At the recent PORAM Annual Forum, Khor Reports spoke on the topic of sustainability certification options.
The outlook for the certification for sustainable palm oil is getting a lot more complex. It appears that stakeholders are wrestling for control over the palm oil policy agenda, after it was so readily snapped up by the Roundtable on Sustainable Palm Oil (RSPO) and its key movers in the last few years. The RSPO is the palm oil industry’s current super-standard and by some measures it is probably the most successful voluntary standard in agriculture product certification. However, the RSPO has some issues: a) its exclusive approach makes it de facto regressive as it set out to focus on the largest corporations, b) it has large gaps with policy in producer countries, c) its first-mover monopoly has been dissipating to the ISCC whose stronger commercial grounding is a contrast to the RSPO’s relatively disappointing low premium and supply glut; d) there are significant worries that the RSPO will be pressured to raise its standards by non-member NGOs; and e) it proposes large financial compensation charges on grower members – this could amount to USD billions and it might open them to national and international lawsuits. This is from the perspective of palm oil industry players. From the viewpoint of other NGOs, it is not doing enough. And here, we see the new combination of The Forest Trust and Greenpeace coming in to usurp the RSPO's prime position while relying on it i.e. launching RSPO+ efforts. TFT/Greenpeace worked to great effect in causing GAR/Sinar Mas to adopt strict standards including no planting on peat and using a 35 tonnes carbon per hectare ceiling for new land development in a pilot project. We can expect the TFT/Greenpeace program to be marketed to more companies, both buyers and plantations.
In light of such trends, it is no surprise that there are clear signs that big grower and buyer members of the RSPO have been setting up various alternatives. Some may worry about a trajectory of excessive demands and so they seek to hedge their bets. Others may be seeking better alignment for multi-product supply-chains. Some want to show they can do more than RSPO e.g. Ferrero working with TFT/Greenpeace standards. Whatever the reason, key stakeholders have been actively pushing for new certification options which may better retain industry control. Will this dilute the impact of RSPO’s perilous promotion of trade restrictions? Thus, we see the introduction of state-initiated and supra-national facilitated schemes. These could gain market share if voluntary standards are impaired by poor alignment at the structural or policy level e.g. many voluntary conservation areas are untenable. Palm oil industry certification could be quickly moving toward the complexity seen in other sectors such as forestry and soy. How will NGOs react to such a shift? The palm oil industry will need to ensure good practices and maintain buyer acceptance. The grower segment and key supply-chain choke-points are under pressure, and they will need to put in additional resources for advocacy and negotiation on market access and more.
Bottom-line: Under sustainability, the supply-chain model has to be short and simple. Big and complex won't work well under traceability requirements.
The outlook for the certification for sustainable palm oil is getting a lot more complex. It appears that stakeholders are wrestling for control over the palm oil policy agenda, after it was so readily snapped up by the Roundtable on Sustainable Palm Oil (RSPO) and its key movers in the last few years. The RSPO is the palm oil industry’s current super-standard and by some measures it is probably the most successful voluntary standard in agriculture product certification. However, the RSPO has some issues: a) its exclusive approach makes it de facto regressive as it set out to focus on the largest corporations, b) it has large gaps with policy in producer countries, c) its first-mover monopoly has been dissipating to the ISCC whose stronger commercial grounding is a contrast to the RSPO’s relatively disappointing low premium and supply glut; d) there are significant worries that the RSPO will be pressured to raise its standards by non-member NGOs; and e) it proposes large financial compensation charges on grower members – this could amount to USD billions and it might open them to national and international lawsuits. This is from the perspective of palm oil industry players. From the viewpoint of other NGOs, it is not doing enough. And here, we see the new combination of The Forest Trust and Greenpeace coming in to usurp the RSPO's prime position while relying on it i.e. launching RSPO+ efforts. TFT/Greenpeace worked to great effect in causing GAR/Sinar Mas to adopt strict standards including no planting on peat and using a 35 tonnes carbon per hectare ceiling for new land development in a pilot project. We can expect the TFT/Greenpeace program to be marketed to more companies, both buyers and plantations.
In light of such trends, it is no surprise that there are clear signs that big grower and buyer members of the RSPO have been setting up various alternatives. Some may worry about a trajectory of excessive demands and so they seek to hedge their bets. Others may be seeking better alignment for multi-product supply-chains. Some want to show they can do more than RSPO e.g. Ferrero working with TFT/Greenpeace standards. Whatever the reason, key stakeholders have been actively pushing for new certification options which may better retain industry control. Will this dilute the impact of RSPO’s perilous promotion of trade restrictions? Thus, we see the introduction of state-initiated and supra-national facilitated schemes. These could gain market share if voluntary standards are impaired by poor alignment at the structural or policy level e.g. many voluntary conservation areas are untenable. Palm oil industry certification could be quickly moving toward the complexity seen in other sectors such as forestry and soy. How will NGOs react to such a shift? The palm oil industry will need to ensure good practices and maintain buyer acceptance. The grower segment and key supply-chain choke-points are under pressure, and they will need to put in additional resources for advocacy and negotiation on market access and more.
Bottom-line: Under sustainability, the supply-chain model has to be short and simple. Big and complex won't work well under traceability requirements.