17/11/2010 (CSR Asia) - The 8th Roundtable on Sustainable Palm Oil (RT8) was held in Jakarta last week. Over 700 participants from across different stakeholder groups were in attendance to engage on the sustainability journey of the world’s leading oil crop.    The Roundtable on Sustainable Palm Oil (RSPO) was formed to generate a supply of palm oil that does not violate social and environmental standards. As a multi-stakeholder organization, the RSPO brings together close to 400 members consisting of palm growers, palm oil processors and traders, retailers, investors and leading NGOs such as WWF and Oxfam International.

Since its inception in 2002, the RSPO has come a long way. Following the adoption of the generic RSPO Principles and Criteria’s (P&C), leading producer countries of Malaysia, Indonesia and Papua New Guinea have developed National Interpretation (NI) of the generic P&C. This allowed third party audits to begin and subsequent certification of producers. In 2008, the first certified sustainable palm oil (CSPO) was made available to the market. Producing countries in the rest of the world, including Thailand, Ghana and Colombia, are now in the process of developing their respective NI to produce CSPO.

At this year’s RT8, the RSPO achieved two significant milestones. The launched of an RSPO trademark logo will soon enable consumers to easily identify products containing CSPO ingredients. RT8 also celebrated the accomplishments of 25,000 smallholders who have attained RSPO smallholders certification through support and partnership with larger palm oil growers.
 
Challenges ahead
The RSPO has no time to rest on its laurels of achievements it has achieved thus far. With the momentum following RT8, the RSPO heads towards challenging times, some of which involves trying to square a circle and addressing “chicken or the egg” dilemma among stakeholders.
 
The tipping point
A concerted effort is needed by all stakeholders to push towards a tipping point whereby there would no longer be a business case to produce and use non-sustainable palm oil. Growers of palm oil have complained that the current lower premiums will not encourage the production of sustainably produced palm oil. RSPO CSPO premiums now stand at USD3-USD5 compared to USD50 at end-2008.

Since August 2008, more than 3 million tonnes of CSPO in annual capacity has been certified. Though initial uptake of the first million tonne was slow, at about 20%, the numbers are increasing. Of the CSPO produced in the first 10 months of 2010, more than 60% have been purchased.

Recently, the Netherlands became the first nation to commit to use of only CSPO by 2015. The recent meeting of German palm oil market players was also a hopeful sign of increasing momentum.   However, it is the commitment to use CSPO by the two largest buyers on palm oil, China and India, which will have significant sway on where the tipping point lies. The two countries account for 40 percent of global consumption. The presence of a strong delegation and a side meeting to promote sustainable palm oil in China at RT8 is an encouraging sign.
 
Increase transparency across the value chain
Growers are concerned that their commitment to producing CSPO is not translating to commitments by retailers and traders downstream to buy it. The RSPO cannot force its members to buy CSPO that is available on the market as it would constitute a clear breach of anti competition laws. Its code of conduct however does require RSPO members to report annually on its progress of promoting and addressing sustainable palm oil. In 2010, less than half its members reported on its progress.

The WWF Palm Oil Buyer Scorecard is a way to show how RSPO downstream members are or not subscribing to uptake of procuring certified palm oil in the market. The 2009 scorecard showed a a handful of companies showing real progress in their commitments to buy and use sustainable palm oil, but the majority were failing to buy CSPO in spite of its availability and contrary to their commitments. With a 2011 scorecard planned, perhaps this can give demand another push.
 
Reduce environmental impacts
The environmental impact of palm oil plantations remains one of the biggest concerns of stakeholders in the RSPO. Though some members have addressed this material issue, rising demand continues to drive clearance of tropical forest and conversion. Habitat destruction has led to the demise of critically endangered species and reduced areas of biodiversity. The debate on the amount of anthropogenic CO2 emissions emitted from the drainage of peat lands and deforestation continue to be highly contentious.

The upcoming review of the New Planting Practices and outcomes of the various Greenhouse Gases Working Group will look towards improving standards and close loop holes.
 
Increase smallholder certification
With over 3 million smallholders globally contributing to the supply of palm oil, the economic dependence of palm oil revenues for individual families is important. Smallholders typically cultivate a few hectares of land with yields far below those of large-scale plantations. Training and agricultural support from companies with available resources can help smallholders increase yields, grow their income and increase palm oil supply without forest conversion. With the adoption of smallholder certification programme and creating a fund to help smallholders attain certification, the palm oil sector can contribute to improving the financial and social status of local communities.
 
Communicating sustainability
Many palm oil growers do not do themselves justice in communicating their sustainability commitments. To date, only four palm oil growers – NBPOL, Wilmar, Kulim and DAABON have published publically available sustainability reports that adhere to the Global Reporting Initiative (GRI). These reports can be found here: http://www.csr-asia.com/case_studies.php. Developing a sustainability report which addresses material issues, involve stakeholders, and incorporate their views allows companies to demonstrate its commitment and chart direction on areas for improvement.  

Conclusion
For all its criticism, the RSPO is the world’s first widely-traded commodity with a credible sustainability standard leading to certification. Externally, competing standards have been proposed to ursurp the RSPO. Internally, tension remains among the differing agendas of NGO, growers, palm oil retailers and users. However, as a multi-stakeholder group with global leading industry players participating in both ends of value chain, the RSPO will remain a credible driving force for sustainable palm oil.