Special Report: Sustainable Palm Oil - Where is the Progress?

27 Mar 2017 --- The debate surrounding the sustainability of the palm oil industry is driving forward change - and that can only be a positive thing, according to the industry body, the Roundtable on Sustainable Palm Oil (RSPO). The companies involved in the palm oil supply chain have to be aware of the issues that sit side by side this industry, linked to major controversies including deforestation, habitat degradation, climate change, indigenous rights abuses including labor exploitation and cruelty to animals. This, of courses, happens in the countries where the palm oil is produced, because the land and forests must be cleared for the development of palm plantations.

As the use of palm oil in food products exploded - because of the high yield of the trees leading to wider cultivation in some of the world’s most vulnerable tropical habitats, like Indonesia and Malaysia - countless hectares of forest get cleared to make space for oil-palm monoculture.

On top of the loss of precious land, the natural habitat of endangered species of orangutan (the Sumatran orangutan is listed as “critically endangered”) is being destroyed.

That’s a lot for one industry to take on board.

Although the likes of Greenpeace continuously scrutinize the industry, working to expose wrongdoings and fight for change, it’s not just the environmental activists - some reputation-conscious companies are stepping up sustainability efforts, the government of palm oil producing countries have adopted their own certification schemes and the RSPO has been operating since 2004.

So what has been happening over those 13 years?
Speaking to FoodIngredientsFirst, Danielle Morley, European Director of Outreach and Engagement at the RSPO explains why there has been so much emphasis lately on the palm oil industry and what their role is.

“The focus on palm oil is a natural consequence of rapid growth of the palm oil sector, and European consumers, businesses and governments’ desire for increased sustainability. The RSPO welcomes this attention and shares this desire for change.”

“Palm oil comes under particular scrutiny due to its high demand, which is also predicted to grow enormously (more than double) over the next 35 years. The European Parliament is also preparing a report on palm oil and deforestation, which is helping draw attention to the issue.”

“The RSPO has a role in ensuring this growth in palm oil production takes place in a way that is fair to the environment, fair to local communities, and fair to workers employed in the industry. We do this through the principle of sustainable agriculture, whereby palm oil is produced according to a strict set of sustainability criteria. Our criteria are reviewed regularly to keep up with best practices, and we have an enhanced set of criteria called RSPO NEXT for companies willing and able to go a step further.”

Indeed over the last years the RSPO has achieved some major milestones including:

- 9% increase in high conservation value areas - the natural habitats, which are of outstanding significance or critical importance due to their high biological, ecological, social or cultural values;

- 40 growers have phased out the herbicide paraquat, and at least 33 also have a policy banning, or have already phased out, WHO category 1a and 1b pesticides.

- Out of the 63 complaint cases since 2009, 41 have either been closed or are closed for monitoring.

- 109,415 smallholders (individual and schemed) have been certified over the last reporting period.

Would this have happened if there wasn’t an industry body?

Transparency is the RSPO’s aim, however achieving total transparency is not an easy task as there are no legal requirements that producers must disclose their concession boundaries or manufacturers their suppliers.

“The RSPO is working towards improving transparency in various ways. Certification audits and applications under the New Planting Procedure must be published, members must submit an Annual Communication on Progress reports which are analyzed and published each year and from 2017, it will become mandatory for growers to calculate and report on their Greenhouse Gas emissions.”

“RSPO also requires growers to calculate GHG. Furthermore, industry can take big steps towards transparency by sourcing certified sustainable palm oil. The certified mills are the starting point of traceability. RSPO has an IT platform which offers traceability for certified oil palm products. From the mill to the refineries, certified members of RSPO register their physical sales and processing of palm oil, palm kernel and fractions under the supply chain models Identity Preserved, Book & Claim, Mass Balance.”

“RSPO members must publish an Annual Communication of Progress which provides information on progress made towards becoming 100% certified.”

What are the stats relating to the RSPO’s stamp of approval?
There are around 3,253 RSPO members, 456 trademark licenses issued by the RSPO, 51% of RSPO-certified palm oil comes from Indonesia, 42% Malaysia, 5% Papua New Guinea, 1% Brazil and 1% Colombia.

However, just 21% of the proportion of the world’s palm oil is RSPO-certified.

FoodIngredientsFirst asked what happens to companies who either refuse to move towards sustainable practice or don't really seem to take them seriously? What punitive powers (if any) does the RSPO have?

“The RSPO has no influence over companies which are not members of the RSPO. This is why the RSPO’s approach emphasizes inclusivity so strongly; as an organization with voluntary membership the focus should be on willing cooperation rather than coercion,” the spokesperson continued.

“If a complaint is lodged against an RSPO member then the RSPO Complaints Panel can decide to impose penalties. Ultimately this can lead to suspension of certification or termination of membership. Terminating certification is a measure of last resort.”

“Once outside of the RSPO’s remit, the infringing company is not subject to the RSPO’s rules and so has no incentive to ‘play fair’ anymore. Deciding in what cases to terminate and when to continue seeking cooperation is a delicate process which our Complaints Panel takes very seriously.”

Another significant challenge is about consumer demand.

While the progression of a multitude of other food and beverage segments are being driven by consumer demand - there is the lack of demand from consumers for sustainable practices when it comes to palm oil. An oddity if you consider that other categories like the increase of plant-based proteins for instance (there are many more) being driven by consumers motivated by ethics, politics, culture, morality, fairtrade issues, eco-friendly factors and many more.

“Half of all sustainably-produced palm oil is not sold as such. This means the palm oil is being produced according to strict sustainability criteria, but then half of it is not sold as certified sustainable palm oil, due to weak demand.”

“Weak consumer demand for sustainable palm oil means there is little incentive for producers to switch to sustainable practices. Only when consumers, particularly us here in Europe, show that we are asking for, and are willing to pay for, sustainable practices will producers be faced with the right incentives to grow palm oil sustainably.”

“This will enable us to continually raise the bar on sustainable practices, completing the transformation of the palm oil sector.”

One helpful rallying call could be directly to consumers to use their purchasing power to help propel sourcing sustainable palm oil for the entire industry - and a shame stigma attached to those who don’t.

The WWF published its annual Palm Oil Scorecards in 2016 revealing the latest data looking at 137 major retailers, consumer goods manufacturers and foodservice companies from the US, Canada, Europe, Australia, Japan and India. Evaluated companies include brands like as Carrefour, L’Oreal, McDonald’s, Nestlé, Tesco, and Walmart among others.

The Scorecard measures how companies performed on basic steps such as joining the RSPO, committing to and buying sustainable palm oil, and transparency. The Scorecard focuses on the year 2015, by which many companies pledged to consumers that they would be using 100% certified palm oil.

“The Scorecard shows that both large and small companies can easily source certified sustainable palm oil. However, due to their buying power, large users of palm oil are crucial to the transformation of the wider industry. A handful of these large users evaluated in the Scorecard – Unilever, Ferrero, FrieslandCampina, Reckitt Benckiser, Colgate-Palmolive, and ConAgra Foods – are showing their peers exactly how they too should be driving industry change by sourcing significant volumes of certified sustainable palm oil from any of the RSPO approved supply chains,” says the WWF.

“Medium sized users of palm oil scoring equally well on buying certified palm oil included Walmart, Mars, Associated British Foods, General Mills, Kellogg's, and Danone. But buying CSPO is only the first step on the journey to change the industry.”

The Scorecard also looks at how fast companies are taking the next step by moving to source certified sustainable palm oil from segregated supplies, rather than relying on trading certificates.

“And according to this measure, company progress is much more patchy. Only three companies used 100% segregated certified sustainable palm oil in 2015 – Ferrero, Danone and Arnott’s. Of these companies, only Ferrero uses large volumes of palm oil. WWF commends these brands for leading the way to the ultimate sustainability goal for the industry– that certified sustainable palm oil becomes the standard commodity grade for all companies while uncertified palm oil becomes unacceptable,” adds the WWF.

The main issues now, according to the RSPO, is ensuring the proper implementation and verification of existing standards, seeing as there is no shortage of policies, regulations and commitments to sustainable palm oil production.

“The challenge now is to bridge the gap between commitments made on paper and changes achieved on the ground,” adds the spokesperson.

“Many recent NGO reports point to the lack of enforcement and faulty implementations of existing certification criteria. The RSPO has responded by improving its complaint resolution mechanism and investing in the accreditation and training of auditors. But the size of the gap between words and actions means that effective implementation of existing criteria and commitments/policies is the main priority today.”

Zoological Society of London (ZSL) Latest Findings on Palm Oil
A new report from international conservation charity has revealed that many of the world’s largest palm oil producers are failing to publicly disclose their total land holdings, leaving these areas vulnerable to irreversible damage and potential wildlife habitat loss.

ZSL’s analysis - Hidden Land, Hidden Risks - conducted by its specialist SPOTT team (Sustainable Palm Oil Transparency Toolkit), found that many companies frequently report on the areas of planted land they hold, rather than the total land under their management.

This misreporting potentially excludes vast areas of land at environmental and social risk – such as undeveloped land that, if converted into plantations in the future, could be at risk of environmental damage, including deforestation.

SPOTT palm oil manager Izabela Delabre tells FoodingredientsFirst: “There is a lack of clear expectations on transparency and reporting. ZSL’s SPOTT initiative is working to bring clarity to this, by working with other stakeholder groups and reporting initiatives, to clearly communicate to companies what is expected from stakeholders in terms of disclosure of information, she says. “There is also lack of understanding across the industry, including from investors, that unplanted areas are important to report on, in terms of assuring against environmental and social risks.”

“Some companies might not declare how much unplanted land they hold because they may have yet to assess its suitability for development. Land may also be at different stages in the permitting process, complicating disclosure of total land under management.”

“Companies might also regard this as sensitive information and wish to avoid pressure from external organizations and pressure groups calling on them to protect or restore these areas for conservation. On the whole, there is continued momentum towards increased transparency, with more progressive companies responding with improved openness.”

“Although some certification standards, such as the RSPO, require companies to declare areas of land under management, this may not be comprehensive across the specific types of land (e.g. unplanted areas, infrastructure) that constitute total land holdings, and there is a lack of common definitions against which to report.”

Delabre goes on to explain how RSPO members can be suspended or terminated for repeat offences if they fail to submit a progress report, and how ACOP question relating to oil palm landbank are mandatory. Although apart from certified areas, the figures they submit are not independently verified.

“ZSL welcomes the fact that RSPO has recently updated its ACOP reporting process, and we look forward to working with companies – both RSPO members and non-members – to improve reporting across the industry,” she says.

“Transparency is fundamental for companies to demonstrate good governance and progress towards fulfilling their sustainability commitments. Accurate reporting on land under a company’s management is a core component of corporate transparency, essential to understanding the current and future impacts of the industry, and an important first step in identifying and prioritizing the mitigation of risks associated with specific companies.”

“Certification standards and their members must also be transparent and accessible, if they are to gain consumer trust and drive demand for sustainable palm oil. Palm oil has long been a hidden ingredient in many products, and there is still a lack of public awareness on the complexities of the supply chain.”

She also backs up the RSPO’s point about the importance of consumer demand in driving change.

“For many years, around half of palm oil produced on certified plantations has not been sold as sustainable palm oil because there has not been enough demand. The RSPO and its members must work to ensure the credibility of the standard in order to build trust in the industry and support uptake by consumers and brands looking to support sustainable products.”

What’s next?
MEPs are advocating sustainable palm oil practices and calling for a clampdown on member states importing unsustainable palm oil with links to deforestation and habitat degradation which are particularly significant in South-East Asia. Discussing the issues earlier this month, European politicians backed a non-binding report looking into how the EU can tackle the environmental impacts of palm oil production.

The RSPO will also be hosting its 2017 European Roundtable in London in June. This year's conference will focus on how to implement its existing commitments to sustainability, focusing on the issues of deforestation, inclusion of smallholder farmers, and human and labor rights.

“With the level of public attention on palm oil today, it has never been a more interesting time to follow the palm oil debate. We encourage everyone who wants to attend to register early,” concludes Morley at the RSPO.

by Gaynor Selby

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