Sustainable Palm Oil as the Way Forward in Meeting Consumer Demand

Posted on 5 February 2010

WORLDWIDE, demand for edible oils and a range of consumer products that can be traced back to proper management of the environment, is growing.

Consumers, especially in Europe, are starting to question their local supermarkets if food on shelves contains ingredients that come from plantations that clear rainforests, displace wildlife and pollute rivers.

The Malaysian palm oil industry, a significant contributor to the nation’s economy, is not spared from criticism against a backdrop of rising concern for sustainably harvested edible oils.

This was the focus of the recent Roundtable on Sustainable Palm Oil (RSPO) Awareness Workshop on “Sustainable Palm Oil – From Tree to Table” in Sandakan, Sabah, which brought together a panel of experts from plantations, the banking industry and food manufacturing.

They shared with more than 80 plantation managers and executives, mainly from the eco-sensitive Kinabatangan Basin, the benefits of a sustainably run palm oil industry.

The Basin which is known for iconic wildlife like Orang Utan and Borneo Pygmy Elephants is also home to 29 mills, making it crucial for those involved in the industry to understand the importance of running a business that cares for nature and local communities.

The workshop jointly organised by the Malaysian Palm Oil Association (MPOA) Sabah branch and WWF-Malaysia’s Kinabatangan – Corridor of Life (K-CoL) project, concluded there is a rise in ethical consumerism, a trend where people want to know about the goods they buy.

Malaysian Palm Oil Association (MPOA) Chief Executive Dato’ Haji Mamat Salleh said there is market demand for sustainably products and this is why organisations like the RSPO, Better Sugar Initiative and Roundtable for Sustainable Soy were formed.

“Demand for sustainable palm oil in future is inevitable. Palm oil producers must be willing to make the early move to change and follow the current trend on sustainability.

“There are 3Ps of sustainability. The first is profit which covers competitiveness and productivity, and the need for financial and economic returns.

“The second is people and this is when we talk about native land rights and needs of stakeholders. Planet is the third one and the focus is on biodiversity, deforestation, carbon emission and carbon offsetting,” Dato’ Mamat said.

With trends to go green advocated in some countries, and the same wave catching on in other nations, local planters and millers should act now by learning about RSPO principles and criteria, and make a commitment to become members.

Currently, plantations and mills that subscribe to RSPO principles supply 1.5 million tonnes of sustainable palm oil to the world market. Demand for sustainable palm oil in the next two years from Europe alone is estimated to stand at four million tonnes.

While RSPO membership is voluntary, it provides companies a chance to brand themselves as being different from others, and provide better market access including by selling directly at a premium to markets in places like Europe.

And with trends to go green on the horizon, becoming a member of RSPO is the right thing to do.

Wilmar Group Berhad’s Mr Philip Ho said there was no point in producing palm oil that no one wants to buy, and that there were consumer groups questioning the use of the edible oil.

He said manufacturers like Nestle were asking for sustainable palm oil, and that there was no choice but to comply with what customers want.

He cited the example of Unilever which suspended buying palm oil from an Indonesian company following serious allegations on poor environmental practices.

“We need to identify types of biodiversity we have and manage our flora and fauna.

“The other thing we need to do is restore riparian zones. By opening up land till river banks, water gets polluted. We need to do quality checks at rivers.

“Riparian restoration is important for erosion control and control of discharge,” Ho said.

He pointed out that apart from environmental considerations, those who are certified by RSPO must make sure they give workers proper housing, treated water and are transparent in payment of salaries.

Another issue he raised was the fact that some banks are now adhering to the “Equator Principle”, a financial industry benchmark for assessing and managing social and environmental risk in project financing.

Banks can choose to not lend, or to cut of loans if businesses choose to plunder the environment and fail to care for needs of workers and other stakeholders.

Global Sustainability Associates’ Senior Associate Mr Darrel Webber said retailers like Wal-Mart are ranking their suppliers through a sustainability index.

“It is not only the palm oil industry that has to be sustainable. Some consumers want to know where the eggs they pick up in the supermarket come from.

“Don’t view sustainability as a hurdle. Look at it as an opportunity that can lead to profit,” he said.

Citing the 2009 Global Edelman Goodpurpose Study, Mr Webber said 68 per cent of people globally say that it is becoming more unacceptable not to make noticeable efforts to show concern for the environment, and that the figure rose to 82 per cent in China.

A survey by United Kingdom’s New Britain Palm Oil Group shows that 86 per cent of people in that country agree manufacturers and retailers of food and consumer products that contain palm oil should be responsible for sources of the edible oil.

“The same survey shows that 65 per cent in the UK saying they would change their buying behaviour in favour of products that are made with sustainable palm oil, with 40 per cent saying they would pay a premium,” Mr Webber said.

WWF-Malaysia Borneo Programme Chief Technical Officer Dr Rahimatsah Amat said the workshop should encourage planters who are unaware of balancing development with environmental considerations to start thinking of what to do next.

“Sometimes we don’t understand what sustainability is, because we are naïve.

“Sustainable development is often misunderstood. It is not about making life difficult for us, but about prolonging the life span of the world,” Dr Rahimatsah said.

-End-

Note to the Editor:

WWF-Malaysia’s Kinabatangan – Corridor of Life (K-COL) project has a vision for sustainable development that focuses on a forest corridor along the Kinabatangan river that connects coastal mangrove swamps with upland forests, where people, wildlife, nature-based tourism and local forest industries thrive and support each other. Its other vision is for a Kinabatangan floodplain that supports a diverse economy that offers opportunities and choices to local people and businesses, and good environmental management of natural capital on which all partners depend on. A landscape in which agriculture, people and nature conservation united by water as a common source is also a K-CoL vision.

The Malaysian Palm Oil Association (MPOA) has been tasked with the important function of balancing the needs and interests of the various sectors for synergy and development of the plantation industry as a whole. Though a crop specific body that focuses on oil palm, MPOA also serves the interests of other plantation crops such as rubber, cocoa, tea and non-crop issues relating to land, labour, trade and pricing. As an integrated single, powerful voice, MPOA is expected to represent the complex needs of the plantation industry more effectively particularly now that the economy is being rapidly globalised. (www.mpoa.org.my)

The Roundtable on Sustainable Palm Oil (RSPO) is a not-for-profit association that unites stakeholders from seven sectors of the palm oil industry - oil palm producers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation NGOs and social or developmental NGOs - to develop and implement global standards for sustainable palm oil. It was formed in 2004 with the objective of promoting growth and use of sustainable oil palm products through credible global standards and engagement of stakeholders (www.rspo.org)

For further information:
Ms Julia Majail or Mr Max Donysius at tel: +60 88 262 420 (O) or H/P: +60 012 826 7900 (Max) or Email: jmajail@wwf.org.my (Julia) mdonysius@wwf.org.my (Max)

Sustainable Palm Oil as the Way Forward in Meeting Consumer Demand

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