31.03.2021 (www.thejakartapost.com) - Sustainability is perhaps the biggest buzzword in recent years, capturing the zeitgeist of the late 2010s and early 2020s. From food consumption to travel and leisure, sustainability is increasingly driving the public opinion, which in turn influences governments.

Arguably, this shift in attitude has impacted one of Indonesia’s largest exports: palm oil.

Trade relations between Indonesia, the world’s largest palm oil producer, and the European Union were damaged in 2017 when the European Parliament issued a resolution refusing to recognize palm oil as a renewable biofuel feedstock, mainly due to concerns over issues like deforestation and social conflicts.

In 2019, the EU then restricted the volume of biofuels made from palm oil that could be counted toward the bloc’s renewable energy goals, on top of reintroducing tariffs on palm oil imports later on.

By 2030, the EU aims to stop the import of palm oil altogether.

On the other hand, palm oil production has benefited millions of farmers across Indonesia, Malaysia and Thailand. Indonesia alone supplies approximately 56 percent of the global crude palm oil trade, with an export value of around $21 billion in 2020, accounting for 12.86 percent of the country’s total exports.

In a webinar held by INOBU and The Jakarta Post, Henriette Faergemann, First Counselor Delegation of the EU to Indonesia and Brunei Darussalam spoke of the EU’s stance on the Green Deal announced at the end of 2019.

 “This is our growth strategy to overcome the challenges of climate change and environmental degradation and to transform the EU into a modern, sustainable, resource-efficient and competitive economy where there are no net emissions of greenhouse gases by 2050, economic growth is decoupled from resource use and no person or place is left behind,” she said.

Faergemann noted that some of the issues in the Green Deal that related to palm oil production included renewable energy, which she said was essential in the transition to clean energy and mitigating climate change. The EU’s deforestation policy was driven by studies showing that forest cover around the world is decreasing, exacerbating global warming, causing biodiversity loss and affecting the livelihoods of some 1.5 billion people.

She also said 80 percent of global deforestation was driven by agricultural expansion, which was in turn driven by demand for products like soy, cattle, palm oil and wood products. The EU, she added, consumed one third of the globally traded agricultural products related to deforestation, corresponding to 10 percent of global deforestation associated with its production.

Asep Asmara, Director of Export Agriculture and Forestry Products at the Trade Ministry’s Directorate General of Foreign Trade, discussed the importance of the palm oil trade to Indonesia, noting that the trade employed some 5.3 million people in direct labor and was the source of income for 21.2 million farmers and their families.

He also described several barriers to the CPO trade with the EU, coving EU and country-driven proposals that could hinder CPO trade along with perceived negative campaigns by the private sector.

The latter included French supermarket Systeme U’s 2012 campaign that said no to palm oil, Dutch airline KLM asking suppliers to avoid using palm oil in their products and Swedish furniture producer IKEA launching a children’s book in 2020 on orangutans who lost their homes because of land clearing for palm oil plantations.

Given both sides’ positions, perhaps the middle ground is to ensure a palm oil production scheme that is sustainable, transparent and humane. One of the proposed solutions is the Terpercaya Initiative.

Terpercaya, which means “trustworthy” in Indonesian, is an initiative by the nonprofit research institute Inobu in collaboration with the European Forest Institute’s EU REDD Facility. The project aims to show that agricultural commodities like palm oil can be produced sustainably and in compliance with the law.

By providing consumers and traders with this information, it is hoped that they can purchase products from districts that are performing well. This way, progress will be encouraged, while others will have the chance to improve their land management.

Josi Khatarina, Terpercaya secretariat and senior advisor at Inobu, said Terpercaya’s “jurisdictional approach” was designed to respond to market demands.

“This approach is inclusive, and the hope is that it can encourage structural changes. We have some experience in that field, where we helped around 3,500 farmers in the West Kotawaringin and Seruyan regencies in Central Kalimantan in obtaining Indonesia Sustainable Palm Oil (ISPO) and Roundtable on Sustainable Palm Oil (RSPO) certifications,” she said.

As for its jurisdictional approach, Josi explained that compared to a permit-based approach, it was more simplified and economical to run, transparent and easily verifiable, as well as inclusive, allowing small-scale farmers to participate as well.