Does the RSPO have a fu­ture?

The Star Malaysia - StarBiz - - Companies & Strategies - COM­MENT by R.H.V. CORLEY

THE Round­table on Sus­tain­able Palm Oil (RSPO) was es­tab­lished in 2004, in re­sponse to the at­tacks on the in­dus­try on en­vi­ron­men­tal and so­cial grounds. Mem­bers in­clude palm oil grow­ers, traders, fi­nanciers and end-users, as well as con­cerned non-gov­ern­ment or­gan­i­sa­tions (NGOs). Its aim is to “trans­form mar­kets to make sus­tain­able palm oil the norm”, and to “ad­vance the pro­duc­tion, pro­cure­ment, fi­nance and use of sus­tain­able palm oil prod­ucts.”

These ob­jec­tives are ad­mirable, and es­sen­tial to the improve­ment of palm oil’s rep­u­ta­tion in some mar­kets.

Here, I wish to give an out­sider’s view on the ex­tent to which these ob­jec­tives are be­ing achieved, and dis­cuss what the fu­ture may hold for RSPO.

The cer­ti­fied sus­tain­able palm oil (CSPO) by the RSPO con­sti­tutes less than 20% of world pro­duc­tion, and users have failed to take up more than half the cer­ti­fied oil.

A ma­jor­ity of grow­ers ap­pear to re­gard the RSPO cer­ti­fi­ca­tion as “an un­jus­ti­fi­able cost” given that the price premium for cer­ti­fied oil is neg­li­gi­ble. De­spite ad­mirable in­ten­tions, the cer­ti­fi­ca­tion for small­hold­ers’ re­mains par­tic­u­larly weak.

Fur­ther­more, a pro­fu­sion of other sus­tain­abil­ity cer­ti­fi­ca­tion schemes con­fuses the con­sumers and ap­pears likely to un­der­mine the RSPO. Far from ‘be­com­ing the norm’, as was hoped, the RSPO cer­ti­fied palm oil will prob­a­bly re­main a niche prod­uct, un­less steps are taken to in­crease up­take of cer­ti­fied oil.

Crit­i­cism

The RSPO has been crit­i­cised for be­ing too le­nient with mem­ber grow­ers who fail to meet the cri­te­ria, but it must be re­mem­bered that mem­ber­ship is vol­un­tary, and there are large mar­kets for palm oil where sus­tain­abil­ity is not yet an is­sue.

Per­haps, the most im­por­tant crit­i­cism is that cer­ti­fi­ca­tion bod­ies have failed to iden­tify un­sus­tain­able prac­tices. Worse still, ac­cord­ing to case stud­ies listed by the En­vi­ron­men­tal In­ves­ti­ga­tion Agency , in some cases the cer­ti­fiers ap­peared to be col- lud­ing with plan­ta­tion com­pa­nies to dis­guise vi­o­la­tions of the RSPO cri­te­ria.

It has been claimed that non-com­pli­ance by mem­bers is wide­spread, with some CSPO com­ing from re­cently de­for­ested land.

Some sug­gested that the RSPO’s prob­lems could be dealt with, and its cred­i­bil­ity im­proved, by ap­point­ing an in­de­pen­dent ‘watch dog’ group to mon­i­tor op­er­a­tions, such as the FSC-Watch, which over­sees the For­est Stew­ard­ship Coun­cil for the tim­ber in­dus­try.

The RSPO cer­ti­fi­ca­tion re­ports are re­viewed be­fore ac­cep­tance, but the re­view­ers re­port di­rectly to the cer­ti­fi­ca­tion bod­ies, rather than to the RSPO, so they are not re­ally in­de­pen­dent.

The NGOs have crit­i­cised the RSPO for be­ing too lax, but con­versely, some of the cri­te­ria are crit­i­cised by grow­ers as mis­con­ceived or un­nec­es­sary. Even the most com­mit­ted grow­ers have be­come dis­il­lu­sioned by ap­par­ently sense­less de­ci­sions, and are frus­trated by the bu­reau­cracy.

For ex­am­ple, the com­plete New Plant­ing Pro­ce­dure has to be fol­lowed even when con­vert­ing to oil palm from an­other crop.

There is no ob­vi­ous logic to this; for­est bio­di­ver­sity and car­bon stocks have al­ready been lost.

Eco­nomic sus­tain­abil­ity is im­por­tant, and if a grower con­sid­ers that con­ver­sion to oil palm is in his eco­nomic in­ter­est, the RSPO should not to prevent con­ver­sion.

The most im­por­tant sus­tain­abil­ity stan­dards ap­plied to palm oil are prob­a­bly; the In­done­sian Sus­tain­able Palm Oil (ISPO), the Malaysian Sus­tain­able Palm Oil (MSPO), the Palm Oil In­no­va­tion Group (POIG), to­gether with the RSPO Next.

The RSPO had the im­por­tant ef­fect of pro­vok­ing the de­vel­op­ment of ISPO and MSPO cer­ti­fi­ca­tion schemes. The ISPO cer­ti­fi­ca­tion is al­ready a le­gal re­quire­ment for plan­ta­tions in In­done­sia, and MSPO cer­ti­fi­ca­tion may be­come com­pul­sory in Malaysia.

In com­par­i­son, the RSPO has the most com­pre­hen­sive So­cial Im­pact Assess­ment re­quire­ments, and the strong­est mea­sures for bio­di­ver­sity pro­tec­tion. ISPO pro­vides the least strin­gent pro­tec­tion for bio­di­ver­sity, but the In­done­sian gov­ern­ment has im­posed a mora­to­rium on the clear­ance of pri­mary for­est.

This does not ap­ply to sec­ondary for­est, how­ever, and there are claims that large ar­eas of pri­mary for­est have been clas­si­fied as sec­ondary, and thus fall out­side the mora­to­rium.

Nei­ther the ISPO nor MSPO has cut-off dates for ap­pli­ca­bil­ity of the cri­te­ria, and there are no ex­plicit com­mit­ments to trans­parency and eth­i­cal con­duct.

The RSPO also gave the great­est pro­tec­tion of hu­man rights and com­mu­nity liveli­hoods, and ISPO the weak­est.

These dif­fer­ences will lead to crit­i­cism of MSPO and ISPO, but a com­bi­na­tion of com­pul­sory cer­ti­fi­ca­tion and more ‘grower friendly’ cri­te­ria means that ISPO and MSPO may have a more sig­nif­i­cant in­flu­ence on the be­hav­iour of the palm oil in­dus­try than RSPO, whether or not the cer­ti­fi­ca­tion is ac­cepted by NGOs and con­sumer coun­tries.

The RSPO Next is a vol­un­tary stan­dard aimed at RSPO mem­bers who have ex­ceeded the cur­rent re­quire­ments for cer­ti­fi­ca­tion.

A num­ber of cri­te­ria are added to the P&C, in­clud­ing a com­mit­ment to no de­for­estion, with for­est de­fined in terms of both bio­di­ver­sity and car­bon stocks.

The RSPO CEO has been quoted as con­fi­dent that if RSPO Next is suc­cess­fully im­ple­mented, it will only be a mat­ter of time be­fore it be­comes the in­dus­try norm.

This seems un­likely, given the poor adop­tion of the ba­sic P&C by the in­dus­try as a whole.

The fu­ture

A cru­cial ques­tion is whether we want as much of the in­dus­try as pos­si­ble com­mit­ted to RSPO, or a lim­ited part of the in­dus­try pro­duc­ing oil which meets the high­est pos­si­ble stan­dards.

In my opin­ion the for­mer is more im­por­tant, but it seems clear that many pro­duc­ers are re­luc­tant to join the RSPO, see­ing cer­ti­fi­ca­tion as a cost, with lit­tle re­turn in terms of price premium.

If the RSPO con­tin­ues as at present, the fu­ture seems clear: its cer­ti­fied oil will be­come more and more of a niche prod­uct.

Re­spon­si­bil­ity for this must lie mainly with those NGOs and food man­u­fac­tur­ers who have pushed for ever higher stan­dards, rather than en­cour­ag­ing the rest of the in­dus­try to come on board.

The use of a niche prod­uct may be a sell­ing point for some palm oil users, of course, so per­haps the users have a dif­fer­ent ob­jec­tive from the NGOs.

To avoid this out­come, it seems es­sen­tial that up­take of CSPO is in­creased.

Far from sup­port­ing the CSPO mar­ket, some man­u­fac­tur­ers who are mem­bers are ad­ver­tis­ing prod­ucts as ‘palm oil free’. This is clearly against the spirit of RSPO, even if the Code of Con­duct does not ex­plic­itly for­bid it.

Per­haps mem­bers who are users should be obliged to put for­ward, and be au­dited against, time-bound plans to move to 100% cer­ti­fied oil, just as pro­duc­ers are au­dited on time-bound plans for all their pro­duc­tion to be cer­ti­fied.

Some mem­bers have pub­lished plans, but these have been vol­un­tary, and are not a re­quire­ment of RSPO mem­ber­ship.

If all CSPO is taken up and there is fur­ther un­met de­mand, the price premium should in­crease, and the plan­ta­tion in­dus­try

might start to see that there is an ad­van­tage to RSPO mem­ber­ship.

At the same time, RSPO and NGO mem­bers should strongly em­pha­sise and pub­li­cise the va­lid­ity of the ‘book and claim’ sup­ply chain, so that users can ob­tain CSPO with­out the un­nec­es­sary ad­di­tional costs of seg­re­ga­tion.

If the RSPO suc­ceeds in mak­ing CSPO ‘the norm’, the price premium would dis­ap­pear, but un­cer­ti­fied oil would prob­a­bly be­come saleable only at a dis­count to CSPO, giv­ing the same net re­sult.

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