MARKET DEVELOPMENT
Sustainability Movement At The Crossroads
Sustainability Movement At The Crossroads
26/08/2013 (Jakarta Post) - One of the prominent global sustainability movements was the establishment of the Roundtable on Sustainable Palm Oil (RSPO) in 2004. It marked the institutionalization of the sustainability movement and standards for palm oil in a multi-stakeholder forum driven by market forces.
Since its inception, the RSPO has been recognized for its leadership in improving the palm oil industry and is seen as an ideal model for the sustainability movement. However, the forum has also been going through challenging times to stay united in the face of criticism and skepticism from both pragmatic and progressive elements.
The palm oil producers, representing the pragmatic wing of the forum, are committed to continuous improvement of the industry’s practices in a gradual, measured and evolutionary manner, while civil society actors in the form of environmental NGOs are determined to impose more rapid and drastic measures to the already robust and stringent sustainability standards.
The main point of contention has been the focusing on preventing deforestation and its associated impact on greenhouse gas emissions and the changing of land use of high carbon stock for the development of new oil palm plantations.
The introduction of new standards and a forum on sustainability is directly affecting the palm oil producers, who suffer the most. The producers will be subjected to close scrutiny by a different forum and will be obligated to comply with a different set of standards.
There is a need for leadership in the sustainability movement; with leaders who can inspire the companies to abide by the best industry standards, attending to global consumers’ hopes and convictions and acceptable regulatory requirements. The best and most effective movement is to have the key beneficiaries take charge and drive the change.
This is not something new for the sustainability movement in the world. However, for Indonesia’s palm oil industry, which has been severely hit by smear campaigns against the integrity of the industry, we need to look at good practices around the world.
There are five regulatory actors in the globalized context as defined by Crane and Matten (2011). First are the international imperative regulations, which are enacted through intergovernmental processes, such as the General Agreement on Tariffs and Trade (GATT) and the ASEAN-China Free Trade Area (ACFTA). These schemes are government-led with some degree of involvement from civil society and business sectors.
Second are global industry codes of conduct that are voluntary and treated as self-regulatory by businesses, such as the International Council on Mining and Metals’ (ICMM) Sustainable Development Framework. In most cases, there is some involvement from civil society and government, though the industry takes the lead.
Third are global industry codes that are negotiated and aligned with government institutions, such as the European Environmental Management Systems and Standards and the Renewable Energy Directive (RED). These have more involvement from government institutions, albeit they are still led by industry.
Fourth are global industry codes of conduct that are negotiated with civil society organizations, such as the Forest Stewardship Council (FSC). In Indonesia, the system of eco-labeling was introduced by civil society organizations (CSOs) for the logging and furniture industries, but was later officially endorsed by the government. Since early 2000, Indonesia has also seen more practices of eco-labeling, especially for the European market.
Last are global industry multipartite standards, such as the UN Global Compact, the Global Reporting Initiative, the RSPO, the Roundtable on Responsible Soya (RTRS) and the Roundtable on Sustainable Biofuels (RSB). These are standards that were negotiated and agreed to by multiple parties, usually with industry representatives and those from companies along the supply chain and relevant agencies.
The RSPO represents an ideal form of alternative sustainability leadership, which is a multi-stakeholder forum that forges an equal footing among the champions of environmental stewardship and social responsibility. All stakeholders are allowed to take part in drawing up the industrial reform agenda. The RSPO has no government involvement in the setting of standards and it employs a more “market” approach for sustainability.
As we can see from these five standard-setting models, this is a new model for leading societal changes that can stimulate creativity, motivation and initiative among stakeholders to advocate continuous improvement of the commodity industry.
The forum offers an opportunity for discourse, cross-fertilization and agenda-setting in formulating the best sustainability agenda. It also facilitates the convergence of ideas and opinions on how sustainability can be advanced.
Many believe that the ideal sustainability standards should be multipartite, with more “carrots” or ”market mechanisms” than “sticks”, such as the RSPO. However, the challenges facing the RSPO come both from detractors, mainly oil palm growers who see the RSPO standards as too stringent and unrealistic, and those who are more progressive, who deem RSPO standards as too lenient and, hence, in need of improvement.
Due to the RSPO’s global success regarding sustainability in the palm oil industry, it attracts intervention by governments of producing countries to craft alternatives to perceived protracted and complex standards. The Indonesian government has introduced a mandatory certification, namely Indonesian Sustainable Palm Oil (ISPO), while the Malaysian government is soon to launch the voluntary certification in the form of Malaysian Sustainable Palm Oil (MSPO).
On the other hand, the progressive members of the RSPO together with NGOs have sponsored the formation of a new group called the Palm Oil Innovation Group (POIG), which was announced last June. The group intends to go beyond the RSPO standards in addressing deforestation and carbon emissions.
Knowing that all new standards will eventually affect the palm oil producers, there is growing concern among the producers about the direction of sustainability standards. Both the government standards and the POIG will directly or indirectly change the industry’s way of operating and adapting to global demand.
The government’s certification creates a new red tape and bureaucracy, while the NGO-led forum is perceived as a new strategy for conducting international campaigns led by international NGOs demanding unrealistic sustainability standards. This could be detrimental to the nature of sustainability standard-setting, which should be created on an equal basis. But due to harsh experience in the past, the standards that will be introduced could be one-sided and more forcefully imposed, rather than relying on a market mechanism, which has greater multilateral involvement.
I believe that palm oil stakeholders, whether the industry, the government, environmentalists or other companies along the supply chain, have to maintain a balancing act: working on the middle ground based on consensus, and putting forward a market mechanism for more “carrots” than “sticks”. This would echo the old saying: “It is better to light a candle than curse the darkness”.
The RSPO has demonstrated leadership in the sustainability movement and it has inspired the establishment of sustainability standards.
It is time for the sustainability forum to rise to the challenges and be determined in setting a platform and path for the future of sustainability standards. In doing so, the forum needs to strengthen its position as the primary market reference, and increase market uptake of certified sustainable palm oil. Internally, the forum needs to enhance democratic decision-making, while ensuring all forum members and its executive boards are committed to the codes of conduct.
The writer is vice president II of the Roundtable on Sustainable Palm Oil (RSPO). The views expressed are personal.
Since its inception, the RSPO has been recognized for its leadership in improving the palm oil industry and is seen as an ideal model for the sustainability movement. However, the forum has also been going through challenging times to stay united in the face of criticism and skepticism from both pragmatic and progressive elements.
The palm oil producers, representing the pragmatic wing of the forum, are committed to continuous improvement of the industry’s practices in a gradual, measured and evolutionary manner, while civil society actors in the form of environmental NGOs are determined to impose more rapid and drastic measures to the already robust and stringent sustainability standards.
The main point of contention has been the focusing on preventing deforestation and its associated impact on greenhouse gas emissions and the changing of land use of high carbon stock for the development of new oil palm plantations.
The introduction of new standards and a forum on sustainability is directly affecting the palm oil producers, who suffer the most. The producers will be subjected to close scrutiny by a different forum and will be obligated to comply with a different set of standards.
There is a need for leadership in the sustainability movement; with leaders who can inspire the companies to abide by the best industry standards, attending to global consumers’ hopes and convictions and acceptable regulatory requirements. The best and most effective movement is to have the key beneficiaries take charge and drive the change.
This is not something new for the sustainability movement in the world. However, for Indonesia’s palm oil industry, which has been severely hit by smear campaigns against the integrity of the industry, we need to look at good practices around the world.
There are five regulatory actors in the globalized context as defined by Crane and Matten (2011). First are the international imperative regulations, which are enacted through intergovernmental processes, such as the General Agreement on Tariffs and Trade (GATT) and the ASEAN-China Free Trade Area (ACFTA). These schemes are government-led with some degree of involvement from civil society and business sectors.
Second are global industry codes of conduct that are voluntary and treated as self-regulatory by businesses, such as the International Council on Mining and Metals’ (ICMM) Sustainable Development Framework. In most cases, there is some involvement from civil society and government, though the industry takes the lead.
Third are global industry codes that are negotiated and aligned with government institutions, such as the European Environmental Management Systems and Standards and the Renewable Energy Directive (RED). These have more involvement from government institutions, albeit they are still led by industry.
Fourth are global industry codes of conduct that are negotiated with civil society organizations, such as the Forest Stewardship Council (FSC). In Indonesia, the system of eco-labeling was introduced by civil society organizations (CSOs) for the logging and furniture industries, but was later officially endorsed by the government. Since early 2000, Indonesia has also seen more practices of eco-labeling, especially for the European market.
Last are global industry multipartite standards, such as the UN Global Compact, the Global Reporting Initiative, the RSPO, the Roundtable on Responsible Soya (RTRS) and the Roundtable on Sustainable Biofuels (RSB). These are standards that were negotiated and agreed to by multiple parties, usually with industry representatives and those from companies along the supply chain and relevant agencies.
The RSPO represents an ideal form of alternative sustainability leadership, which is a multi-stakeholder forum that forges an equal footing among the champions of environmental stewardship and social responsibility. All stakeholders are allowed to take part in drawing up the industrial reform agenda. The RSPO has no government involvement in the setting of standards and it employs a more “market” approach for sustainability.
As we can see from these five standard-setting models, this is a new model for leading societal changes that can stimulate creativity, motivation and initiative among stakeholders to advocate continuous improvement of the commodity industry.
The forum offers an opportunity for discourse, cross-fertilization and agenda-setting in formulating the best sustainability agenda. It also facilitates the convergence of ideas and opinions on how sustainability can be advanced.
Many believe that the ideal sustainability standards should be multipartite, with more “carrots” or ”market mechanisms” than “sticks”, such as the RSPO. However, the challenges facing the RSPO come both from detractors, mainly oil palm growers who see the RSPO standards as too stringent and unrealistic, and those who are more progressive, who deem RSPO standards as too lenient and, hence, in need of improvement.
Due to the RSPO’s global success regarding sustainability in the palm oil industry, it attracts intervention by governments of producing countries to craft alternatives to perceived protracted and complex standards. The Indonesian government has introduced a mandatory certification, namely Indonesian Sustainable Palm Oil (ISPO), while the Malaysian government is soon to launch the voluntary certification in the form of Malaysian Sustainable Palm Oil (MSPO).
On the other hand, the progressive members of the RSPO together with NGOs have sponsored the formation of a new group called the Palm Oil Innovation Group (POIG), which was announced last June. The group intends to go beyond the RSPO standards in addressing deforestation and carbon emissions.
Knowing that all new standards will eventually affect the palm oil producers, there is growing concern among the producers about the direction of sustainability standards. Both the government standards and the POIG will directly or indirectly change the industry’s way of operating and adapting to global demand.
The government’s certification creates a new red tape and bureaucracy, while the NGO-led forum is perceived as a new strategy for conducting international campaigns led by international NGOs demanding unrealistic sustainability standards. This could be detrimental to the nature of sustainability standard-setting, which should be created on an equal basis. But due to harsh experience in the past, the standards that will be introduced could be one-sided and more forcefully imposed, rather than relying on a market mechanism, which has greater multilateral involvement.
I believe that palm oil stakeholders, whether the industry, the government, environmentalists or other companies along the supply chain, have to maintain a balancing act: working on the middle ground based on consensus, and putting forward a market mechanism for more “carrots” than “sticks”. This would echo the old saying: “It is better to light a candle than curse the darkness”.
The RSPO has demonstrated leadership in the sustainability movement and it has inspired the establishment of sustainability standards.
It is time for the sustainability forum to rise to the challenges and be determined in setting a platform and path for the future of sustainability standards. In doing so, the forum needs to strengthen its position as the primary market reference, and increase market uptake of certified sustainable palm oil. Internally, the forum needs to enhance democratic decision-making, while ensuring all forum members and its executive boards are committed to the codes of conduct.
The writer is vice president II of the Roundtable on Sustainable Palm Oil (RSPO). The views expressed are personal.