By Chan Quan Min
The Roundtable for Sustainable Palm Oil (RSPO) is facing questions on its motives and role in the industry. Competing sustainability certification standards are being set up by national governments, reflecting dissatisfaction with RSPO certification policies, which according to one United Nations report can be considered a trade barrier. KiniBiz takes a deeper look.
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Palm oil faces a problem of bad press; not in the major palm oil producing countries of Indonesia and Malaysia – nor in much of Asia where India and China count as major consumers – but in the West.
For decades now, palm oil has been framed as either one of two evils in North America and Europe – combined, the two regions account for approximately 20% of Malaysia’s palm oil exports. In the 80s and the 90s palm oil was branded as a health menace. From the 90s onwards, oil palm cultivation has been blamed for deforestation in tropical countries.
But not all palm oil is made the same, that much is certain. The bulk of cultivated areas in Peninsular Malaysia were converted from rainforest, decades, even centuries ago. However, the same cannot be said for East Malaysian and Indonesian oil palm plantations.
To set apart sustainably produced palm oil (to put it simply) from its slash and burn counterpart, the Roundtable for Sustainable Palm Oil (RSPO) was formed in 2004 to promote and certify environmentally sustainable production of palm oil.
It was thought that through certification, plantation companies with environmentally sound practices could be appropriately compensated with higher prices for their product in the open market. This did not turn out to be true, recent data suggests.
Throughout the course of the week, KiniBiz will uncover the less often discussed motivations behind the setting up of the RSPO. A decade on, the RSPO is in a precarious position. Competing certification bodies and ground-breaking vertical partnerships are undermining its long held authority on sustainability certification.
While the RSPO has often been credited for raising environmental awareness across the industry, and rightly so, it is not without its critics. Chief among the complaints are accusations that the RSPO is not business-friendly. Plantation companies report high compliance costs involved with meeting the organisation’s complex certification criteria.
In the global arena against other edible oils such as soybean, plantation companies consider the bureaucracy of RSPO membership an unjustified hindrance. After all, no other competing edible oil has a similar roundtable for sustainability certification.
Another common observation in the industry is that the plantation companies that are staunch supporters of the RSPO happen to be larger, vertically integrated corporations. Certification inherently disadvantages smaller players and lower-cost rivals in Indonesia and this is to the benefit of larger, more established players, studies by independent researchers have shown.
RSPO a noble cause with deep flaws
The RSPO was formed in 2004 with ten founding members, most notably the nature conservation group World Wildlife Fund (WWF), Malaysian plantation giant Sime Darby, growers association the Malaysian Palm Oil Association (MPOA) and consumer goods multinational Unilever.
Today, the RSPO counts 931 voting members of which oil palm growers make up just 124 members or 13% by percentage. Oil palm growers are grossly outnumbered by palm oil processors and other member groups not directly involved in the palm oil industry such as consumer goods manufacturers, retailers, banks and environmental NGOs (non-governmental organisations).
Membership numbers are critical as voting rights at the RSPO general assembly are offered by and large on the basis of one vote per member. Consequently oil palm growers, outnumbered six-to-one in the RSPO, have little say within the Roundtable.
“Plantation companies are a minority at the working group and board level at RSPO”, noted independent researcher Khor Yu Leng. “At any rate, the MPOA does not have veto power at RSPO and any opposition to RSPO measures cannot be carried through successfully.
Khor Yu Leng
The RSPO Secretariat, where the day-to-day running of the organisation is based, is in Kuala Lumpur. Darrel Webber, the current RSPO secretary-general joined the organisation in 2007 as an executive board member representing environmental NGOs. He was appointed secretary-general in 2011.
Webber’s profile on the RSPO website states his last position as a senior member of Global Sustainability Associates, a role where he offered counsel to companies and organisations on agricultural development. Prior to that, he was senior manager of palm oil sector engagement at WWF-International.
Webber very succinctly summed up the purpose statement of the RPSO in a note last year as an opportunity for consumers to “contribute to the protection of the environment, the fight against deforestation and the improvement of the livelihood of indigenous communities in palm oil producing countries.”
To further this goal, Webber said the RSPO must aim to “align supply and demand in order to ensure that sustainable palm oil becomes mainstream.”
“Consumer purchasing power plays a critical part because they can motivate the entire industry to embrace certified sustainable palm oil,” he added.
A decade after it was introduced to the world, certified sustainable palm oil is far from “mainstream.” According to 2013 data provided by the RSPO, only 15% of global production of palm oil is certified sustainable.
Worse still, the RSPO reported only 52% of certified sustainable palm was sold last year. “The remaining part was sold as conventional palm oil,” the certification body admitted.
Darrel Webber
Thus, by inference, just under 8% of global production of palm oil was transacted as certified sustainable palm oil last year, meaning the RSPO is a long way from achieving its vision of “transforming markets to make sustainable palm oil the norm.”
Webber’s push to bring about a shift to certified sustainable palm oil through influencing “consumer purchase power” has been helped along by the efforts of environmental lobby groups, not all of them aligned with the RSPO. WWF, Greenpeace and The Forest Trust (TFT) to name a few, have been running awareness campaigns, sometimes bordering on smear tactics, to turn consumers in developed nations away from palm oil.
The intense environmental awareness campaigns have been a double-edged word for RSPO. On one hand they have been able to gain the endorsement of consumer goods multinationals, institutions and even entire governments seeking a more sustainable alternative. Webber told KiniBiz at least seven European Union member countries have pledged full support of certified sustainable palm oil. On the other hand, the smear campaigns could lead some consumers to reject palm oil entirely, which could be detrimental to the industry.
Consumers abandoning palm oil products is not an outcome that Webber wants. He told The Guardian last year this could be the “worst thing” consumers could do.
“Saying no to palm oil means somewhere else you are going to have to produce one tonne more of another vegetable oil … So if you’re saving one hectare of rainforest today from palm oil, you’re removing four hectares of the Cerrado from Brazil tomorrow”, he said to the UK based newspaper.
Palm oil is the most productive edible oil per given planted area, by some measures up to 10 times more productive than soybean.
No escape from palm oil
Palm oil is a key component in processed foods and non-perishable consumer goods. Close to the entire world’s palm oil production, at least 85%, comes from just two countries; Indonesia and Malaysia. Despite this, palm oil is the world’s most popular edible oil and among the most widely traded globally.
A 2012 experiment by French PhD student Adrien Gontier of Strasbourg demonstrated just now ubiquitous the commodity is to everyday life. Gontier tried to live a year without consuming palm oil. To do this he discovered he had to cook all his meals from scratch and was not able to purchase any soap, toothpaste or cleaning products. Gontier stopped his experiment six months early when he realised he was inadvertently purchasing palm oil in the form of biodiesel.
Tomorrow: The trials and tribulations of RSPO certification
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