Palm oil watchdog needs to take giant leap to save forests

Kuala Lumpur

THE global watchdog for the palm oil industry must strengthen its standards to require all members to commit to ending deforestation - or risk becoming irrelevant, said an increasing number of growers, investors and green specialists.

The Kuala Lumpur-based Roundtable on Sustainable Palm Oil (RSPO) - comprising producers, buyers, consumers and advocacy groups - is conducting a review of its standards. It aims to publish new guidelines in November that will cover the next five years.

Presently, the RSPO demands that its members should not cultivate oil palm trees on land designated as primary forest or forest with a "high conservation value", which includes important biodiversity, ecosystems and sacred sites.

"The standards are strong and tough, but that doesn't mean they can't be made stronger or tougher," said Carl Bek-Nielsen, chief executive director of United Plantations, which grows oil palm in the world's top two producers, Malaysia and Indonesia.

Mr Bek-Nielsen, who also co-chairs the RSPO, called for "a total commitment" by all its members to zero deforestation. "If they can address that big elephant in the room, they will not just take a big leap forward - it will be a giant leap forward and show a level of commitment unseen within the commodity sector today," he told the Thomson Reuters Foundation.

Palm oil is the world's most widely used edible oil, found in everything from margarine to cookies, and soap to soups. But the industry has come under unprecedented scrutiny in recent years - not only from the mounting influence of activists, but also from consumers - and has been blamed for deforestation, forest fires and exploitation of workers.

Faced with such pressures, many large palm growers have made pledges to slow or end deforestation, while major buyers such as Nestle, PepsiCo and Unilever have committed to zero deforestation and to source only sustainable palm oil by 2020.

The RSPO faces the tough task of trying to please members with different interests at a critical time for the industry.

Ramping up the pressure, earlier this month about 90 institutional investors, including banks and pension funds, representing more than US$6.7 trillion in assets under management, called on the RSPO to ban deforestation and clearing of peat lands, and to strengthen provisions for workers' rights.

As a body encompassing a wide range of interests, with its infrastructure already in place, the RSPO is unlikely to be replaced, even if some members drop out, said palm oil specialists.

The RSPO has faced challenges in recent years, including advocacy groups withdrawing support and criticising its stance on human rights abuses and its complaints panel.

In June, Nestle's membership was suspended for three weeks after it failed to submit a report setting out how it would ensure the use of certified sustainable palm oil.

Earlier this year, British supermarket chain Iceland pledged to remove palm oil from its own-brand food by the end of 2018, saying that it did not believe there was a sustainable form.

But companies working outside the RSPO umbrella could struggle to deal quickly with any problems in their supply chain, while credibility would also be an issue, experts said.

"Investors really want RSPO to succeed," said Julie Nash, director of food and capital markets at US-based sustainability lobby group Ceres. "It is a Catch 22. If the standard no longer meets the prevailing needs of the buyers, it is hard to be able to grow market share."

The RSPO was established in 2004 and backed by major buyers. Its focus has been mostly on making large and medium-sized palm oil companies more sustainable, but in recent years it has begun to look at ways to work with smallholders.

While many RSPO members are pushing for tougher standards, some industry officials warned that this could exclude palm companies that have yet to join, especially smaller growers that cannot afford to adhere to its standards and achieve certification.

Anne Rosenbarger, South-east Asia commodities manager at World Resources Institute Indonesia, said that RSPO has a vision to make sustainable palm oil the norm and transform the industry.

But it is trying to find a balance between making zero deforestation mandatory, and smoothing potential negative effects for poverty alleviation and rural development, she said.

Ms Rosenbarger, who is working with the RSPO on the review, said that the palm oil sector has a history of environmental and social impacts which have attracted international media and political attention in recent years.

"Now is the time where we really need to have the credibility in place to show that palm oil can be done sustainably - and to change that image," she said. REUTERS