Palm oil & RSPO

Palm oil campaign

Appetite for destruction

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Last updated: May 2008

 

Palm oil is in one in ten supermarket products, from soaps and detergents to cosmetics and foods. The Roundtable on Sustainable Palm Oil (RSPO) was set-up as a voluntary organisation to promote sustainable practices in the industry. Dan Welch asks, can the RSPO deliver?

 


Last year the United Nations Environment Program made the shocking prediction that if deforestation in Sumatra and Borneo continues at the current rate, the orang-utan will be virtually extinct in 15 years or sooner.

In February, WWF reported that carbon emissions from the Indonesian province of Riau, from forest loss, fires and peat decomposition were equal to 39% of the UK’s annual emissions.[1] Forest clearance for palm oil production is the number one cause. In Aceh province, the Regional Head of Investment warns that unregulated expansion of palm oil “is a potential time bomb” threatening to re-ignite the decades long civil war.[2]

The RSPO is a multi-stakeholder organisation dedicated to the development, implementation and verification of sustainability standards in the industry. Its members include NGOs such as WWF, Oxfam and the Indonesian Sawit Watch, and players throughout the complex palm oil supply chain. It includes growers, processors and traders, consumer goods manufacturers such as Unilever, retailers, banks and investors, such as HSBC, and other interested parties such as BP.

Thanks to campaigning by Friends of the Earth and engagement from activist investors Co-operative Insurance, all of the UK’s biggest food retailers have joined up. Today all but two of the top 15 biggest palm oil companies in the world are members.

It is the first time that such an organisation has been established to develop sustainability criteria for an agricultural commodity. The RSPO has the unenviable task of achieving consensus from the agendas of stakeholders as diverse as small farmers, environmental NGOs, multinationals and governments.

In 2005 the RSPO published its ‘Principles & Criteria’ for sustainable palm oil production. Indigenous peoples in south-east Asia have often suffered from land grabs, the loss of their traditional forest resources and exploitation at the hands of the palm oil industry. Workers, often migrants, have suffered endemic rights abuses.

At the heart of the RSPO’s ambitious principles is the notion of “Free, Prior and Informed Consent” of those effected by the industry. However, not only corruption, but the law itself can undermine these principles.

In Indonesia 70% of land is classified ‘state owned forest’ and indigenous peoples are denied meaningful land rights. Avoiding deforestation is usually couched in terms of exploiting ‘wasteland’. But again, in Indonesia, all such designated land is state-owned, whether occupied or not.

 

 

Criticism and controversy
 

In 2006 the International Union of Food workers (IUF) condemned the RSPO as “a hollow front for corporate greed and brutality”.[7]

The RSPO was embroiled in controversy over the behaviour of Musim Mas, a member and major supplier to Unilever, which chairs the RSPO’s board. In 2005, following a strike over the company’s long-term refusal to negotiate with the local union over legally guaranteed minimum labour standards, six trade union leaders were jailed for up to two years.

A thousand union members were fired, workers were evicted from their homes and children from their schools. Amnesty International declared the six men “prisoners of conscience... detained purely for the peaceful exercise of their right to freedom of association and collective bargaining”.[4] The following year the Dutch national trade union centre FNV called on its government to withdraw support for the RSPO if it failed to terminate the membership of Musim Mas.

The IUF accused the RSPO of refusing to apply their own “Principles & Criteria” to a member - which include the right to organised labour and a ban on discrimination on the basis of union membership.[5] The IUF is no longer in dispute with Musim Mas; but accused the company of starving the local union into submission and reaching an accommodation with workers under duress.

The RSPO in turn stated that although it could “monitor progress and compliance” it “cannot pass judgement on the sustainability of its members”.[9]  Members are required to work towards, but are not bound by the “Principles & Criteria”.

In a recent report Greenpeace accused the RSPO of taking “few meaningful steps to end the devastation and injustice linked to the industry”. While acknowledging that some RSPO members motives are genuine, Greenpeace claims “many in the industry are using the RSPO to cover their backs, putting off urgent action while the destruction continues” (naming Unilever, Cargill and Nestlé specifically).

However, the report’s conclusions, that Indonesia should stop felling its forests and that industry should “support zero deforestation” and “clean up the trade” rather begs the question “how?” rather than providing a solution. Few would argue with the injunction to the industry “do not trade with those engaged in deforestation,” but doesn’t that rather demand an industry-wide mechanism? Something rather like the RSPO?

 

 

Lush and Body Shop
 

At the consumer goods end of the market, two major players distinguished by their ethical credentials have taken different strategies on the issue. The two approaches embody a common dilemma: to boycott or engage?

In November last year Lush announced that it had produced the first ever palm-oil free soap base suitable for large-scale production. Lush told Ethical Consumer that the plan to develop the alternative had arisen out of disenchantment with the RSPO: “When two of our buyers went to the RSPO, they came away thinking that the whole thing…was dominated by people from within the palm industry who seemed more interested in preserving the status quo.”

The Body Shop, on the other hand, which was one of the first RSPO members, remains an active participant. It announced its own initiative in July last year, to source all the palm oil for its soaps from Daabon, an organic producer in Colombia.

According to Jan Buckingham, Body Shop’s Director of Values, the move came at a point when the RSPO process was “wobbling” and the company wanted to demonstrate to suppliers in south-east Asia there was a market for sustainable palm oil. Steve Noble, Head of Global Sourcing added: “the RSPO wasn’t moving quickly enough for us, but we remain active participants. Daabon was already up to RSPO standards - we can trace from the palm to the product. And we’re looking for it to be certified in future. Ultimately we would like multiple RSPO sources.”

 

 

Positive Indications


In July last year Friends of the Earth (FoE) published a report condemning Wilmar, the world’s biggest palm oil trader, for illegally logging and burning rainforests and violating the rights of local communities in Indonesia.[11]

Again, Wilmar is a member of the RSPO. But it is hardly surprising that RSPO members are accused of unsustainable practices, given what we know of the industry. The issue is whether it serves as a forum in which members can be challenged.

FoE lodged a complaint against Wilmar with the RSPO, and, unlike the Musim Mas case, it has served a useful purpose. The company admitted culpability in three cases raised by FoE over land acquisition, compensation and environmental impact assessments, and undertook to change its practices[8].

FoE also lodged a successful complaint with the UK’s Advertising Standards Authority against claims to sustainability made by the Malaysian Palm Oil Council – and used the RSPO criteria to do so. Rather than greenwash therefore, in this concrete case, the RSPO standards are helping to keep false claims in check.

And if we look to the sharp end of the palm oil trade the message is clear. In the post-tsunami province of Aceh, the end of the civil war presents an opportunity, and a new threat – palm oil. The demands of local NGO Eye on Aceh are unequivocal; all companies applying for palm oil permits should join the RSPO[2].

According to Dr. Samantha Lacey, Executive Board member of the RSPO for Co-operative Insurance: “What we set out to create – a mainstream sustainability standard for the whole palm oil industry – is a huge task and we’re still only at the end of the beginning. The real results will be seen when RSPO members start to become certified and sustainable palm oil finds its way into the products on our tables.”

 

 

How will it work?


In November 2007, after 18 months of development work, the RSPO unveiled its certification system – how to actually implement and verify its standards in the supply chain. RSPO certified products are not on the supermarket shelves yet, but they are a significant step closer.

The demand for sustainably produced palm oil is largely driven by European consumers. Globally only about 17% of palm oil goes to Europe. India and China are huge consumers – but their products must satisfy a European market too.

The RSPO mechanisms have to govern growing (both by small holders and giant plantations), palm oil production, refining, processing and certifying the end product.
Auditing a trail from plantation to product is a hugely complex task. Most palm oil is produced through processes that see large quantities from multiple sources mixed to achieve the critical mass practical for refining, and then again for transportation.

To enable a flexible approach to this complex situation the RSPO has three supply chain options for ‘certified sustainable palm oil’ (CSPO):

 

  • Segregated supply chains - 100% CSPO traced from plantation to product, allowing the claim “This product contains RSPO certified palm oil”.
  • Mass Balance – or controlled mixing of certified and non-certified palm oil. This option arises because oil from multiple sources tends to be mixed in a single processing mill and fully segregated supply chains are currently very expensive. It is seen as a valuable stepping stone towards 100% CSPO. It will enable a product claim relating to containing CSPO from mixed sources.
  • Book & claim – This is the low cost alternative to physical segregation and traceability. The grower will be certified. But rather than the physical palm oil being traced through the supply chain, the grower is issued with a certificate for the CSPO produced. A consumer goods company then buys the certificate, supporting the initiative by rewarding the grower. The company can then claim “This product supports the trade in sustainable palm oil”. The scheme aims to return bigger potential income to the growers than segregated supply chains, directly encouraging more growers to work towards sustainability best practice.

 

References
1 “Raui: deforestation, carbon and species loss” www.panda.org 26/2/08
2 “The Golden Crop? – Palm Oil in Post-Tsunami Aceh” www.aceh-eye.org 09/07 3 email, CIS, 17/3/08
4 http://asiapacific.amnesty.org/ viewed 17/3/8
5 www.fnv.nl/defnv/actueel/english/indonesia_palm_oil_industry_protest.asp 6 www.iuf.org 13/6/06
7 IUF Reply to the RSPO www.iuf.org 20/3/6 
8 www.rspo.org/resource_centre/Wilmar_Reply_25%20Jan_2008.pdf viewed 17/3/8
9 www.rspo.org/resource_centre/Letter%20to%20IUF.pdf 30/8/6
10 ‘How the palm oil industry is cooking the climate’ Greenpeace, 11/7
11 Wilmar Palm Oil Environmental Social Impact pdf from www.foeeurope.org
12 www.asa.org.uk viewed 17/3/8

 

From Ethical Consumer, Issue 112, May/June 2008