The RSPO engine for sustainable palm oil seems to be sputtering

The RSPO engine for sustainable palm oil seems to be sputtering

11 November 2013

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Indonesia — More than 600 delegates from 30 countries are gathering in the Roundtable on Sustainable Palm Oil (RSPO) 11th annual conference opening in Medan, North Sumatra, today when the multi-stakeholder organization itself is facing bigger challenges to its own sustainability as the market watchdog of socially and environmentally sustainable palm oil.

Even though most big palm oil companies in Malaysia and Indonesia, which together account for over 85 percent of global production, and most consumer product giants, such as Nestle, Unilever and major environmental NGOs remain RSPO members, its effectiveness as the vanguard of sustainable palm oil is increasingly under scrutiny.

The establishment of the RSPO in 2004 by plantation companies, processors, manufacturers of consumer products, retailers, banks and environmental conservation NGOs was prompted largely by market forces or the mounting consumer demand for green products.

However, more than five years after the RSPO began its certification program, the volume of RSPO certified palm oil remains very small, amounting to only 8.3 million tons or 15 percent of global output.

Yet even more disappointing, both the market uptake of certified palm oil and the premium price gained by this supposed ‘green’ commodity are also negligibly small.

In fact since several RSPO members were implicated in the June-July forest fires in Riau, which caused the worst haze that Malaysia and Singapore had ever faced. This organization has been criticized for what several NGOs see as weak enforcement of its principles of sustainability.

The Indonesian government countered the RSPO with its own program called the Indonesia Sustainable Palm Oil (ISPO) in 2011 and Malaysia is also reportedly preparing its own sustainability initiative called the MSPO.

Even though the credibility of both programs are questionable due to the non-involvement of NGOs and independent auditors, the ISPO certification has been made compulsory for all companies.

The principles of sustainable management promoted and assessed by the RSPO for its certification process includes elements, such as transparency, legal and regulatory compliance, best production practices, environmental responsibility, commitments to local community development, human rights as well as land rights to name a few.

By and large, these principles and criteria are precisely the best practices for agricultural development that the ISPO itself has been trying to promote.

The good news is that earlier this month, the RSPO and ISPO signed an agreement on strategic cooperation to eventually develop a unified certification program for sustainable palm oil.

At present, companies in Indonesia deal with two different certification programs: RSPO certification, which is voluntary but recognized by the consumers in the developed countries, and ISPO certification, which is mandatory but lacks international credibility due to the absence of environmental NGOs and independent auditors as well as weak law enforcement.

But it will probably take a long time before the RSPO and ISPO can finally develop a unified certification plan, which will be globally recognized, especially if the Indonesian government is not willing to involve environmental NGOs and other private-sector stakeholders, such as consumer products and retail giants.

But without government involvement in or co-ownership of its certification program, the RSPO would find it extremely difficult to influence policies in Indonesia and Malaysia.

In fact, the RSPO has been perceived in many quarters in both countries mainly as a forum of multinational buyers and international NGOs despite the active participation of smallholders.

Despite these differences, it is nevertheless totally misguided to say that the green campaign for agricultural commodities will weaken. On the contrary, the clock of the global green-consumer drive has been ticking faster and can no longer be turned back.

The force of the gren consumer drive has also been quite strong within the 21-member Asia Pacific Economic Cooperation, which held its annual summit in Bali last month.

APEC has drawn a list of 54 Environmental Goods that are eligigible for deep import tariff cuts as low as five percent.

Indonesia, as the host of the summit, lobbied hard to enter palm oil and rubber to the list, but failed miserably.

The rationale for the green campaign for agricultural commodities is this: because the prominent role of agriculture in the use of natural resources — notably land, water and biodiversity — ensuring sustainable resource use has become an important challenge.

The allegations that the RSPO movement is a subterfuge by the producers of vegetable oils, such as soybean, sunflower, rapeseed and corn oil in the rich countries in coping with the fierce competition from palm oil seem misplaced.

Independent product certification has earlier been used in the forestry industry as a market-based instrument to supplement the regulatory system in curbing illegal logging.

The Bonn-based Forest Stewardship Council (FSC), which groups the representatives from environmental and conservation groups, timber industry, forestry professions, forest certification organizations and forestry communities, has developed forest certification standards and accredits independent certifiers.

The Indonesian government has launched an official timber legality certification program, called SVLK, and has made this program compulsory for all forestry products under an agreement with the European Union.

The green consumer campaign for socially, environmentally and economically sustainable farm commodities has escalated around the world and covered other agricultural commodities, such as soybeans and sugar cane.

Soybean growers and processors in North and South America and Australia, grouped in the Roundtable on Responsible Soy Association (RTRS), and sugarcane growers and processors under their Bonsucro organization, have also begun similar certification programs.

Industrial users in Europe, which consume more than six million tons of palm oil a year, have committed to using only RSPO certified palm oil by 2015.

The Singapore-based International Rubber Study Group (IRSG) has embarked on an ambitious initiative to draw up a plan for the industry, much like what the RSPO has been doing in palm oil.

IRSG said recently all stakeholders of the rubber supply-chain system should come up with a sustainability plan, especially because over 85 percent of rubber production comes from small growers.

The campaign for sustainable agricultural commodities, especially palm oil, still has still a long way to go, especially because India and China, the world’s largest palm oil consumers, have yet to realize the urgency of this green consumer agenda.

But as the experiences of several the RSPO members who have certified their plantations have shown, the primary beneficiaries of sustainable oil palm development are the growers themselves.

Several RSPO certified palm oil companies have showcased that their best agricultural and corporate governance practices immediately generated benefits like higher efficiency, higher productivity, peaceful labor relations, good relations with local communities, better pest management and certainly better reputations (corporate image).

The biggest challenge now is how to integrate the RSPO, ISPO and the imminent MSPO and put the sustainability agenda under government leadership, while also including the involvement of private-sector stakeholders.

Because a global platform, even if it is led by multinational companies or NGOs, cannot be seen as dictating or influencing the policies of sovereign countries.

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