Lack of sustainability limits funds, markets for oil palm producers
31/12/2022 (Business Day, Nigeria) - The oil palm tree has a reputation for producing high-quality oil that is used for cooking, mostly in developing countries. It also finds its way into several food products, detergents, cosmetics and, to some extent, biofuel.
To meet growing demand, plantations continue to spring up across Asia, Africa, and Latin America but at the expense of forests. These are critical habitats for many endangered species and a lifeline for some human communities in those areas.
It is said that there are less than 100 Cross River Gorillas left in that part of Nigeria’s south-south region. Poachers, illegal loggers, and those putting up plantations and having to clear the forests have combined to on one hand, make Nigeria lose what should be a source of tourism revenue. On the other hand, is the fact that these iconic species, which are native to Nigeria, are on the brink of extinction.
Like other wildlife and invaluable forestry, they have been casualties of unconscionable agricultural activities, and in particular oil palm production. In other parts of the world, like Indonesia, the world’s leading producer of the commodity, it has been attributed to be a driver of deforestation for the past 20 years, accounting for one-third (3 million hectares) of Indonesia’s loss of old-growth forest.
For years, environmentalists campaigned aggressively against the environmental damage that came with rapidly increasing palm oil production. The more consumers around the world could not get enough of the red oil and its dozens of by-products, the more the environment was at risk of further damage if something was not done. And urgently too.
Not just the environment but also people who lived in areas that had to be acquired and cleared as oil palm plantations expanded their footprints. Their rights were not guaranteed, and definitely no concerns about the hazards such activities could pose to their health or other living things in those ecosystems.
“There was a huge outcry about the destruction of orangutan habitats, one of the great apes,” said Elikplim Agbitor, head, Africa, at the Roundtable on Sustainable Palm Oil (RSPO). “They started saying even in Africa, Palm oil could be in areas where there could be gorillas. For example, Cross-River gorillas, which is a subspecies only found there.”
It was at this point he says a decision was made to come together and develop a set of requirements that would create a means of certifying sustainable palm oil producers. For those whose clear conscience was not enough reward, the certification would give them access to more markets, especially in Europe as well as institutional investors who would not touch any uncertified plantation with a million-mile-long pole.
The certification process was such that the plantation would implement and then get an independent third party to come and verify it before they are issued a certificate.
“It gives proof that you are operating in a way that takes into consideration the environment and social equitability,” says Agbitor. Before then, there was large-scale clearing of forests, habitats of different species of plants and animals.
“Now you cannot just go and clear, you have to do all manner of assessments; high carbon stock assessments, environmental impact, social impacts, land use change analysis, so that we know the vegetation of the land before you going there. There are certain categories of vegetation that you are not allowed to touch,” he says.
Before RSPO standards were introduced, there were talks of banning or boycotting palm oil, mostly in Europe and parts of North America. But some producers like Unilever came together with NGOs such as the World Wildlife Fund (WWF) to become founding members of RSPO to develop a set of requirements that can be implemented in demonstrating palm oil was not being produced in a way that is damaging to the environment or infringing on the rights of local people.
The first catch for palm oil producers in getting certified as Agbitor explains, is “to appeal to their conscience. We just can’t destroy everything, when we have to keep some of those resources for posterity and protect the water bodies and the rest.” On another hand, he says, is reputation, especially for big companies. If they do the wrong thing, the media could pick it up and may not be good for their corporate reputation.
The third factor, which he says is mostly important in Africa, is access to finance. “One of the main reasons most of them are motivated to come to RSPO is access to finance,” Agbitor says. A lot of financial institutions like the International Finance Corporation (IFC), would require a fund seeker to do an assessment against RSPO standards. With this, they will determine if the company is sustainable enough before they consider giving finance.
“They don’t want to be seen investing in a company that is not sustainable, a company that is doing the wrong things environmentally and socially,” he says. “Presently most financial institutions have signed on to sustainability ideas, and to access finance, you have to show proof that you are committed to sustainability.”
Furthermore, if a palm oil producer in Africa were to be exporting to European or North American market, such company cannot have access to those places unless they are RSPO certified. “If your target market is Europe or North- America, you don’t have a choice but to be RSPO certified, it is only then that your products can enter,” he says.
According to the World Wildlife Fund (WWF), palm oil production is a leading cause of air pollution, soil and water pollution, climate change and loss of critical habitat for endangered species.