26/03/2013 (The Star) - The issue on sustainably-produced palm oil hogged the limelight again when the Norwegian Government Pension Fund Global (GPFG) recently said it has sold its stakes in 23 oil palm plantation firms which are not producing sustainable palm oil.

The rationale for GPFG pulling out of these investments was in support of the Western NGOs move to help reduce the greenhouse gas (GHG) emissions from the oil palm plantations in the developing countries.

But what is baffling is that planters claim that the GPFG disposal list shows some of the companies were in fact members of the Roundtable on Sustainable Palm Oil (RSPO) that have been producing certified sustainable palm oil (CSPO).

This somewhat contradicts with GPFG's statement in its 2012 annual report that it placed weight on whether palm oil companies had committed to RSPO and continues to hold US$450mil in the sector.

Having said that, GPFG is still retaining its stake in Sime Darby Bhd, currently the world's largest producer of CSPO with an annual production capacity of 2.3 million tonnes. Sime Darby is poised to be fully RSPO-certified by this year.

This seems to reflect GPFG's stand that it would increase its holdings in companies that are deemed to have progressive environmental practices.

Given such a situation, the question now is whether oil palm planters should continue to support and produce RSPO-certified palm oil to appease the Western consumers and NGOs?

CIMB Research opined that the benefits of the RSPO certification for companies goes beyond the premium pricing accorded to certified palm products.

This also suggests that planters who were able to demonstrate their commitment to sustainable planting through RSPO or other means will be able to attract a wider investor base over time and potentially fetch premium valuations vis-a-vis their peers.

In this respect, listed plantation companies with integrated operations would appear to be more successful thus far.

On the other hand, detractors of RSPO said that the organisation was fast being dominated by its consumer-based stakeholders and Western NGOs. As at March 1, 2013, processors and traders collectively make up the largest RSPO group of members at 38%, followed by consumer goods manufacturers (36%), and oil palm growers (15%).

Some oil palm producers from Malaysia and Indonesia feel that they are producing CSPO that is partially not wanted by the market while those who are trying hard to produce palm oil sustainably are turning apprehensive since there seems to be no demand for the premium oil.

In fact, the take-up rate for CSPO has been lagging behind supply, resulting in current low premium attained for certified palm oil of around US$2.25 per tonne of RSPO-certified CPO, through the GreenPalm certificate trading programme.

Based on the latest available statistics, only 58% of CSPO was sold in the first half 2012.

Citing Norway, it wanted to reduce the GHG emission from oil palm plantations in the developing countries but continues to increase GHG to the atmostphere from its own oil and gas venture.

If GPFG is truly sincere in protecting the environment, then it should also pull out of other sectors that cause deforestation, such as logging companies, oil and gas firms, and soya and meat producers.

The question is why only palm oil is being singled out?

From the environmental point of view, the oil and gas activity should not be supported since it is emitting GHG to the atmosphere in the same way GPGF views palm oil is emitting GHG.

In fact, research has shown that the net carbon emission by the whole of the Malaysian palm oil industry is much less than the amount of GHG emitted by the city of Oslo.

Deputy news editor Hanim Adnan wonders if Malaysia will finally opt for which national palm oil standards the Malaysia Sustainable Palm Oil or Malaysia Responsible Palm Oil?