Scoring on Sustainability
The most widely consumed vegetable oil in the world, palm oil is very versatile and found in over half of the packaged products that you see on supermarket shelves from cooking oil, bread, margarine to chocolate and cookies. In addition, palm kernel oil is used in the oleo-chemical industry to churn out soaps, detergents, toiletries, cosmetics, plastics, pharmaceuticals and biodiesel.
Malaysia is the second largest producer of palm oil in the world (behind Indonesia), and currently accounts for 29% of global palm oil production and 37% of world exports. The largest agriculture commodity in Malaysia, palm oil makes up 5-6% of the nation’s Gross Domestic Product (GDP) annually. Last year, the industry contributed RM38.5bil to the country’s GDP, producing 17.3 million tonnes of palm oil and 1.96 million tonnes of palm kernel oil.
Oil palm plantations spread over 73% or 5.7 million hectares of agricultural land in Malaysia, with 3.06 million hectares located in Sabah and Sarawak, and 2.68 million hectares in Peninsular Malaysia. The industry is estimated to employ and support the livelihood of some 5 million people in Malaysia and Indonesia.
However, when palm oil is unsustainably produced, there is negative environmental and social impact such as climate change, loss of biodiversity and the threatened health and livelihood of local communities.
Being a key producer, Malaysia has the responsibility to ensure sustainability in the production, usage and consumption of palm oil.
In recent years, demand for certified sustainable palm oil (CSPO) by markets in developed countries, specifically from the European Union, has seen an upward trend. This trend is expected to expand into other big palm oil markets such as China and India.
CSPO is produced according to the standards established by the Roundtable on Sustainable Palm Oil (RSPO) and provides assurance that valuable tropical forests have not been cleared and that environmental and social safeguards have been met during the oil’s production. The RSPO standards also cover pertinent issues like conservation and zero burning, and protect the rights of the indigenous people and workers.
Sustainable palm oil is important because it fulfils increasing global food demand, supports affordable food prices and poverty reduction, safeguards social interests, communities and workers, and protects the environment and wildlife.
Malaysia’s commitment to sustainably produced palm oil is clear via the Malaysian Sustainable Palm Oil (MSPO) certification, which will be made mandatory in 2019. The MSPO, implemented in January 2015, aims to ensure best practices throughout the supply chain and lift the industry to a higher level of sustainability and transparency.
In support of sustainable palm oil, WWF-Malaysia is working with companies to enhance their environmental policies by encouraging practices such as zero deforestation and promoting wildlife-friendly products. WWF-Malaysia is also developing a business driven platform to increase the focus on using, supplying and procuring sustainable palm oil within companies. Known as the Sustainable Palm Oil Coalition (SPOC), the platform will foster a collective working partnership across sectors to find solutions to problems faced by the industry and facilitate capacity building.
The Palm Oil Buyers' Scorecard (POBS) – Singapore and Malaysia 2017 – aims to bring awareness to key Singapore- and Malaysia-based companies about sustainable palm oil and to encourage them to source for sustainable palm oil in their supply chain.
“The scorecard in Malaysia and Singapore is the first of its kind and will be the baseline for Malaysian and Singaporean companies in recording their journey and commitment towards using, sourcing and supply of certified sustainable palm oil,” said Dato’ Dr Dionysius Sharma, Executive Director / CEO of WWF-Malaysia.
The WWF POBS focuses on key deliverables that directly support sustainably produced palm oil.
“We believe that the RSPO and the use of CSPO are the most effective ways of ensuring the transformation of the global palm oil supply chain to more sustainable practices,” said Denise Westerhout, Lead for the Sustainable Markets Programme, WWF-Malaysia.
“The POBS will help consumers and purchasers of palm oil related products to identify their favourite brands and look at the progress of those brands moving towards sustainability in the context of using certified sustainable palm oil.”
“With this, consumers can make the conscious choice to select brands and companies that use certified sustainable palm oil and ensure that palm oil production is sustainable and protects the environment and people,” said Westerhout.
A total of 45 companies participated in the scorecard, with 25 from Singapore and 20 from Malaysia. The companies, which are required to complete a simple online survey, are selected from sectors known to consume palm oil and are producers of familiar house brands in the region.
Survey questions in the POBS follow the requirements for RSPO certified sustainable palm oil.
The scorecard will be published in August 2017.
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For more information, please contact:
Communications Manager, Market Transformation Initiative, WWF-Malaysia
Tel: 03-7450 3773