In Sabah, the push for sustainable palm oil is driven by the state government's Jurisdictional Approach for Sustainable Palm Oil (JASPO) Initiative. This initiative aims to launch state-wide RSPO certification through a Jurisdictional Entity by 2025, achieve the first sub-jurisdictional certification under this entity by 2028, and make RSPO certification mandatory for all oil palm operations by 2030. This statewide commitment seeks to transform Sabah’s palm oil sector, halt deforestation, restore ecosystems, and secure livelihoods.

But for many smallholders and medium-sized growers, getting certified has been a struggle. The process is costly and technically demanding, often putting it out of reach. To help bridge that gap, WWF-Malaysia began introducing a practical approach new to many of the growers we work with: the cooperative business model. By working together under a shared certification process, growers are reducing costs, streamlining requirements, and taking real steps toward producing sustainable palm oil.

 

A smallholder inspecting oil palm trees. © Mazidi Abd Ghani / WWF-Malaysia

 

 

While over 425,000 hectares of Sabah’s palm oil plantations are RSPO-certified, progress has slowed in recent years. Certification is still largely dominated by large companies with their mills. In contrast, smallholders, who manage about 15% of the state’s plantations, and medium-sized growers, who produce around 50% of Sabah’s palm oil, face challenges meeting certification requirements.

Unlike Malaysia’s mandatory Malaysian Sustainable Palm Oil (MSPO) certification, RSPO certification is voluntary and comes with additional costs, including audit fees, training, and compliance measures. To help address these hurdles, WWF-Malaysia’s Sustainable Palm Oil Team (SPOT) has been providing technical support, training, and financial guidance to growers. However, a new strategy was needed to scale this support sustainably and cost-effectively. The solution: a cooperative model that allows growers to share certification costs, streamline compliance, and improve access to certified markets.

 

The cooperative model provides a structured and inclusive way for growers to achieve RSPO certification. By joining forces, members share expenses such as staffing, office rental, training, and auditing, reducing the financial burden on individual growers. The cooperative holds the RSPO certification for all its members, ensuring compliance while offering crucial support services.

Larger growers who produce more fresh fruit bunches contribute more funds to the cooperative, helping to sustain operations while supporting smaller growers. For example, a cooperative managing 15,000 hectares could generate RM225,000 annually through a nominal RM1 per tonne member contribution. This financial model ensures that certification remains viable for all, allowing members to access premium pricing for certified palm oil while reducing costs associated with sustainability staff, audits, and compliance training.

 

Scheduled Waste Management Training for oil palm growers in the Tabin Landscape
© Zaim Azfar Nordin / WWF-Malaysia

 

A leading example of this model is Koperasi Landskap Kelapa Sawit Sabah Berhad (LKSS), which was formed in 2019. With 380 members to date—300 smallholders managing 3,500 hectares and 80 medium-sized growers overseeing 12,500 hectares—LKSS has proven that cooperatives can make sustainable palm oil certification achievable and profitable.

Through the RM1 per metric tonne contribution, LKSS has sustained its operations for nearly four years without external funding. The cooperative hired five full-time staff, conducted training, and supported growers in obtaining MSPO certification, with a growing number now pursuing RSPO certification. The SPOT team has also played a key role by helping LKSS register with Suruhanjaya Koperasi Malaysia (SKM), digitise land titles, and conduct cost-saving High Conservation Value (HCV) assessments. LKSS has helped 25 independent smallholders pass the Eligibility Phase of the RSPO Independent Smallholder Standard (RISS), enabling them to trade RSPO credits. Unilever’s commitment to purchasing these credits has provided a strong financial incentive, proving that sustainable practices can be economically rewarding.

 

LKSS members receive their Roundtable on Sustainable Palm Oil (RSPO) Certification © WWF-Malaysia

This success has had a ripple effect—95 more smallholders from LKSS and another cooperative have since begun the RSPO certification process, driven by the prospect of similar financial benefits. This highlights how market-driven incentives can accelerate certification uptake, ensuring sustainability goes hand in hand with economic opportunity.

 

Despite its success, the cooperative model still faces challenges. One key issue is that while RSPO credits offer financial incentives, the premium remains relatively modest for medium-sized growers, which can limit their motivation to pursue certification. To address this, WWF-Malaysia recently proposed a resolution at the RSPO General Assembly to establish a task force focused on improving these incentive structures.

Another barrier was the eligibility to join the group certification. Previously, RSPO regulations restricted growers with plantations exceeding 500 hectares from joining group certification schemes. This rule significantly limited participation by this category of growers, hindering broader adoption of sustainable practices. The SPOT team raised this concern with the RSPO Secretariat, and after high-level discussions, the rule was successfully amended. This change represents a meaningful step forward, enabling more inclusive participation and unlocking greater potential for scaling up certification efforts.

There is reason for optimism. RSPO has acknowledged these challenges and is committed to reviewing its certification standards. In the meantime, WWF-Malaysia and its partners remain committed to refining and expanding the cooperative model to ensure it continues to be a practical, cost-effective, and appealing option for growers across Sabah.
 

A sustainable future for Sabah’s palm oil industry The success of LKSS highlights the power of collaboration in transforming the palm oil industry. By fostering trust, sharing costs, and providing crucial technical support, cooperatives offer a sustainable pathway to RSPO certification. With continued investment and expansion, this model has the potential to reshape Sabah’s palm oil landscape, ensuring that both people and nature thrive together. Imagine if the LKSS example can be replicated across ten cooperatives; this model could potentially add about 150,000 hectares of RSPO-certified plantations, advancing Sabah’s 100% certification goal!

These efforts also contribute to the broader goals of the Jurisdictional Approach to Sustainable Palm Oil (JASPO), which aims to achieve RSPO certification at the state level, positioning Sabah as a global leader in sustainable, responsible palm oil production.

While the cooperative model represents a promising way forward, it does not hide the broader challenges across Sabah’s 1.5 million hectares of oil palm plantations. Systemic issues, ranging from costly certification costs to limited resources and market barriers, must be addressed to reach full sustainability. WWF-Malaysia remains committed to working with growers, partners, and policymakers to make sustainable palm oil the standard, not the exception. The cooperative model is more than just a business strategy—it’s a movement towards a future where every palm oil grower can be part of a responsible, resilient, and profitable industry.