Commercial risk mitigation

Nb diversifies products and supply chains to manage fluctuations. If demand slows, trees can remain standing, increasing in value. Domestic demand provides resilience during downturns like COVID-19.

The investment model

Financing instruments

Nb seeks a US$250,000 grant or interest-free loan to refine operations, plus US$2-5 million in credit for scaling. The soft loan structure allows interest-only payments until 2024, with capital repayment over five years.

Investor types

Impact investment funds with environmental and social objectives are key targets. Nb also explores partnerships with buyers seeking supply chain security.

Risk mitigation instruments

Nb avoids plantation ownership to remain agile. It considers SAFE (Simple Agreement for Future Equity) arrangements to balance valuation risks.

Replicability and scalability

Nb’s model is viable for replication across Southeast Asia, where many communities grow commercial timber but lack market access. The approach has successfully linked smallholders to high-value markets and could be expanded to regions like Vietnam, Thailand, and the Philippines.

Conclusion

Nb integrates conservation with sustainable forestry through FSC certification and market access. It provides economic benefits to smallholders while reducing deforestation. With scalable financial sustainability and strong risk mitigation, the project offers a replicable model for community-based forestry.