Palm oil's multiple choice solutions
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The document discusses various approaches to improving the sustainability of palm oil production, including certification schemes and industry initiatives. It notes that while progress has been made through certification programs like RSPO, there are still issues with the pace of decision making and concerns that certification has not fully addressed deforestation. Multiple strategies beyond certification are now being explored, but experts disagree on the best path forward and balancing environmental and social concerns remains challenging.
Palm oil's multiple choice solutions
- 1. PAGE 19 oil," says Katie McCoy, head of the forests programme at Carbon Disclosure Project. "I think we can be positive about the momentum and attention it has received but we need to be cautious because clearly things are not yet quite right." Supply/demand gap Morley agrees that there remains much work to be done. "Today only half of the palm oil certified as sustainable is sold as such and there remains a gap between supply and demand. It also remains the case that certain markets are further ahead than others in terms of the amount of sustainable palm oil they use," she says. However, despite the focus on the problems of palm oil cultivation, "it’s not an evil crop", says Keller. In addition to its versatility, palm oil is also very productive, she points out. The yield (amount of oil produced per hectare per year) is far greater than for other vegetable oils, while production costs are lower, mainly due to low labour costs in the countries in which palm oil is grown. "The problem is with how it is produced," Keller says, but she says that a boycott is not the answer. "If we were to substitute all the palm oil we use with other oils, we would need nine times as much land, which would make the deforestation problem even worse." RSPO too slow? RSPO wants more consumers to demand products made with sustainable palm oil. The group has set a target in Europe to achieve 100% sustainable palm oil by 2020, supported by targets of 50% in Indonesia, 30% for India and 10% for China. But despite the progress RSPO has made, it has been criticised for the slow pace at which it makes decisions. As a result, many companies are looking to move "beyond certification". In part this has come about as a result of pledges by industry groups such as the Palm oil is, in many ways, a victim of its own versatility. The oil, mainly grown and produced in Indonesia and Malaysia, is found in approximately 40-50% of household products in countries such as the United States, Canada, Australia and England. These range from cosmetics to cakes, while in other markets such as India, it is a popular cooking oil. The oil comes from trees mainly grown in tropical forests, which hold the greatest diversity of life on earth. Its production has contributed to deforestation and climate change, as well as habitat degradation, animal cruelty and abuse of indigenous peoples' rights. To tackle these problems, the Roundtable on Sustainable Palm Oil (RSPO) was created in 2004. It now has more than 2,400 members and represents 40% of the global palm oil industry, including producers, processors, buyers, retailers and civil society groups. The organisation certifies 11.64m tonnes of palm oil, equivalent to 20% of global production, says Danielle Morley, RSPO’s European director of outreach and engagement. Mass balance and beyond There are three main certification approaches – the most basic is Green Palm Certificates, which allow companies to buy certificates for sustainable palm oil equivalent to their own palm oil purchases. Then there is a "mass balance" approach, where sustainable palm oil is blended with other supplies. "What we are encouraging, though, is a third approach where companies buy segregated supplies of sustainable palm oil from a dedicated supply chain. If supplies are ‘identity-preserved’ there is very sophisticated traceability so the buyer knows what mill the palm oil comes from," says Emma Keller, agricultural commodities manager, WWF-UK. "There is lots of activity going on against a backdrop of significant movement from companies to find sustainable sources of supply." "Of all the forest risk commodities, progress to date has been strongest for palm SECTOR SNAPSHOT – PALM OIL Palmoil’smultiplechoicesolutions Campaigners have long called for the palm oil industry to cut its links with deforestation. Numerous strategies – not always complementary – are being adopted to improve standards across the industry’s complex supply chain Essential insight • Palm oil is one of the most widely-used vegetable oils: as a basic cooking oil and as an ingredient in products ranging from lipstick and toothpaste to ice cream and biscuits. • The industry is linked to deforestation and climate change in the countries where it is produced. • Starting with the Roundtable on Sustainable Palm Oil, a number of initiatives are developing more sustainable palm oil. • Experts disagree on the best approaches, including on whether certification actually works and how to identify valuable forests. Roundtable on Sustainable Palm Oil ESTABLISHED 2004 2,475 members 11.64m TONNES – 20% of world palm oil production – RSPO certified 2.56m HECTARES palm oil production area RSPO certified. SUPPLY CHAINS IN FOCUSSUPPLY CHAIN RISK & INNOVATION
- 2. PAGE 20 are also concerns that China and India will try to expand their own palm oil industries by creating plantations on areas of high conservation value. For some, the whole certification process is a failure. Scott Poynton of forests group TFT says that "over the last 20 years, certification has not really worked". "If you look at the state of the world’s forests and other natural resources where certification is in operation, things look pretty grim – and they are getting worse," he adds. He says certification is a "command and control" response to a problem that does not stand still but is moving all the time. As a result, it stifles the innovation that such a complex problem requires, he argues. government policy and the political will to enable these companies to make good on their commitments. Changing demands Another big challenge in years to come will be in Asian markets, particularly India and China, which are currently the two biggest importers of palm oil. "They are very different markets from those in the west," she adds. "In India, for example, the highest proportion of palm oil is used by the poorest sectors of society as a basic cooking oil. It will be a huge challenge to engage with the small traders who sell to them." WWF in India is working to raise consumer awareness of the sustainability issues around palm oil as well as engaging with large consumer goods companies. There Consumer Goods Forum, which in August 2015 published the first Sustainable Palm Oil Sourcing Guidelines, which it hailed as "an important step in helping the consumer goods and retail industries to achieve zero net deforestation by 2020, as outlined in the CGF’s Deforestation Resolution". Another important driver – or at least it should have been – is the 2014 New York Declaration on Forests, which commits signatories from companies, government and NGOs to halve deforestation by 2020 and completely eliminate it by 2030. Brendan May, chairman of sustainability experts Robertsbridge, argues for more and faster progress. Around the time of the declaration’s launch "there was rhetoric aplenty from governments and companies about cutting deforestation. Since then, however, what have we seen in terms of action plans and concrete commitments? Not a lot. We need to inject some pace – transformation of business models that we need is simply not happening fast enough." Elsewhere, in Europe, EU food labelling regulation that requires all palm oil in food, which had hitherto been a hidden ingredient, to be identified has also played a part in awareness raising and increasing supply chain transparency. However, while buyers profess their willingness to go beyond certification, they are not yet prepared to pay the extra costs this incurs – and nor are producers, either the large producers or the many smallholders in the sector, who do not have the resources to do so. There is also concern that "most of the action is coming from western multinationals", Keller argues. Certainly this has been the case until recently – though now there has been more pressure from grower countries. May highlights that in terms of progress on deforestation it is "big producer companies in the developing world – from sectors such as palm oil – that are now leading the charge". The challenge, May argues, is for FOUR PILLARS: • improve environmental stewardship; • strengthen policy and regulations; • expand social benefits; • improvecompetitiveness ofIndonesianpalmoil. MISSION: “Create an environment in Indonesia which enables and promotes the production of sustainable palm oil that is deforestation free, expands social benefits, and improves Indonesia’s market competitiveness”. FIRST SIGNATORIES: Wilmar, Golden-Agri Resources, Cargill and Asian Agri. Musim Mas signed in 2015. INDONESIAN PALM OIL PLEDGE Private sector collaboration signed first in 2014 SUPPLY CHAINS IN FOCUSSUPPLY CHAIN RISK INNOVATION
- 3. PAGE 21 This has proved to be the case. Greenpeace has accused the coalition of greenwashing but others argue that the original limit was too restrictive. Recognising, perhaps, the risks from developing potentially confusing competing definitions of what is and isn’t sustainable palm oil, there are people from both sides keen to develop a common approach. Meanwhile, the RSPO has responded to the development of the HCS Approach by introducing RSPO Next, a new voluntary addendum to its standard that allows members to adopt a best in class approach to sustainable palm oil production. The multiplicity of approaches illustrates the complexity of the problem, but also the fact that more and more industry participants see the need for change as unavoidable. ★ they contain. Greenpeace, TFT and Golden Agri-Resources (GAR), the largest Indonesian palm oil producer, started work on an HCS definition in 2011, which has evolved into what is now known as the HCS Approach. HCS spat This initially defined HCS forests as those containing more than 35 tonnes of carbon per hectare. More recently, a coalition of palm oil companies led by Malaysia’s Sime Darby has proposed that a line be drawn at 50 tonnes per hectare. This alternative proposal, backed by a new high carbon stock study would allow the carefully planned conversion of some forest to oil palm. Understandably, this suggestion may – initially at least – alarm supporters of current HCS policies, the group’s consultation report says. On-the-ground improvements While certification and other schemes focus on demand for palm oil, there have been significant developments in producer regions as well, in part because of increasing concern about the pollution problems caused by fires that are used to clear land for palm oil cultivation. The Indonesian Palm Oil Producers Association says it will expel members found to have caused forest fires while the environment and forest ministry has revoked the licences of three palm oil producers for illegal land clearing. A number of producers have committed to a high carbon stock (HCS) approach, which identifies areas of forest that should be preserved because of the amount of carbon that they lock up and the biodiversity • Comply with existing RSPO principles and criteria, or equivalent standards. • Protect high conservation value (HCV) areas. • Involve no burning in the preparation of new plantings, re-plantings or any other developments, including the management of existing plantations. • Respect human rights, and endorse and support the Universal Declaration of Human Rights. • Engage in free prior and informed consent of indigenous and local communities concerning activities on their customary lands where plantations are planned for development. • Operate an open, transparent and consultative process to resolve complaints and conflicts. In addition to these, companies should consider developing an approach for addressing the following criteria (which go beyond current RSPO certification standards): • Protect high carbon stock (HCS) forests. • Do not establish new developments on peatlands regardless of depth. CONSUMER GOODS FORUM – SUSTAINABLE PALM OIL SOURCING GUIDELINES SUPPLY CHAINS IN FOCUSSUPPLY CHAIN RISK INNOVATION