Can the continued expansion of palm oil be economically, socially and environmentally sustainable? Rainforest Action Network

When the Secretary-General of the Roundtable on Sustainable Palm Oil (RSPO), Darryl Webber, rose to conclude the organisation’s tenth meeting two weeks ago in Singapore, he simply stated his view that “the RSPO is flying”.

In the last two years its member numbers have practically doubled and collective interest in its evolution can be keenly sensed on the part of palm oil growers, processors, traders, investors, retailers, NGOs, and governments alike.

Yet this depiction should not suggest that the flight of the RSPO has been, or will in future be, care-free and easy; far from it. The great achievement of the RSPO, like other roundtables before it, is to unite a wide variety of actors behind a common aspiration: to transform, and make sustainable, global markets for palm oil. No one would deny the challenges that that aspiration entails for the RSPO, especially at the present juncture, with the organisation’s first review of its principles and criteria soon due. Indeed, the RSPO’s members seem acutely aware that the future of their collective enterprise is delicately poised.

From where does this uncertainty stem? Certainly not from the future of palm oil itself, as the world’s most voluminous vegetable oil. Demand for vegetable oils on the whole has been rising steadily for decades, a trend palm oil is uniquely placed to prosper from given its versatility and low production costs (especially in southeast Asia). Palm oil production is now expanding into West Africa, the palm’s ancestral home, as well as Latin America, where more often than not it has avoided contributing to deforestation by remaining within the agricultural frontier.

The challenge for the RSPO is to demonstrate that the continued expansion of palm oil, in both geographic and volumetric terms, can be economically, socially and environmentally sustainable. In South-East Asia especially, an area in which 90 percent of current production occurs, its history has often tended to suggest the opposite: large areas of forest have been cleared and many community interests overridden to make way for this unassailably profitable crop.

Of course, some palm oil growers have long sought to buck this trend by adhering to impeccable management standards. Just before the roundtable, Greenpeace released a ‘scorecard’ of growers representing almost a quarter of global production, rating Agropalma (Brazil), New Britain Palm Oil Ltd. (Papua New Guinea), Golden Agri-Resources (Singapore) and Wilmar International (Singapore) highest on three key environmental indicators.

A primary function of the RSPO – indeed one of its founding purposes – is to reward these growers for their efforts, linking up with processors and retailers who are willing to provide market access and/or a price premium. A notable source of frustration at the recent roundtable was the fact that half of the palm oil currently produced to RSPO requirements cannot be sold as such (since demand lags behind supply); even when it can, price premiums can be marginal. While the RSPO’s appeal to growers can be read as a measure of success, finding ways to enhance demand for certified palm oil will be important to keep those growers on board.

The urge to increase the RSPO’s coverage among palm oil suppliers is made more difficult by another characteristic: the first to join such a scheme are almost always the suppliers with the best pre-existing social and environmental performance. These suppliers have the least shortfall to make up in order to achieve compliance, and their management principles are often already aligned with those the RSPO promotes. In academic terms this is known as a ‘self-selection bias’, and the challenge it poses for the RSPO in inducing further suppliers is the greater expenditure of effort they will progressively require.

Despite these and other tensions, there is no doubt that the RSPO’s achievements to date are praise-worthy. In the course of under a decade, it has successfully gathered over 1000 members, representing the full spectrum of entities with an interest in this valuable commodity. It currently certifies 14 percent, or over 7 million tonnes, of global palm oil production. Down to its majority-based voting on proposed resolutions, the organisation operates democratically, a feature which remains its fundamental source of credibility in formulating palm oil policy. But this democratic nature is also the organisation’s Achilles heel.

For the RSPO, a handful of critical test cases loom: decisions are pending on acceptable levels of greenhouse gas emissions, protective measures for high value conservation areas and the flashpoint of peatland plantings (mainly in Indonesia). Arguably, these decisions are the toughest the RSPO has yet had to face. The gamble of the RSPO, like that of all other roundtables, is that these concerns can be settled to the satisfaction of each of its members without breaching any of their disparate mandates and principles.

There is some cause for hope. Frequently during the roundtable, I was struck by the openness of the conversation between members. Together with members’ steadfast commitment to the RSPO’s aspiration, this openness stands the organisation in good stead to approach the challenges that lie ahead. Whether or not the RSPO can clear these hurdles will in large part determine, in the eyes of its many members and followers, whether palm oil production can be sustainable on a sufficiently large scale to positively affect ‘people, planet and profits’.