The Road to the RSPO and Beyond

Posted on 5 December 2014

The oil palm plant, named botanically as Elaeis guineensis Jacq. is indigenous to West Africa, growing naturally in Sierra Leone, Liberia, the Ivory Coast, Ghana, Cameroon and the Republics of Congo and Zaire

The history of oil palm
The oil palm plant, named botanically as Elaeis guineensis Jacq. is indigenous to West Africa, growing naturally in Sierra Leone, Liberia, the Ivory Coast, Ghana, Cameroon and the Republics of Congo and Zaire. This high-yielding palm traces its roots as a plantation crop in South East Asia to the four seedlings brought from Mauritius and Amsterdam and planted in the Botanic Gardens in Bogor, Indonesia in 1848.

In 1911, a Frenchman by the name of Henri Fauconnier visited the world’s first oil palm plantation in Sumatra, Indonesia. The plantation was established by M. Adrien Hallet, a Belgian agronomist with interests in the Zaire (known then as Belgian Congo). During this visit Fauconnier purchased some oil palm seeds and planted them in his Rantau Panjang Estate in Selangor. The following year he returned to Sumatra to obtain seeds that he had selected together with Hallet from Tanjong Morawa Kiri Estate for further planting. With seedlings obtained from his 1911 and 1912 trips, Fauconnier replaced his unsuccessful coffee shrubs at Tennamaram Estate, Selangor, thus establishing the first commercial oil palm plantation in Malaya in 1917.

The fuel of Malaysia’s economy
In the 1960s, the plunging world price of natural rubber and competition from synthetic rubber gave birth to Malaysian government’s diversification policy, which aimed to reduce the dependence of the national economy on natural rubber. Rubber estates began to give way to oil palm plantations due to oil palm’s versatility, high yield, and relatively cheaper production costs. The government also encouraged poor landless farmers and smallholders to plant oil palm by introducing land settlement schemes.

After just 50 years since the diversification policy, Malaysia has grown to be one the largest producers and exporters of palm oil in the world, with RM35.5 billion in exports from January 2014 to September 2014. In 2013, 5.23 million hectares of land in Malaysia is under oil palm cultivation, producing 19.22 million tonnes of Crude Palm Oil (CPO) against 18.79 million tonnes recorded in 2012. The year 2013 also witnessed Malaysia exporting 18.15 million tonnes of palm oil to overseas markets such as China, Bangladesh, the European Union (EU), Iran and India.

What makes oil palm so high in demand amongst producers and consumers? For starters, it is the most efficient oil-bearing crop in the world, with efficient producers requiring as little as 0.125 hectare of land to produce one tonne of oil. Compared to other major oilseeds such soybean and sunflower, oil palm only accounted for 5.5% of global land use for cultivation, yet produced 32% of global oils and fats produced in 2012.

Palm oil’s versatile repertoire includes being a food stabilizer and a moisturizing agent. With these traits, it has found its way into half of all packaged products in any supermarket, such KitKat chocolates, Palmolive soaps, and Pringles chips, listed under names that range from the generic “vegetable oil” to etyl palmitate. Demand for vegetable oils is at an all-time high, with per capita human consumption of vegetable oils increasing more rapidly during the past 30 years than any other food. It is little wonder that the palm oil industry provides employment to more than half a million people and livelihood to an estimated one million people in Malaysia.

Controversial unsustainable practices
The oil palm grows best in tropical climate, resulting in large tracts of biodiversity-rich tropical rainforests in Malaysia, Indonesia and lately in Papua New Guinea being cleared to make way for new plantations. For example, uncontrolled land conversion results in burning of peat swamp forests, a unique habitat that provides a critical buffer against flooding during the wet season, and which slowly releases water as insurance against drought in the dry season.

Peatlands also hold a major stock of organic carbon, courtesy of a thick water-logged organic soil layer (peat) that is made up of dead and decaying plant material. The destruction of peatlands releases the stored carbon into the atmosphere as carbon dioxide (CO2) which in turn contributes to global warming.

Unsustainable oil palm plantations have also been connected to the destruction of the habitat of endangered species like orang-utans, rhinos, elephants, and tigers, besides being the culprit of indigenous people losing their land and forest-dependent livelihoods. In terms of climate change, felling and burning of vegetation releases climate-warming greenhouse gases into the atmosphere. Poorly laid out and managed plantations can also cause soil erosion and river pollution.

Unsustainable palm oil production practices do not need to continue. There are ways that palm oil production can become more environmentally responsible.

Insights from industry insiders
Simon Siburat, the General Manager of Group Sustainability at Wilmar International Ltd. and a well-known sustainable palm oil advocate in Malaysia, recently shared his experience in turning Wilmar’s PPB Oil Palms Berhad (PPB) into a Certified Sustainable Palm Oil (CSPO) producer.

“I first heard about the Roundtable on Sustainable Palm Oil (RSPO) back in 2002 from the Malaysian Palm Oil Association (MPOA), which PPB is a member of. MPOA suggested that members get certified by the RSPO, as it is the only sustainable palm oil standard recognized worldwide.”

The RSPO is a not-for-profit association that unites stakeholders from the 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 work on transforming how palm oil is produced, traded and sold. Palm oil producers that follow the RSPO standards are bound to strict guidelines that are designed to ensure their palm oil meets high environmental and social standards.

In 2003, the first Annual Roundtable Meeting on Sustainable Palm Oil (RT) was held in Kuala Lumpur. Also known as RT1, it was attended by 200 participants from 16 countries. Since then, RT has grown to become a leading event for the palm oil sector and is the foremost global platform for palm oil stakeholders to address challenges and discuss solutions towards a unified vision for sustainable palm oil.

According to Datuk Darrel Webber, the Secretary General of the RSPO, “The RSPO began with a challenge to introducing companies in the palm oil sector and supply chain to the concept of sustainable palm oil. Today, we have almost 2,000 members from over 70 countries that have not only adopted sustainability practices but have also taken their own initiatives to go beyond what is stipulated in the RSPO standards.“

The RSPO Certification System was finally launched in November 2007 at the fifth RT (RT5) held in Malaysia. “We at PPB saw the RSPO as a great opportunity to improve and benchmark our business practices using a global standard”, said Simon, and continued on, “After the RSPO Certification System was launched, we applied to be certified as a sustainable palm oil producer the next year.”

There was a long queue to kick-start the certification process as there were other eager companies as well. Sustainable palm oil was the new thing in the industry and everyone wanted to get a taste of it. In the end, PPB did its first RSPO certification exercise in April 2008, and received their first certification in December 2008 for three of their palm oil mills: Sapi, Reka Halus and Sabahmas, all in Sabah. Right after getting certified by the RSPO, PPB recorded a higher demand for their products, even when sustainable palm oil was still in its infancy in Malaysia. Simon also noticed that there was a higher level of awareness on health and safety, environmental compliance, and legal compliance amongst the staff.

“Before the RSPO came into being, most plantation managers only thought about caring for what’s within the gates of their plantation. By signing up for the RSPO certification, you start to look at the bigger picture, because you now realise that how you manage your plantation can affect the communities around you. All the RSPO-certified producers recognise that their responsibility extends beyond the gates.”

Engaging the local communities living near a plantation is one of the responsibilities that an audit process from the RSPO entails. Simon, who is also an alternate member of the Board of Governors for the RSPO, has conducted many dialogues with smallholders and villagers living near PPB plantations. At these sessions, communities can bring up any concerns regarding the company’s business practices. PPB also shares technical know-how with smallholders at these public gatherings.

M.R. Chandran, an advisor to the RSPO & the former chief executive of Malaysian Palm Oil Association (MPOA), had stated in the past his personal observation of the transformative effect that the RSPO can have on plantations and mills. This included improved staff morale and reduced turnover, better yields, more consistency, improved community and government relations. He also projected that in the near future, investors, buyers, traders, and ultimately industry players like China and India will all converge around concepts of sustainability and traceability.

“Companies certified by the RSPO are more transparent in their business practices. This in turn earns the trust of the public. With the RSPO trademark known worldwide as the gold standard for sustainable oil palm, PPB also gets a wider access to premium export markets such as the European Union. However, we need to do more to encourage buyers and consumers to choose products from sources certified by the RSPO,” Simon said.

The next step forward for palm oil producers
The palm oil market has changed in the last decade. As of September 2014, the global total for the RSPO’s CSPO was 11.2 million metric tonnes (MT) or 21.5% of total global palm oil consumption. The oil palm sustainability in Malaysia is gaining momentum ever since the first certification started in 2008. Today, Malaysia alone produced 4.6 million MT of that CSPO, which is about 24% of Malaysia’s CPO production. Some plantations have even gone beyond the normal RSPO certification requirement, a testament to how these oil palm companies are progressively branding their products. In the near future the palm oil market will reach the tipping point when the consumers will only demand CSPO. It is therefore high time that non-RSPO oil palm companies in Malaysia raise their game, following in the footsteps of companies and even smallholders in Malaysia whose plantations have received the RSPO certification, such as the group of independent smallholders from Kinabatangan of Sabah, which received the latest RSPO certification this year.

Palm oil companies can start their journey to sustainability by becoming an RSPO member. Once it becomes a member, a company should state their time-bound plan on how they want to progress towards certification. Apart from the RSPO Secretariat, there are other stakeholders such as WWF-Malaysia that are able to provide technical advice on the road to certification. WWF-Malaysia’s Executive Director and CEO Dato' Dr Dionysius Sharma said, “WWF-Malaysia wants to see that sustainability becomes the norm in the palm oil industry. Thiswould minimize environmental and social impacts.”

“The palm oil industry has huge economic and sustainable development potential which can benefit society and without compromising on the environment, “ he added. “As a founding member of the RSPO, WWF is keen to assist the industry in achieving productivity and sustainability through improvement in plantation management and mill performance.”

Activities that WWF-Malaysia undertakes to promote sustainable palm oil include:

Promote the adoption of best management practices in oil palm plantation operations.
Advocate that new plantations do not happen in high conservation value areas (HCVA).
Provide advice on locations of high conservation value areas to any interested parties.
Engage consumers and buyers of palm oil products, via WWF’s international network, to demand for CSPO only. This includes buyers in the China and India markets.
Conduct awareness programmes and road shows on wildlife and habitat protection.

What can consumers do?
To nudge traders, manufacturers and retailers of palm oil to use only certified sustainable oil, consumers must shop for products that bear the RSPO trademark. If your favourite product is not certified by the RSPO as sustainable, you can write to the company that produces it and demand that they buy from the RSPO-certified sources. Writing to companies that use palm oil or derivative products, and demanding that they do the right thing for the environment, can transform the way companies do business.

Such consumer-driven changes are changing the way palm oil is produced. After its Facebook page was flooded by comments from consumers concerned about unsustainable palm oil in its products, Nestlé has publicly announced that it is committed to using only CSPO by 2015. In 2013, a landmark policy was signed by Wilmar, the world's largest palm oil trader and a long-time target of environmentalists, to eliminate deforestation from its supply chain.

The RSPO recently concluded its 12th Annual Roundtable Meeting on Sustainable Palm Oil (RT12), held from 17 to 20 November 2014 in Kuala Lumpur in Malaysia with the theme “Sustainability: What’s Next?“. At RT12, the Chair of the RSPO Board had announced that member companies who have ignored annual reporting requirements for the last three years will be expelled within six weeks and those failing to report over two years will be suspended. Member companies are required to report annually on progress towards time bound plans to reach sustainability milestones.

For more information on sustainable palm oil

References:

Malaysia External Trade Development Corporation
Malaysian Palm Oil Board
Malaysian Palm Oil Council
The Roundtable on Sustainable Palm Oil
WWF-Malaysia
Wilmar International Ltd.
The Sime Darby Group

- Ends -

About WWF-Malaysia
WWF-Malaysia (World Wide Fund for Nature-Malaysia) was established in Malaysia in 1972. It currently runs more than 90 projects covering a diverse range of environmental conservation and protection work, from saving endangered species such as tigers and turtles, to protecting our highland forests, rivers and seas. The national conservation organization also undertakes environmental education and advocacy work to achieve its conservation goals. Its mission is to stop the degradation of the earth’s natural environment and to build a future in which humans live in harmony with nature, by conserving the nation’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption. For latest news and media resources, visit http://www.wwf.org.my/media_and_information/media_centre/

For further information:
Leona Liman
Senior Communications Officer
Sabah Terrestrial Conservation Programme
WWF-Malaysia
Tel: 088-262420 ext 45
Email: lliman@wwf.org.my

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The Road to the RSPO and Beyond

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