Palm oil, an economical and highly versatile commodity, has provided livelihoods for millions of people, contributed to economic growth and bolstered global food security. In 2021, the industry was credited for playing a crucial role in helping the Malaysian economy rebound from the Covid-19 pandemic, thanks to its use in soaps, detergents and hand sanitisers — cleaning agents that helped to eliminate the virus.

Yet it remains much maligned as anti-palm oil lobbyists disregard the industry’s efforts to produce ethical palm oil and instead paint a picture of the Wild West, where deforestation is rampant, soil degradation is widespread and the rights of local communities are trampled on.

Contrary to what critics might say, planters and producers of palm oil have been addressing the environmental, social and governance (ESG) concerns with measures ranging from the use of precision agriculture techniques to the provision of smallholder support. These initiatives go beyond lip service and encompass forward-thinking holistic strategies.

In fact, shutting the door on palm oil could cause more harm than good. In May 2024, the International Union for the Conservation of Nature (IUCN) pointed out that meeting the global demand for vegetable oils by 2050 will require a 14% increase in production. This could lead to serious environmental consequences, making the push towards less sustainable replacements counterproductive.

When it comes to land use efficiency, oil palm reigns supreme, producing significantly more oil per hectare than alternative crops. According to the Malaysian Palm Oil Council (MPOC), each hectare of oil palm plantation produces about 3.58 tonnes of oil each year. In comparison, other oil-producing crops produce between 0.45 and 0.67 tonnes of oils per hectare.

Sustainable palm oil planters are adopting practices that further improve yields and reduce the overall footprint. While beef and soy production have been identified by the World Wildlife Fund (WWF) as the top two drivers of tropical deforestation, palm oil cultivation no longer poses a significant threat to the country’s rainforests, thanks to the industry’s commitment to the No Deforestation, Peat and Exploitation (NDPE) policy.

This has been confirmed by Global Forest Watch (GFW), which reported a sharp reduction in forest loss in Malaysia in June 2023. This progress has been praised by The World Resources Institute (WRI), the United Nations’ Food and Agriculture Organization (FAO), and GFW itself, which describes Malaysia as a “success story” and states, “Palm oil is no longer a driver of deforestation.” This aside, oil palm plantations in Malaysia occupy a relatively small land area, covering just 5.65 million hectares — only 17% of the country’s total land area.

Plantation companies are also utilising sustainable cultivation methods such as zero-burning techniques, which involve the felling, shredding and natural decomposition of old palm trees. Some have adopted geospatial technologies via satellite and drone imagery to monitor the health of individual palm trees. This enables the tailoring of fertiliser and pesticide use to each planted palm. Another sustainable practice is the planting of cover crops, which improves soil health and increases water retention.

Cognisant of their impact on wildlife, palm oil companies are implementing various conservation efforts to address the industry’s environmental impact. These include the restoration of peat land and forest areas via tree-planting programmes and the creation of wildlife corridors between fragmented forests, allowing animals to safely travel between habitats for feeding, breeding and escaping threats.

Sustainable palm oil players go beyond basic wildlife protection. They actively monitor and fund the conservation and care of rare, threatened or endangered species through breeding, rescue, relocation, rewilding and post-release monitoring programmes. Some plantations have regular patrols to track wildlife and wildfires, and ban illegal hunting on the estates.

These companies work alongside governmental and non-governmental organisations to manage human-wildlife conflicts, monitor biodiversity and identify areas for improvement in their efforts. For instance, the industry, through the Malaysian Palm Oil Green Conservation Foundation, backs the efforts of agencies such as the Wildlife Rescue Unit, which supports the Sabah Wildlife Department in conserving wildlife.

To protect the rights of plantation workers, sustainable palm oil players are guided by the Human Rights Due Diligence framework, which is set out in the United Nations Guiding Principles on Business and Human Rights. This is an ongoing risk management process to assess and address potential adverse impacts on human rights. It helps a firm evaluate labour practices within its operations and throughout its supply chain.

Palm oil companies that are committed to ESG conduct due diligence on the appointment of recruitment agencies; provide grievance channels for their staff; reimburse workers who have had to pay recruitment fees; improve their working and living conditions; and ensure their employees are not overworked.

Responsible palm oil companies also focus on the economic empowerment of local communities. These include building roads, schools and healthcare facilities and running community development programmes with initiatives like sanitation projects or the provision of clean water. The industry also creates income-generating opportunities for Malaysia’s smallholders, who number more than 450,000, and ultimately helps to reduce the income gap between the rural and urban populations.

Transforming the entire palm oil industry hinges on widespread collaboration, and there are encouraging signs that suggest that a successful overhaul is underway. The vegetable oil is one of the world’s most certified and most regulated commodities. Additionally, Malaysian palm oil companies are held accountable by the nationally mandated and independently audited Malaysian Sustainable Palm Oil (MSPO) scheme.

The certification assures palm oil buyers that the commodity is produced sustainably and provides traceability across the entire supply chain. As at May 2024, 85.9% of oil palm estates and 91.1% of palm oil mills in the country had been certified under the MSPO. It is a remarkable transformation as the palm oil industry works on putting its tarnished past behind it.