Can we find Sustainable Sourcing in Palm Oil? Palm oil is the most efficient edible oil crop in the world. It produces 10 times more oil per hectare of land than any other edible oil. So if you remove a hectare of palm oil from the edible oil equation, it has to be replaced by 10 hectares of something else to meet the demand. – says Secretary General of the RSPO.
I firmly believe that the possibility exists for the sustainable development of palm oil where the triple bottom line is maintained – for people, planet and profit. And it can only be done if we constantly ask the right people the hard questions about how to keep this balance.
Secretary General of the RSPO Darrel Webber (2015)
Interview: EMG CEO and RSPO Secretary General
EMG: Please tell us about the Roundtable for Sustainable Palm Oil, its mission, and some of the key achievements in its first 10 years.
The RSPO is a not‐for‐profit association that has been in existence since 2004, and which aims to unite stakeholders along the palm oil supply chain. This includes the producers, the processors, the manufacturers, the consumer goods manufacturers, the retailers, the financiers, and the social and environmental NGOs.
Our mission is simple: define what sustainably grown palm oil is, and promote its use. We certify crude palm oil as well as those products in the market that use it.
We have a vision to transform markets, making sustainable palm oil the norm. We’ve made some big achievements in the last 10 years. The first milestone was in 2005 when we developed a set of
standards for the sustainable production of palm oil. By 2008, the first RSPO‐certified products were coming on to the market. Since then, we have made progress so that today, 14% of all palm oil produced in the world is certified sustainable according to the RSPO.
Of course, we need to go much more than 14%. While we have more than 1000 members in over 50 countries, this is still only scratching the surface. We really need to tap into the markets of China and India because these are the largest consumers of palm oil. But our overall mission is to transform this commodity into one that is sustainable, and to make sustainable palm oil the norm.
EMG: What for you personally have been the main reasons for wanting to get involved in improving the managing of the cultivation of palm oil?
I left the corporate world and joined the WWF to do conservation work on the ground. This took me to those parts of the world where the landscape has oil palm development, as well as very high biodiversity.
The most charismatic species in those landscapes were the elephant and the orangutan. My job was to negotiate with the plantation sector to help them use better management practices to allow for wildlife corridors for these and other species, and to allow for a more environmentally‐friendly approach to use of chemicals.
It was during these times that I came to the realization that the business sector of the palm oil industry had created some serious problems. But from my work with them, I knew they had the potential to create the solutions as well. At that time I was at WWF Malaysia, and WWF international asked me to join them instead. They had just begun work on creating the RSPO with some other individual organizations. I was brought in because there was a need for someone who understood the industry to begin negotiations. So that’s how I stumbled into it.
I firmly believe that the possibility exists for the sustainable development of palm oil where the triple bottom line is maintained – for people, planet and profit. And it can only be done if we constantly ask the right people the hard questions about how to keep this balance.
EMG: So what is the RSPO’s definition of ‘sustainable’ when it comes to the cultivation of palm oil? How is it defined?
Our current definition of sustainable is based on standards that cover three core areas. The first is legality, which means we need to be able to say that the palm oil was produced on a plantation situated on land that is legally obtained, and all its operations have to require licences and permits.
The second core component is people. We need to be sure that the palm oil plantations were established with the free, prior, and informed consent of the local communities around them. We also need to know that the plantation is operating with the best interest of the workers in mind, and that it employs best practices when dealing with its employees.
The third core component relates to the environment. We need to make sure that these plantations will not develop at the expense of primary forests, that they have not been developed at the expense of what we call ‘high conservation value areas’ and that they have used best practices to avoid environmental damage.
EMG: What are the key benefits to a company that becomes a member of the RSPO?
The main benefits we’ve seen for producers are that they gain access to premium markets, as well as gaining a better understanding of how to manage their business across international situations. For example, some palm oil companies are multinational, with plantations in Malaysia as well as Indonesia or Africa, where each country has different laws and social issues. We find that if these companies employ the RSPO standards, they are better able to deal with these different situations, and manage the hurdles of legal, social and environmental issues.
The other benefit for the producer is they become more efficient. Because everything is recorded, it’s more transparent, which leads to less conflict and, in turn, less disruption in an operation. Our members also employ better agricultural practices for their yields.
For the buyers, investing in a sustainable supply chain means that they are investing in a supply chain that they can always rely on. If a producer is unsustainable, he tends to have problems with either his people or the environment. If he has to close down operations, then the buyers at the other end of the chain can’t get their regular supply, which means they have to source it somewhere else, or there will be price spikes in their supply, which they don’t want. For buyers, certified palm oil is not only an investment in a long term supply chain, it is also an issue of reputation.
EMG: Have you considered setting higher standards for more advanced companies, such as gold and silver standards in addition to one general standard? If so, what would be the differences?
We have considered this. If you look at us compared to other similar initiatives – Fair Trade, the Forestry Stewardship Council, the Marine Stewardship Council, the Better Sugar Initiative – it’s fair to say that we have grown the fastest. But even then, we are only currently certifying 14% of the total production of palm oil, so we are effectively still just a ‘niche’ in the market, and you cannot hope to transform the market if you continue to remain a niche player.
Currently, it’s our view that with all the effort we are putting into refining the one standard and getting it through a very complex supply chain, it would be a negative thing for us to introduce an additional higher level of the standard. That would create a ‘niche within a niche’, which as I’ve said makes it very hard to transform markets.
We do recognize that some companies want to move faster, but we all have to use the same supply chain, which would create a problem. This is because the supply chain, as we currently understand it, is finding it very difficult to keep up with the demands of production of sustainable palm oil in competition with the production of so‐called ‘unsustainable’ palm oil. The supply chain is simply not that flexible right now. I think while it’s good to have some differentiation between the faster‐moving companies, our focus is on transforming the markets, so we should avoid perceptions of being niche at all costs.
EMG: I understand that RSPO members account for about 40% of the global production of palm oil. What do you see as the challenges for achieving a higher percentage than that, and how do you see that changing over time?
I think the 40% figure is nice to hear, but it doesn’t really mean anything. It means that these companies have joined the RSPO, but have not necessarily changed their practices. It’s like joining a golf club. You can become a member of the golf club with all the bragging rights that entails, but it doesn’t mean you can play golf. Many of our member companies have not even got on the golf course yet; they’ve just become members.
I think it’s more important for us to increase the percentage of certified sustainable palm oil to a much higher amount. That’s where our energy is; to do that, we have to ensure that there is demand for certified palm oil, not just production. Rather than focus on 14% production, we should look at it as 14% consumption of certified palm oil. At the moment we are not getting 14% of consumption; we are getting something like 7‐8%. This means that only half the certified palm oil we produce is actually used in products that are sold as certified sustainable palm oil products.
EMG: So what is your response to people who say the RSPO is not doing enough, or needs to do more?
My response is, yes! We do need to do more! We currently review our standards every five years and have just completed our first review, which is now waiting to be endorsed. So we are moving forward. To those who say we aren’t doing enough I say join in the debate! Come and be part of the RSPO, and talk with us about how you want to see things move forward.
The unique thing about organizations like ours is that we create policies and standards through a multi‐stakeholder discussion. Any discussion that we have must have balanced representation from each of the seven categories of stakeholders. We have NGOs, buyers, producers and financiers all in one room, discussing standards and policies. What’s even more unique is that we approach decisionmaking through consensus. Everybody in the room has to agree. If there is even one person who does not agree, a policy cannot be made.
In this way we ensure that everybody is on board, and that there is a richness in the conversation because we have brought all the stakeholders together. That’s also how we stay current and relevant. Those outside the organization will not know this, but if they really want to change, our system allows for them to participate in these discussions as equal partners.
EMG: Compared to 10 years ago, what are the key changes you’ve seen today with international companies that want to steer clear of associations with deforestation and social conflict due to palm oil cultivation?
Ten years ago many companies simply did not know about these issues associated with palm oilproduction. While many do now, many others still don’t get it.
What I mean by this is that there are still companies that insist on the complete removal of palm oil as an ingredient. I always tell these companies that they have to understand that palm oil is the most efficient edible oil crop in the world. It produces 10 times more oil per hectare of land than any other edible oil. So if you remove a hectare of palm oil from the edible oil equation, it has to be replaced by 10 hectares of something else to meet the demand. If you save one hectare of rainforest from palm oil destruction, you’re actually putting at risk 10 hectares of Amazon land for producing soya or maize, or canola, or corn – none of which are anywhere near as efficient as palm oil.
So to those people who think we can do without palm oil, I tell them that is the wrong approach because to produce something else is ultimately doing more harm than good.
EMG: How do you see demand for palm oil developing over the next few decades?
I think demand for palm oil will be driven by the rising affluence of those fast‐developing countries in the world that they call the BRIC – Brazil, Russia, India and China ‐ and mainly because of their shift towards processed foods. A lot of palm oil goes into processed foods, and the more affluent a country you are, the more processed foods you will consume. Rising affluence also means products like shampoos and soaps will be in greater demand, and they also have a lot of palm oil in them. In fact, probably around 50% of anything you find in the supermarket contains palm oil. Toothpaste, pharmaceuticals and many cleaning agents contain palm oil derivatives. And of course anywhere you see ‘edible oil’ on the list of ingredients in processed foods it is most likely to be palm oil.
EMG: There has been an increased awareness globally of the negative side effects of palm oil production. How did that come about and how has the RSPO dealt with that?
The public became more aware of the environmental issues related to palm oil during the period of rapid expansion in the palm oil industry in Southeast Asia in the mid to late nineties. Then in the early 2000s there was the regional haze that developed in Southeast Asia that grabbed the world’s attention. Many people pointed the finger at the oil palm developers in Indonesia who were burning the peat soil in order to clear oil palm plantations. Thanks to the Internet, awareness increased dramatically.
The fact is RSPO is a direct reaction to all that. It was a reaction of some organizations who witnessed those events, who understood the issues, and decided that they had to do something about it. This is why they formed the RSPO in 2004.
For more on Sustainable sourcing read our article Sustainable palm oil. Article published in 2015.
For more on Sustainable sourcing from former CEO of ECOVER read our article The Blue Economy.
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