Beyond flight of fancy: The Roundtable on Sustainable Palm Oil

Can the continued expansion of palm oil be economically, socially and environmentally sustainable? Rainforest Action Network

BOGOR, Indonesia (19 November, 2012)_When the Secretary-General of the Roundtable on Sustainable Palm Oil (RSPO), Darryl Webber, rose to conclude the organisation’s tenth meeting two weeks ago in Singapore, he simply stated his view that “the RSPO is flying”.

In the last two years its member numbers have practically doubled and collective interest in its evolution can be keenly sensed on the part of palm oil growers, processors, traders, investors, retailers, NGOs, and governments alike.

Yet this depiction should not suggest that the flight of the RSPO has been, or will in future be, care-free and easy; far from it. The great achievement of the RSPO, like other roundtables before it, is to unite a wide variety of actors behind a common aspiration: to transform, and make sustainable, global markets for palm oil. No one would deny the challenges that that aspiration entails for the RSPO, especially at the present juncture, with the organisation’s first review of its principles and criteria soon due. Indeed, the RSPO’s members seem acutely aware that the future of their collective enterprise is delicately poised.

From where does this uncertainty stem? Certainly not from the future of palm oil itself, as the world’s most voluminous vegetable oil. Demand for vegetable oils on the whole has been rising steadily for decades, a trend palm oil is uniquely placed to prosper from given its versatility and low production costs (especially in southeast Asia). Palm oil production is now expanding into West Africa, the palm’s ancestral home, as well as Latin America, where more often than not it has avoided contributing to deforestation by remaining within the agricultural frontier.

The challenge for the RSPO is to demonstrate that the continued expansion of palm oil, in both geographic and volumetric terms, can be economically, socially and environmentally sustainable. In South-East Asia especially, an area in which 90 percent of current production occurs, its history has often tended to suggest the opposite: large areas of forest have been cleared and many community interests overridden to make way for this unassailably profitable crop.

Of course, some palm oil growers have long sought to buck this trend by adhering to impeccable management standards. Just before the roundtable, Greenpeace released a ‘scorecard’ of growers representing almost a quarter of global production, rating Agropalma (Brazil), New Britain Palm Oil Ltd. (Papua New Guinea), Golden Agri-Resources (Singapore) and Wilmar International (Singapore) highest on three key environmental indicators.

A primary function of the RSPO – indeed one of its founding purposes – is to reward these growers for their efforts, linking up with processors and retailers who are willing to provide market access and/or a price premium. A notable source of frustration at the recent roundtable was the fact that half of the palm oil currently produced to RSPO requirements cannot be sold as such (since demand lags behind supply); even when it can, price premiums can be marginal. While the RSPO’s appeal to growers can be read as a measure of success, finding ways to enhance demand for certified palm oil will be important to keep those growers on board.

The urge to increase the RSPO’s coverage among palm oil suppliers is made more difficult by another characteristic: the first to join such a scheme are almost always the suppliers with the best pre-existing social and environmental performance. These suppliers have the least shortfall to make up in order to achieve compliance, and their management principles are often already aligned with those the RSPO promotes. In academic terms this is known as a ‘self-selection bias’, and the challenge it poses for the RSPO in inducing further suppliers is the greater expenditure of effort they will progressively require.

Despite these and other tensions, there is no doubt that the RSPO’s achievements to date are praise-worthy. In the course of under a decade, it has successfully gathered over 1000 members, representing the full spectrum of entities with an interest in this valuable commodity. It currently certifies 14 percent, or over 7 million tonnes, of global palm oil production. Down to its majority-based voting on proposed resolutions, the organisation operates democratically, a feature which remains its fundamental source of credibility in formulating palm oil policy. But this democratic nature is also the organisation’s Achilles heel.

For the RSPO, a handful of critical test cases loom: decisions are pending on acceptable levels of greenhouse gas emissions, protective measures for high value conservation areas and the flashpoint of peatland plantings (mainly in Indonesia). Arguably, these decisions are the toughest the RSPO has yet had to face. The gamble of the RSPO, like that of all other roundtables, is that these concerns can be settled to the satisfaction of each of its members without breaching any of their disparate mandates and principles.

There is some cause for hope. Frequently during the roundtable, I was struck by the openness of the conversation between members. Together with members’ steadfast commitment to the RSPO’s aspiration, this openness stands the organisation in good stead to approach the challenges that lie ahead. Whether or not the RSPO can clear these hurdles will in large part determine, in the eyes of its many members and followers, whether palm oil production can be sustainable on a sufficiently large scale to positively affect ‘people, planet and profits’.


  • http://yahoo.com Tim Upham

    Alternatives have to be found for palm oil. Indonesia is making money off of it now, but the country will be haunted later with environmental catastrophe. This is a crop that just cannot be a cash crop for Indonesia. So the demand for it in consumer countries will have to be cut down or eliminated.

  • Andy Green

    What alternative would be best to replace Palm Oil? The next nearest, in terms of yield, is at least 4 times less productive meaning 4 times the land given to production. Is this food that is no longer produced or forest that are cleared? Either way this is a worse option than growing palm SUSTAINABLY under RSPO rules. Demand RSPO certified palm in products.

  • Sam McGlennon

    @Tim. Thanks for your comment. In one sense the RSPO is a tool not to reduce demand for palm oil per se but to skew demand towards sustainable sources, reaping the clear positives of palm oil (high yield, low cost, many uses) without the current negatives (high env + soc impacts). Other actors could supplement the RSPO’s efforts (without lowering demand) eg. governments in Indonesia and Malaysia could use the World Resources Institute mapping tool for Borneo to determine already-cleared land suitable for palm plantings (see http://insights.wri.org/news/2012/10/2-new-tools-can-cut-deforestation-and-support-sustainable-palm-oil-indonesia). That said, like other Roundtables, no one would claim that the RSPO is a perfect, holistic solution and so demand management may yet come to play a very important role.

    • http://yahoo.com Tim Upham

      In many nations, palm oil is replacing methods of traditional cooking. In India, they are replacing ghee with palm oil, and ghee has been used in Indian cooking for centuries. It is based on the fact, that India is a wealthier country now, and can take the luxury of importing palm oil from Indonesia. For a long time, Denmark has used palm oil as a substitute for its native butter, because Danish butter would have a distinctive flavor of the region it was produced in. Denmark’s neighbor, Norway is phasing out the use of palm oil, because Norway’s international development agency funds Indonesia’s Ministry of Forestry. So the Norwegians are putting their money, where their mouth is.

  • Sam McGlennon

    @Andy. Thanks too for your comment. I agree that one of the toughest challenges would be finding a replacement crop- none appears ready at scale (and see my above reply to Tim). Interestingly though, the EU has drafted a proposed amendment to its Renewable Energy Directive downgrading the potential contribution of palm oil to its renewable transport fuels. Perhaps this could be read more as minimising its implication in the ‘food vs fuel’ debate. Back on the RSPO, there’s also the problem that unsustainably-produced palm oil finds ready markets in India, China and domestically in Malaysia and Indonesia. It’s all very well expanding the ‘good’ palm, but there will probably need to be efforts to weed out the ‘worst’ palm too.

  • Will Davis

    I agree with Sam’s point above. Domestic markets in developing countries are less well regulated and price point may trump other concerns for local consumers (as it does in the west). As a comparison Fairtrade certified Tea/Coffee is still a small proportion of overall Tea/Coffee production globally, despite many years of campaigning and promotion by Fairtrade International. I hope that RSPO has greater success in promoting both consumer demand and producer take up. Fairtrade is quite a mature ethical mark now but still has long way to go. It’s depressing to see that the big supermarkets in the UK now sell palm oil as a cooking oil, all of it appears uncertified.