The Push for Sustainable Palm Oil

 

 

Leaders involved in the palm oil industry, from growers to producers to end-use manufacturers, are generally aware of the challenges they face. In 2004, in response to internal and external concern over environmental sustainability in palm oil production, several key stakeholders together with the World Wildlife Fund got together to find some solutions.

 
Roundtable on Sustainable Palm Oil

 

The Roundtable on Sustainable Palm Oil (RSPO), formed in 2004, brings together parties from all levels of the palm oil industry, from processors and retailers to watchdog organizations and investors. Today the RSPO's membership exceeds 1,200.  

 

The RSPO has established a set of standards and practices, called the Principles & Criteria, meant to “define the practices for sustainable palm oil production,” covering legal, environmental, and social concerns.  

 

At the April 2013 General Assembly, RSPO members voted on a new set of Principles & Criteria, which now explicitly bans forced labor. The World Wildlife Foundation (WWF), while endorsing the new principles, asserts that the new rules are weak in regulating greenhouse gas emissions and the use of pesticides on plantations. 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Not All RSPO Member Companies Produce
 Certified Sustainable Palm Oil (CSPO)

 

Simply because a company is a member of the RSPO does not mean its products are certified. As of June 2013, there were 236 companies and 612 facilities with CSPO certificates (that is, their products are RSPO certified). Of all crude palm oil produced around the world, the RSPO says 15% of it is RSPO-certified.

 

Just as not all RSPO members are producing certified palm oil, not all RSPO certified palm oil is the same either. Companies seeking CSPO certification can choose from three RSPO supply chain systems.

 

 
CSPO & RSPO Supply Chain Systems 

 

One supply chain system segregates out certified palm oil from other oil, either as “Identity Preserved” in which the palm oil is kept physically separate from other palm oil throughout the production process, or as “Segregated,” which mixes together palm oil from various certified plants (although a plant's subcontractors don't have to be certified). 

 

The second system, referred to as “Mass Balance,” mixes certified palm oil with other stocks of non-certified palm oil. 

 

The graphics below from the RSPO illustrate the several supply chain systems within their certification schemes.

 

Learn more about the palm oil supply chain>

Delegates (above) are pictured at the eighth annual Roundtable Meeting on Sustainable Palm Oil (RT8) held in Jakarta in November 2010. The Roundtable gathering each year is the world's largest meeting about sustainable palm oil production where stakeholders from government, private sector, and human rights and environmental organizations get together to discuss how to tackle the challenges of producing sustainable palm oil.

 

Green Prospect Asia dedicated its September 2011 monthly magazine to the business of palm oil. 

 

 

RSPO, Forced Labor & Labor Rights

 

 

The RSPO’s focus in its Principles & Criteria (P&C) is largely towards regulating the negative environmental production factors of oil palm plantations. However, the Principles & Criteria do lend some consideration to corporate relationships with palm oil plantation workers and the communities in and around plantations. 

 

Only a handful of RSPO criteria are directly related to general labor rights. At the April 2013 General Assembly, RSPO members voted to explicitly ban forced labor in the updated Principles & Criteria.

 

The previous 2007 version of the P&C stipulated that “pay and conditions” for plantation and contractor workers must meet “at least legal or industry minimum standards,” while two other criteria establish the right of workers to form unions and be protected from harassment.

 

Another P&C criterion established that underage child labor is acceptable “on family farms, under adult supervision, and when not interfering with education programmes,” and as long as children are not “exposed to hazardous working conditions.” 

 

Read "Indonesia's Palm Oil Industry Rife With Human-Rigths Abuses," an investigative report by Schuster Institute Senior Fellow E. Benjamin Skinner at Businessweek.com, about debt bondage and child labor in the palm oil supply chain.

 

Learn more about problems of forced labor and child labor in palm oil plantations in Indonesia and the industry generally.

RSPO Membership & Certification (CSPO)

 

As of May 2013, there were 832 ordinary members, 100 affiliate members, and 307 supply chain associates in the RSPO. 236 companies and 612 facilities have CSPO certificates.   

 

As part of the RSPO Code of Conduct, members are asked to submit their timetables, or time bound plans, (TBP) for moving their palm oil production or usage over to 100% CSPO. Click on the following thumbnail graphics to see the lists of RSPO member growers, processors and traders, consumer goods manufacturers, and retailers and the data they submitted to the RSPO. Investment companies and banks are included but their levels of investment are not indicated.

GreenPalm, a subsidiary company of RSPO founding member and vegetable oil manufacturer AarhusKarlshamn UK Ltd., operates a third supply chain system called “Book and Claim.” In this process, RSPO-certified palm oil producers can register their CSPO palm oil for GreenPalm certificates, which buyers can then purchase through GreenPalm’s online trading system. Proponents of the “Book and Claim” system say that it has paved the way for segregated systems and has helped to open up markets, like those in India and China, where sustainable palm oil is not currently a strong concern. 

Picture of palm oil from the French research center CIRAD who works with developing countries on issues including supply chain sustainability. Photo | C. Bessou / CIRAD

Picture of palm oil from the French research center CIRAD which works with developing countries on

issues including supply chain sustainability. Photo | C. Bessou / CIRAD

1

2

3

There is great variance among the commitments and progress made by RSPO members. Membership does not mean that a company produces or sources 100% sustainable palm oil.

 

For example, of the 375,000 metric tons of crude palm oil in RSPO member PepsiCo’s products in 2011-2012, less than 8% (28,200 mt) was RSPO certified. PepsiCo uses the "Mass Balance" system which means the palm oil it buys is mixed with non-certified stock.

 

During the same time period, Wal-Mart’s 84,000 metric tons of crude palm oil contained 18% (15,171 mt) of RSPO-certified product, and they were a mixture of "Book & Claim" (58%), "Mass Balance," (12%) and "Segregated" (29%) oils.  

 

Meanwhile, Avon’s 2011-2012 report showed that 100% of the 15,000 metric tons of the crude palm oil it sold in their products was purchased through GreenPalm “Book and Claim” certificates. 

 

Search RSPO members and see detailed reports of their progress at the Members section of the RSPO website. 

 

Stay up-to-date with news about which companies are choosing to switch from uncertified palm oil to RSPO-certified palm oil at BetterPalmOil.org.

 

 

 

Indonesia Sustainable Palm Oil (ISPO)
 

Indonesia Sustainable Palm Oil (ISPO) was established by the Indonesian government in 2011 as a legal mechanism to manage and control production methods in the palm oil industry operating in the country. Its goals include improving competitiveness of the industry in global markets and reducing greenhouse gas emissions and addressing other environmental concerns.

 

The ISPO has a certification process that the palm oil industry in Indonesia must adhere to and which is monitored for compliance by a group of authorized independent auditing organizations. All companies in the palm oil industry in Indonesia must meet ISPO standards by 2014, though Piers Gillespie and Rahayu Siti Harjanthi, experts in the field, say there is concern that the "ISPO may face challenges of credibility due to the general low level of trust felt by Indonesians towards the national government’s perceived inability to provide independent and effective blanket oversight."

 

Other potential problems, they say, include the ISPO's failing to explicitly articulate the manner in which plantation owners must achieve "free, prior, informed consent" by local people at the planning stages of new oil palm plantation development, and the omission of an RSPO mandate that prohibits the development of new plantations on natural forests after November 2005. 

 

The ISPO is a member of the RSPO. The Indonesian Palm Oil Association (GAPKI) withdrew its membership in the RSPO in 2011 to fully support the policies of the ISPO. GAPKI has 589 members.

 

To the right are two promotional clips produced by GAPKI that focus on GAPKI members' commitment to employee welfare and the environment.

Indonesian Palm
Oil Association (GAPKI) clips

Top: Employee Welfare. Bottom: Commitment to Environment

International Commitments to
  Sustainable Palm Oil Production

 

 

Environmental, labor and human rights organizations and the scientific community around the world have played a key role in bringing to light research, data, and on-the-ground experiences that show the multifaceted problems associated with current methods of palm oil production and development.

 

Palm oil has been featured prominently in the press, highlighting both its problems and successes. Increased media attention and consumer awareness have brought about the push for sustainable practices to the point where today, a number of companies in the industry are pledging to switch their supply chains over to 100% certified sustainable practices yielding certified sustainable palm oil.

 

The extent to which perceptions of "sustainability" include provisions against forced labor, although now banned in the RSPO's P&C, remains uncertain.

 

When pressure from environmental advocates hasn't been enough, financial incentives have been applied.

 

New York State Comptroller Tom DiNapoli, sole trustee of the state's pension fund, has entered discussions with the fund's investees that are not using certified sustainable palm oil (CSPO). Earlier this year DiNapoli obtained the commitment from Dunkin' Brands Group, makers of Dunkin' Donuts, to commit to 100% CSPO. He won similar promises from Sara Lee Corporation and J.M. Smucker Company.

 

Norway announced that it was pulling investments from 23 Asian palm oil companies, citing concerns over deforestation and carbon emissions. In October of 2012, the United Kingdom pledged to use only CSPO in “central Government food and catering services.”

 

Note: Following the publication of the Schuster Institute-Bloomberg Businessweek article, investment advisors with more than 40 investors
petitioned major palm oil production and snack food companies, demanding reforms leading to environmental and workforce sustainablity. 

 

The petition urges "major stakeholders in the palm oil industry to adopt policies that would ensure palm oil development does not contribute to deforestation, development on peatlands, or human rights violations. The coalition of investors, representing approximately $270 billion in assets under management, sent letters to 40 major palm oil producers, financiers and consumers including Wilmar, Golden Agri Resources*, Unilever*, and HSBC."

 

 
Further reading

 

“Market access poser for palm oil, new move by major consumers to completely avoid using palm oil,” Hanim Adnan, The Star Online, March 12, 2013.


"RSPO ACOP Digest: A snapshot of RSPO members' annual communications of progress," October 2012, Roundtable on Sustainable Palm Oil.

 

“UK to lead way on sustainable palm oil,” October 30, 2012, UK Department for Environment, Food & Rural Affairs.


“Testing the Law: Carbon, Crime, and Impunity in Indonesia’s Plantation Sector,” Environmental Investigation Agency, July 12, 2012.

 

“Profitability and Sustainability in Palm Oil Production: Analysis of Incremental Financial Costs and Benefits of RSPO Compliance,” World Wildlife Foundation, CDC and FMO, March 2012.

 

“Palm Oil Investor Review: Investor Guidance on Palm Oil: The role of investors in supporting the development of a sustainable palm oil industry,” World Wildlife Fund and EnviroMarket, 2012.


UK Department for Environment, Food & Rural Affairs report: “Mapping & Understanding the UK Palm Oil Supply Chain and Analysis of Policy Options,” 2011.

 

“Cargill’s Problems with Palm Oil,” Rainforest Action Network.

 

 “World’s largest sovereign wealth fund divests from palm oil companies,” Rainforest Foundation Norway.

 

"Regulating the Oil Palm Boom: Assessing the Effectiveness of Environmental Governance Approaches to Agro-industrial Pollution in Indonesia," John McCarthy and Zahari Zen, Law & Policy, Vol. 32, No. 1, January 2010.

 

 

 

Clip from the World Wildlife Fund illustrates its role in the RSPO and the RSPO's goals of getting the palm oil industry to adopt certifiably sustainable practices.​

Volume of

CSPO used
or produced

(selected companies, 2011-2012)
 
Sime Darby:
  2469K mt (112%)
Neste Oil: 1039K mt (73%)
Unilever: 878K mt (68%)
Wilmar Int.:
  612K mt (37%)
Golden Agri-Resources: 
  430K mt (18%)
Kuala Lumpur Kepong Berhad: 332K (41%)
FELDA: 307K mt (12%) 
Nestle S.A.:
   257K mt (69%)
Cargill: 182K mt (59%)
Kraft Foods:
  151K mt (61%)
Companhia Refinadora da Amazônia:
   93.5K mt (85%)
Mars: 86K (100%)
Archer Daniels:
   86K (15%)
J&J: 76.4K mt
PepsiCo: 28.2K mt (8%)
Colgate-Palmolive: 
   25K (0.03%)
Bunge: 25K (3%)
Tesco: 25K mt (77%)
Wal-Mart: 15.2K mt (18%)
Avon: 15K mt (100%)
Marks & Spencer:
  8K mt (100%)
Hershey: 1.1K mt (75%)
Boots: 395 mt (73%)
Procter & Gamble:
  388 mt (4%)
RSPO.
RSPO certification through independent third-parties

Companies wishing to achieve RSPO certification must undergo assessments by RSPO approved independent certification bodies. Once certification is achieved, continuing compliance is determined through yearly assessments. Every five years a full review is conducted. More about how the RSPO manages certification can be found on the RSPO website.
 

 
Complaints against RSPO members

Complaints against RSPO members may be mediated and their cases published online. As of July 2013, half of the 18 cases listed on the RSPO website were located in Kalimantan, Indonesia. 

 

"Indonesia's Palm Oil Industry Rife With Human-Rights Abuses," is the result of a nine-month investigation by Schuster Institute Senior Fellow
 E. Benjamin Skinner. It was published at Businessweek.com on July 18, 2013
and in the July 22, 2013 issue of
Bloomberg Businessweek. 
Photo | Kemal Jufri,
Bloomberg Businessweek.

The extent to which perceptions of "sustainability" include provisions against forced labor, although now banned in the RSPO's P&C, remains uncertain.
"Wilmar, named the 'worst company in the world' by Newsweek, and 22 other oil palm companies are considered to be responsible for tropical deforestation, according to the Norwegian Government Pension Fund Global (GPFG). GPFG’s investments in the palm oil industry are reduced by more than 40 per cent."

 

Nils Hermann Ranum, Regnskogfondet

Palm oil workers in Papua, Indonesia, 2008.
Photo |  Agus Andrianto/CIFOR. 

 

Photo | GreenProspectAsia.com

On this page
Roundtable on Sustainable Palm Oil 
Not all RSPO companies produce
 certified sustainable palm oil
RSPO-CSPO supply chain systems
RSPO, forced labor & labor rights
RSPO membership, certification
Indonesia Sustainable Palm Oil (ISPO)
International committments to
 sustainable palm oil production
Further reading
 
 
Links to other sections
1. Forced Labor on
Palm Oil Plantations
 
2. From Palm Fruit
to Product
3. Human Rights Abuses & Other Controversies

 

4. Palm Oil Industry Response <

RSPO Members'CSPO Commitments:

   1 | Growers

   2 | Processors & Traders

   3 | Consumer Goods    

        Manufacturers

   4 | Retailers

   5 | Banks & Investors

To play, press and hold the enter key. To stop, release the enter key.

Palm Oil Industry's Response

to Alleged Human Rights Abuses and other Criticisms

 

4. Palm oil industry's response: An overview

Our investigation reveals that some palm oil--the most widely used vegetable oil in the world--is produced with slave labor. Palm oil is in all the products above, and many more.