Wednesday 17 Apr 2024
main news image

This article first appeared in The Edge Malaysia Weekly on January 15, 2024 - January 21, 2024

The topic of palm oil — and whether it can be sustainably produced — is a controversial one, with a range of views from different parties. This tension has boiled over in recent years as palm oil boycotts took off and the European Union Deforestation Regulation (EUDR) was introduced.

One organisation that has been spearheading efforts to transform the sector is the Roundtable on Sustainable Palm Oil (RSPO), which will be celebrating its 20th anniversary this year.

It is now charting its path forward to increase its impact, as seen through its annual Roundtable Conference, which had the theme “Partners for the next 20” (RT2023) and was held in Jakarta last November.

According to RSPO, it has grown from 200 members in 16 countries to 5,700 members from over 100 countries and territories in the last 20 years, and increased the global certified area from 125,000ha to 4.9 million ha across 23 countries in 2023.

Certified Sustainable Palm Oil supply reached a new milestone of 15.4 million metric tonnes in 2023, while the RSPO Trademark licences increased to over 1,600 in over 100 countries, with growth seen in China, Japan and Southeast Asia.

At this juncture, RSPO’s role in promoting sustainable palm oil is critical to ensuring its relevance, as scrutiny on the sustainability of commodities will only increase going forward.

“If you go back in time to 20 years ago, when RSPO was founded and I said to growers, ‘At some point, you’ll be expected to do these things just to be compliant,’ they would have walked out of the room. [Things are different now] and that’s a credit to the progress we’ve made over the last 20 years, so much so that what the industry now takes as a given, not just in RSPO but in national standards, is common practice,” RSPO CEO Joseph D’Cruz tells ESG at the RT2023.

RSPO is a voluntary scheme that was founded by some of the largest plantation and consumer goods companies, and its secretariat is based in Malaysia. Its members include the biggest plantation companies in Malaysia.

The regulatory developments in recent years reflect higher expectations from companies and commodity suppliers on sustainability and human rights issues. This interest is also observed in emerging markets such as India and China, which are beginning to source more sustainable palm oil, according to D’Cruz.

Rather than being defensive, he feels excited about the opportunity. “This industry has had such a track record of being able to deal with sustainability challenges. This puts us in a position to do better than many others. The EUDR is a great example,” he says.

This is because RSPO has already prohibited conversion of primary forests since 2005, and the 2018 standard requires identifying and preserving areas of high conservation value and high carbon stock.

Reaching out to smallholders and non-RSPO members

There are risks, of course, such as the potential exclusion of smallholders due to the EUDR, which is an issue that has been brought up by Indonesia and Malaysia in particular. Smallholders may not have sufficient resources to obtain the full certification or produce the necessary information required.

That’s why helping smallholders will be important to RSPO. In Indonesia and Malaysia, two of the biggest palm oil producers, smallholders represent around 40% of the total area for oil palm production. One of the main ways RSPO is reaching out to them is by enabling smallholders that adopt sustainable practices to sell RSPO Smallholder Credits.

Additionally, to convince the world that palm oil can be produced sustainably, the organisation has to reach out to non-RSPO members. Currently, only 20% of the global production of palm oil is certified by RSPO.

D’Cruz is, again, optimistic about handling this challenge. “When growers become RSPO members, they commit to, over time, certifying all their production landscapes to a time-bound plan. We’ve done an internal estimate that if our current membership gets to 100% [compliance], that’s probably like another 18% of global production in the pipeline [of getting certified],” he says.

“I think our evolution is twofold. How do we reach out to parts of the industry that are not yet part of RSPO, and [how can we] remind our members that, as a membership body, we have a tremendous influence on how this industry evolves?”

Updating requirements to meet current demands

The RSPO completed the public consultation for the five-year review of its Principles and Criteria in June 2023, and is now going through the revision process. The topics in the review are relevant to many of the issues currently plaguing the industry.

For instance, it touches on clarity on living wages and requirements to eliminate forced labour, including reimbursement of recruitment and other costs; human rights due diligence; and occupational health and safety.

It has strengthened indicators on its Social and Environmental Impact Assessment review every two years; and provided clarity on its Free, Prior and Informed Consent (FPIC) application, which usually involves local communities living around plantations.

Other topics include peatland protection and a clearer definition of smallholders. The revised standards should be produced in 2024.

“Based on the feedback we got from the review, we are asking ourselves: Where and how do we clarify and tighten how we deal with labour issues? [This also means] using our experience from the last few years to figure out how to make the language more specific, auditable and implementable,” says D’Cruz.

One example is grievance channels for workers to channel complaints, which is already required of RSPO members. Some parties find the investigations too slow or reactive.

D’Cruz responds that some of the issues that emerge through grievance channels are complex and require time for a consultative and collaborative investigation process.

“The review we’re doing now is precisely a mechanism by which we are asking: Where can the process be improved? How can we speed things up? How can we make it clearer, more transparent and more credible? But it’s always going to be a mechanism designed to deal with the toughest issues in a very contentious landscape,” he says.

Another tricky issue is FPIC, as there have been many incidents of local communities protesting the loss of land due to the expansion of palm oil plantations.

“Our current standards are very clear. When you’re actually opening new plantation areas, you have to conduct FPIC and there are very clear criteria and guidelines on how to apply that. How do you continue to ensure communities around your landscape are consulted and empowered about the process?” says D’Cruz.

“But whether you can apply FPIC retroactively to a plantation that has been there for 20 years — that’s a tricky question to answer and it’s one we tried to figure out in the context of the revision process.”

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.

      Text Size