27/12/2022 (The Edge Markets) - IF the Roundtable on Sustainable Palm Oil (RSPO) were a person, it would be on the cusp of adulthood as it turned 18 in April this year. Having been around for close to two decades, to what extent has the not-for-profit organisation achieved its vision to make sustainable palm oil the norm?

Critics say the production of RSPO-certified sustainable palm oil (CSPO) has been stagnating at around 20% for a number of years. Having said that, it is worth noting that the absolute production of CSPO has also been growing in tandem with global production.

In a recent interview with The Edge, the co-chair of RSPO board of governors Datuk Carl Bek-Nielsen reveals that he does not subscribe to the thinking that sustainable palm oil will be the norm.

“I don’t believe in this terminology of making sustainable PO the norm, it will not be because the bar is simply set very, very high but it is a vehicle to move the sector to more sustainable measures,” he says, and explains that the vision is an aspirational target and covers all sustainable certification standards.

“However, what I have over the years questioned, and continue to rightfully question, is that it is not possible to make sustainable palm oil (as per the RSPO) to be the norm for the simple reason that the RSPO goal post has already been raised so high that 70% of the global palm producers will never be able to meet its very, very stringent standards,” he adds.

The estimated actual production of CSPO in 2021 stood at 14.7 million tonnes, rising 5.5% from the year before. The volume has been rising over the years; compared with seven years ago, in 2014, the estimated actual production of CSPO was just 8.16 million tonnes.

Indeed, RSPO’s achievements are still commendable. Bek-Nielsen who is also vice-chairman and chief executive director of United Plantations Bhd (UP), believes that RSPO has steered the sector to adopt more sustainable measures and inspired the formation of the Malaysian Sustainable Palm Oil (MSPO) and the Indonesia Sustainable Palm Oil (ISPO) schemes. He sees this as a positive development “because these certification schemes complement each other”.

“If everyone starts having grades of F or E, if people can move up to A with RSPO and people with ISPO and MSPO can get a B, it is still a good pass, isn’t it?” he says, adding that RSPO is the gold standard for vegetable oils when it comes to sustainability.

“By all means, it’s fantastic if we can grow the percentage of RSPO-certified palm oil to 30%-40%. The ambition and drive is to grow that base and welcome more growers to come on board and show them the benefits of RSPO membership and be certified ... [but] the bar is high. We have to be realistic here,” he adds.

Bek-Nielsen stressed that membership is voluntary but those who join the RSPO must have the desire, will and ability to commit to the principles and criteria (P&C) — a set of environmental and social standards — that member companies must comply with in order to be certified. “If there are more who want to join, by all means, the doors to RSPO are always open,” he says.

On the organisation’s major achievements in the last 18 years, Bek-Nielsen says it has played a pivotal role in keeping trade doors open, pointing to the palm oil trade with the Western markets where heightened environmental, social and governance (ESG) awareness has created hurdles that would have kept the commodity out of these regions if not for RSPO.

“RSPO has helped the trade doors open to a 9.5 million-tonne market, which otherwise could have been permanently shut close. That’s where RSPO has played a role. It has demonstrated and shown that there are these very strict criteria on sustainability, which today are the gold standard. There’s 20% of this large commodity that has lived up to that,” he says.

UP has been a member since 2004 when RSPO was founded. It was awarded the world’s first RSPO certificate in 2008.

Petaling Jaya-born Bek-Nielsen, who is a Danish permanent resident of Malaysia, was appointed as the organisation’s co-chair in 2014. His father was the late Tan Sri Borge Bek-Nielsen, who was also known as Malaysia’s Palm Oil King and was instrumental in expanding UP.

The Western markets he refers to are the European Union and the US, with the former being the world’s third largest consumer of palm oil in 2021 at 7.35 million tonnes, after Indonesia and India.

According to a report commissioned by the RSPO, the European Palm Oil Alliance and the Sustainable Trade Initiative, Europe is seen as the global frontrunner in promoting certification in the palm oil supply chain as reflected in the region’s dominant share of CSPO consumption, accounting for 45% of total use globally.

The report, titled “Sustainable palm oil: Europe’s business”, points out that CSPO has become mainstream in Europe with the share of CSPO imports relative to total imports of palm oil at a high 93% in 2021.

“This is one of the world’s major agricultural commodities. Nowhere else has such a large agricultural commodity been subject to the same level of scrutiny as it has compared to palm,” says Bek-Nielsen, adding that the commodity has undergone a huge sustainability transformational change, which no other crops have.

“So, RSPO has played a huge role. Eighteen years ago, not a single tonne was certified as sustainable. Today, you have 20% of a huge agricultural commodity which is certified as sustainable under the world’s strictest criteria for sustainability,” he adds.

But challenges remain for RSPO. For one, the uptake of CSPO stands at a low 64% currently.

“This is simply not acceptable. It shows that some along the value chain are not taking ownership, not being party to that important process of making individual change. This is what I find extremely hypocritical because there are some who are dragging their feet to avoid living up to the spirit of shared responsibility,” says Bek-Nielsen, who has been outspoken on what is viewed as the hypocrisy seen among those who criticise palm oil, yet remain reluctant to pay the premium for CSPO.

The RSPO’s Shared Responsibility framework has been in effect since October 2019 and acts as “a road map for members to lead their sectors’ sustainability transformation through a shared vision, and act as a catalyst for change to make sustainable palm oil the norm”.

Bek-Nielsen explains that the framework is basically having the players along the value chain move in the same direction: “If I pull, you pull. If I push, you push. If I produce, you buy.”

The focus has always been on the growers who had to literally “jump through a ring of fire”, as Bek-Nielsen puts it.

“It’s because the focus has always been about the growers, who have had to do this, and do that. Well, you know what? We’ve actually done that. We’ve produced and helped to transform one of the world’s largest agri commodities, of which 20% is now certified as sustainable. How can it be that the uptake of all that oil is only 64%?” he asks incredulously, warning that if the concept of shared responsibility is not embraced, RSPO will slowly move towards irrelevance.

But something could still be done. With the RSPO undertaking a review of its P&C, its board of governors has stated clearly that the focus should be on improving the auditability of the existing standards, not just building new layers and tighter rules, and secondly, to incorporate the spirit of shared responsibility. “That is key. Because we are not happy. Tell me any business where I produce two units and only one is sold. That company is not going to work, it will go bankrupt,” says Bek-Nielsen. 

https://www.theedgemarkets.com/article/rspo-keeps-trade-doors-open-says-beknielsen