Sustainable Palm Oil – Not an Oxymoron
By Lim Sze Wei and Cheryl Lee Shi-Ying
The oil palm is a remarkably productive crop – it is the most efficient oilseed crop in the world. On a per hectare basis, oil palm trees are six to ten times more efficient at producing oil than other oilseed crops such as rapeseed, soybean, olive, and sunflower . The oil palm tree begins bearing fruits at 30 months and has a productive lifespan of 30 years. Most oil palms are planted in Asia, Africa and South America because the trees require warm temperatures, sunshine and plenty of rain for fertility.
The fruit of the oil palm tree yields both palm oil and palm kernel oil, which have different physical characteristics, making palm oil highly versatile.
- Palm oil is extracted from the pulp of the palm fruit and is a type of edible oil used in food.
- Palm kernel oil is extracted from the seed of the fruit and is mainly used in the manufacture of non-edible products such as soaps, detergents, and cosmetics.
Henceforth, both palm oil and palm kernel oil will be referred as palm oil in this article.
In 2018, over 70 million tonnes of palm oil were produced globally. Nearly 90% were produced in Indonesia and Malaysia (both countries are in South East Asia). Regrettably, the global palm oil industry has long been a subject of debate. Palm oil production is linked to massive deforestation, peatland disturbance, climate change, human rights exploitation, and the dwindling population of iconic fauna. Calls for boycotts have recently led to retailers and governments calling for sanctions or elimination of palm oil from its supply chain and products.
While most express anger and demand reforms from the industrial plantation owners, many will be surprised to know that the palm oil industry is not dominated by large corporations. Small-scale rural farmers who are not linked to any companies, more widely known as ‘independent smallholders’, are responsible for about 40-50% of the global palm oil production . For these independent smallholders, oil palm cultivation has provided an income, lifted millions of rural households out of poverty and reduced inequalities between urban and rural populations. Therefore, smallholder farmers are critical players and must be included in the sustainable and conflict-free palm oil narrative.
According to statistics from the United Nations (UN) Department of Economic and Social Affairs, the global population is estimated to grow to 9.8 billion in 2050 . Most of the increase is attributable to population growth in developing countries. As these developing countries grow and work towards meeting the UN Sustainable Development Goals to address a range of social needs and improve quality of living of its citizens (e.g. reducing poverty, eliminating hunger, and improving health and well-being), consumption of resources such as agricultural products and edible oil is set to rise. Therefore, balancing land use change and the nutritional needs of a burgeoning population is another fundamental factor in the sustainable edible oil and palm oil narrative.
Due to its unique properties – high yielding, ubiquitous, and versatile – palm oil is essential for food, energy and water security, three most critical resources in the sustainable economic development narrative. According to the International Union for the Conservation of Nature (IUCN), replacing palm oil with other oil crops such as soy, rapeseed or corn would require up to nine times as much land to produce than palm . If palm oil is banned or boycotted, other less efficient oils would take its place and will drive damaging environmental issues elsewhere, rather than end the environmental issues associated with palm oil. Therefore, eliminating palm oil from food products will not decouple our consumption from environmental degradation. The focus instead should be on challenging unsustainable models of production and supply chain.
As the global population increases in numbers and desires for higher living standards, the need for sustainable development grows in urgency. Economic growth and development can no longer come at a high cost to the environment. In the palm oil narrative, stakeholders in the supply chain (oil palm producers, processors or traders, consumer goods manufacturers, retailers, banks and investors, and NGOs) must work together towards sustainable and conflict-free palm oil and ensure that all attempts such as policies and legislations to delimitate palm oil use are informed by holistic science understanding.
Certifications for Sustainable Palm Oil
Roundtable on Sustainable Palm Oil (RSPO)
The Roundtable on Sustainable Palm Oil (RSPO) was formally established in 2004 to promote the production and use of sustainable palm oil. The RSPO is a non-profit international certification body that unites stakeholders from all sectors of the palm oil industry: oil palm producers, processors or traders, consumer goods manufacturers, retailers, banks/investors, and NGOs to develop and implement global standards for sustainable palm oil.
The first set of RSPO Principles and Criteria (P&C) were released in 2005, detailing environmental and social criteria that members had to comply with in order to produce Certified Sustainable Palm Oil (CSPO). Since then, the P&C have undergone two revisions, RSPO membership has grown to over 4,000 members across all aspects of the palm oil supply chain worldwide, and CSPO now accounts for 19% of the global supply of palm oil.
The RSPO’s role in driving sustainability in the palm oil industry is an important one. It serves as an internationally recognised certification standard which producers and manufacturers can use to prove their commitment to producing and consuming palm oil in a sustainable manner. The RSPO also serves as a body which unifies stakeholders across the supply chain and engages them to see beyond their individual interests. The RSPO Complaints System aims to keep RSPO members and RSPO itself accountable to other stakeholders, ensuring that any breaches of RSPO statutes, Code of Conduct or P&C are resolved transparently and impartially.
The RSPO’s New Principles & Criteria 2018
The RSPO’s 2018 update to the P&C was adopted on 15 November 2018 and is effective immediately upon adoption. Existing members have been given a one-year transition period to meet the new standards.
The first significant development of the P&C 2018 is the adoption of no deforestation through the implementation of the High Carbon Stock Approach (HCSA). The HCSA distinguishes forest areas for protection from degraded lands with low carbon and biodiversity values. Only land with low carbon and biodiversity values may be developed. While previously the clearing of secondary forests was permitted, the new P&C ensure that forests, high carbon stock areas and their biodiversity are protected. With this, the RSPO answered a longstanding call to stop deforestation, bringing it one step closer to the no deforestation, no peat, no exploitation (NDPE) commitments adopted by major players in the sustainable palm oil industry. However, the new RSPO P&C is not a total deforestation ban as there is an allowance made, in the form of an adapted procedure, to recognise the needs of local communities and indigenous peoples in High Forest Cover (HFC) countries with legal or customary rights and to support their sustainable development of palm oil.
Another key update is the ban on new plantings on peatland regardless of depth. Previously, the ban only applied to peat layers of more than three metres deep. A clear and updated definition of peat has also been incorporated, which along with the new prohibition of fire in land preparation, will aid in the prevention and reduction of peatland fires and haze. This change is significant as peatlands are the world’s largest natural terrestrial carbon store. Disturbances to peatland will release significant amount of carbon emissions. Protecting and restoring peatland are critical initiatives to combat climate change.
The third key development is the tightened stance on human and labour rights requirements, where the RSPO has historically been criticised for being lax. Clearer definitions of child, forced and bonded labour mean greater protection against exploitation of workers. Anonymity, confidentiality and no-reprisals will be guaranteed to complainants and human rights defenders, supporting transparency in the system.
Notable as well are RSPO’s efforts to progress towards
1) greater transparency and traceability with new legality requirements for the sourcing of all third-party Fresh Fruit Bunches (FFB),
2) greater protection of workers and environmental health with the limitation of toxic pesticide application to specific circumstances validated by a due diligence process, and
3) greater smallholder inclusivity with the inclusion of a new principle to improve smallholders’ livelihoods.
The new P&C present a stricter set of requirements that organisations must comply with in order to be certified. Members are held to a higher standard of transparency and environmental and labour standards. While some may see these updates as an opportunity to raise their operating standards, there are others who will undoubtedly be challenged in their commitment to responsible production.
On the RSPO’s side, it faces a different challenge: poor enforcement, cultivated by underqualified auditors and a lack of transparency, and compounded by a series of scandals. As such, RSPO needs to strengthen enforcement and transparency in order to combat criticism of its ineffectiveness and ensure meaningfulness of its certification.
RSPO, MSPO, ISPO: Where do they stand?
The Malaysian Sustainable Palm Oil (MSPO) and the Indonesian Sustainable Palm Oil (ISPO) certification standards were developed by the Malaysian and Indonesian governments respectively. These national standards were developed in response to the need to regulate national agricultural practices and enhance the sustainability of the industry. Unlike the RSPO where compliance is mandatory only for members, compliance with the MSPO and ISPO is mandatory for all producers in the respective countries.
In a comparison by Forest Peoples Programme in 2017, RSPO emerged as having the most comprehensive and clear set of guidelines, followed by MSPO and then ISPO, both of which follow their respective national legislations closely.
|Main areas of comparison||RSPO||MSPO||ISPO|
|Deforestation||Deforestation is prohibited except in special HFC cases||No clearance of primary forests or forests designated for protection, in compliance with national and state laws||No clearance of forests under national protection|
|Peatland||New plantings on peat are prohibited||Provides guidelines for best practices on peatland as state law allows planting on peatland that has been gazetted for agricultural use||Allows planting on peatland under specific conditions; where no more than 30% of the peatland is more than 3 metres deep|
|Identification of areas requiring protection and biodiversity conservation||Requires HCV identification and enhancement, and identification procedure is clearly defined||HCV assessments are not required, although large plantations are required to do a Social and Environmental Impact Assessment (SEIA)||Requires HCV identification although the identification procedure is not defined in detail. Companies are required to do an Environmental Impact Assessment|
|Social impact assessment||Requires comprehensive social impact assessment,
strongly emphasising a participatory process
|Requires a social impact assessment and a system
for complaints, but this is not outlined in detail
|Does not require extensive social impact assessment|
|Free Prior and Informed Consent (FPIC)||FPIC must be obtained||FPIC must be obtained||The government retains the authority to issue land-clearing permits for national development on state land|
|Labour rights||Requires policies on workers’ rights, health and safety. Provides comprehensive detail and guidelines: no child labour or forced labour||Requires a policy on workers’ rights in accordance with national standards. Provides some detail and guidelines||Does not have a requirement for worker contracts. Workers must be enrolled in the government’s social security programme|
As seen from the table above, RSPO has the strictest and most comprehensive standards. MPSO has addressed most main areas of concern which makes it a more rigorous certification scheme than its neighbour ISPO. Nevertheless, there is room for improvement in both MSPO and ISPO standards, particularly with regards to social impact and labour rights.
It is worth remembering that MSPO and ISPO originated in different contexts from RSPO. As both are national standards, existing legislations governing plantations in Malaysia and Indonesia were integrated. MSPO and ISPO are good first steps, setting a baseline for the minimum actions required of producers. They fulfil the regulators’ need for a baseline that helps address criticism from palm oil buyers and safeguard the livelihoods of those in the industry as well as the land quality in their own countries.
Supply and Demand
While RSPO holds suppliers to a higher standard for sustainable palm oil than MSPO and ISPO, the market is struggling to balance a growing supply with languishing demand. Dr Simon Lord, Chief Sustainability Officer of Malaysia’s Sime Darby Plantation, which supplies one-fifth of the world’s production of RSPO-certified palm oil, disclosed that “Some 50 per cent of the oil that we produce—all of which is certified sustainable—actually isn’t sold as sustainable palm oil. The willingness of the market—and we are talking here about Europe—to pay more for sustainable oil is just not there.”
Despite the amount of criticism levied on palm oil’s lack of sustainability, it doesn’t seem to be translated into a greater uptake of certified sustainable palm oil (CSPO). Rather, there seems to be movement in the opposite direction, with companies calling for a total ban of palm oil in their products, as in the case of British supermarket chain, Iceland, in 2018. However, the chain subsequently faced difficulty in removing palm oil from its own-brand products because of its ubiquity. Instead of meeting its target, Iceland ended up simply removing the brand label from its own-brand products.
Rather than calling for a boycott, Iceland should have chosen to engage and be a part of the conversation on moving palm oil towards sustainability. As awareness about the palm oil industry grows, many have the right intentions, but these intentions must be translated into the right strategic actions informed by a holistic science understanding or risk backfiring on the organisation, planet and all of us.
Beyond Certification – Call to Action
“(We) share the same objective: a sustainable palm oil production and consumption. No palm oil is no solution,” – Frans Claassen, chair of the European Palm Oil Alliance (EPOA)
With the world’s population set to increase, consumption and use of oil and palm oil based products will rise exponentially. Palm oil is the most efficient oil among all other types of oil. We should not and cannot afford to boycott palm oil because that will be a total loss for the environment. As discussed previously , alternative oils use at least nine times as much land as palm oil, leading to even greater deforestation and species loss. What we should do is engage with other players in the industry such as producers, buyers, and consumers to encourage the uptake of sustainable palm oil practices.
Consumers – vote for sustainable palm oil using your purchasing power! Look out for products carrying the CSPO logo where possible. There are emerging tools to help conscious consumers do that, such as smartphone apps that scan barcodes on products and web-plugins to help identify products containing CSPO. One such initiative is EcoCart http://pmhaze.org/ecocart/, a Singapore-based plugin designed to help consumers shop sustainably on major eCommerce sites such as Redmart.com and ColdStorage.com.sg. As online shoppers browse these sites, the EcoCart plugin will alert them when they view products made with unsustainable palm oil and recommends more sustainable alternatives.
Another initiative is the Palm Oil Buyers Scorecard – an initiative by the World Wide Fund for Nature (WWF), which scores more than 130 global and close to 50 Singapore- and Malaysia-based brands and retailers on their use of sustainable palm oil. Brands included in these scorecards include Ayam Brand, F&N, Mamee, Munchy Food, McDonald’s, Unilever, Delifrance, Nestle and many more!
When consumers, through their purchasing power, signal an increased uptake of sustainable palm oil, brands and retailers would respond.
Brands and retailers can declare their commitment to sustainability by committing to 100% CSPO in their supply chain. As brands and retailers purchase palm oil from producers, brands and retailers can also demand for increased traceability from producers. Increased traceability will address the prevailing lack of disclosure by palm oil producing companies on the extent and location of smallholders within their supply chain (just 14% of companies assed by the Sustainable Palm Oil Transparency Toolkit in 2018 published maps of their scheme smallholder locations, while only about 50% of companies provided details of support programmes for their smallholders). As smallholders are significant suppliers, unsustainable farming practices on smallholder plantations will cause ripple effects, including reputational damage, to other stakeholders in the supply chain. Brands and retailers should also extend their commitments to cover all their sourcing, including increasing support for the smallholder farmers in their supply chain.
Producers need to work towards producing sustainable and NDPE palm oil. Only when palm oil stops being linked to deforestation, fires, biodiversity loss and human rights issues will the image of the palm oil industry be improved. One of the ways to increase sustainable palm oil production while remaining deforestation-free is to increase the yield productivity on existing plantations, especially those owned by smallholders, who account for 40-50% of global palm oil production. As producers are in direct contact and reliant on FFB supply from smallholder farmers, producers can be involved in organising targeted programmes for these smallholder farmers on efficient and sustainable farming for better yields. To address the purported lack of transparency, producers need to also work towards publicly disclosing their FFB traceability to the plantation level.
Smallholders often lack expertise, capacity and resources to engage in sustainability and productivity efforts. Therefore, governments of palm oil producing countries need to put in place smallholder support programmes to equip smallholders with the means to produce sustainable palm oil. With their overview of other needs and database of information, governments are also uniquely equipped to balance the water-energy-food (WEF) nexus with sustainable economic development from the palm oil industry. Governments must strengthen regulatory frameworks and strictly enforce regulations on protected land and illegal practices, as well as invest in R&D, in order to bring about sustainable change in the palm oil supply chain.
All governments need to ensure that policies and legislations on vegetable oil (including palm oil) production and consumption are through science-based policymaking and informed by a holistic science understanding.
Instead of calling for sanctions on the most efficient and risking unsustainable production expansion of other vegetable oils, governments should apply the same stringent sustainability requirements on all oilseed crops.
For example, in the case of palm oil, governments should require companies and retailers to buy identity-preserved certified palm oil, which can be traced back to source plantations. Governments can also encourage oil supply chain traceability and transparency by legislating the reporting of it. Such measures will enable unsustainable agricultural practices to be identified and addressed.
Financial institutions can also do their part to support government initiatives by providing sustainability performance linked loans to incentivise sustainable practices in the supply chain. Besides that, financial institutions, together with other stakeholders, can also play a critical role in designing financial products appropriate to the appetite and unique needs of smallholder farmers.
Finally, NGOs must be responsible in presenting a true, unbiased picture of palm oil, as a commodity that is essential to meeting growing food needs, improving socio-economic development and achieving many of the UN SDGs. They should use their influence and resources to educate and advocate for the private and public sectors to take up sustainable and conflict-free palm oil.
In his speech at the European Palm Oil Conference 2018, chair Frans Claassen spoke about the need for pro-active communication on sustainable palm oil by NGOs:
“As we all know, sustainable palm oil is important for the socioeconomic development of many palm oil producing countries. It supports millions of smallholders, provides work and income in rural areas and helps halt deforestation.
We need to explain our commitments towards sustainable palm oil, we need to pro-actively talk about our actions, the positive developments, the progress that is being made and at the same time acknowledge that we face challenges to make our supply chain fully sustainable.
We have a shared ambition to create a global move towards 100% sustainable palm oil. I call upon all partners – palm oil producers, industry and NGOs – who believe in the future of sustainable palm oil to create that movement!”
As with every industry, every stakeholder’s actions have an impact on other stakeholders. No one player is an island; collaboration is key in order to forge progress towards sustainable palm oil.
 Murphy DJ (2014) The future of oil palm as a major global crop: opportunities and challenges, Journal of Oil Palm Research, 26, 1-24