Sustainability Initiatives - Palm Oil

Roundtable on Sustainable Palm Oil (RSPO)


About Sustainable Palm Oil

Vegetable oil production around the world totals 95 million tonnes per year, of which over 28 million tonnes are produced by the oil palm, the world's second largest oil crop after soyoil.

Palm oil is an important and versatile raw material for both food and non-food industries, which contributes to the economic development of the producing countries and to the diets of millions of people around the world. Although palm oil is entirely GM free and has the highest yield per hectare than any oil or oilseed crop, it is recognized that there are environmental pressures on its expansion to eco-sensitive areas, particularly as oil palm can only be cultivated in tropical areas of Asia, Africa and South America. It is vital that production and use of palm oil must be done in a sustainable manner based on economic, social and environmental viability.

Why sustainable palm oil?
Driven by ever increasing global demand for edible oils, the past few decades have seen rapid expansion in the production of two major edible oils, soyoil in South America and palm oil the tropics. From the 1990s to the present time, the area under palm oil cultivation had increased by about 43% , most of which were in Malaysia and Indonesia - the world's largest producers of palm oil. While better managed plantations and oil palm smallholdings serve as models of sustainable agriculture, in terms of economic performance as well as social and environmental responsibility, there is serious concern that not all palm oil is being produced sustainably at present. Development of new plantations has resulted in the conversion of large areas of forests with high conservation value and has threatened the rich biodiversity in these ecosystems. Use of fire for preparation of land for oil palm planting has been reported to contribute to the problem of forest fires in the late 1990s. The expansion of oil palm plantations have also given rise to social conflicts between the local communities and project proponents in many instances.

History of RSPO
In 2001, WWF gave an assignment to Reinier de Man, a Dutch consultant, to explore the possibilities for a Roundtable on Sustainable Palm Oil. The result was an informal co-operation among Aarhus United UK Ltd, Golden Hope Plantations Berhad, Migros, Malaysian Palm Oil Association, Sainsbury's and Unilever together with WWF in 2002. A preparatory meeting was held in London on 20 September 2002 and this was followed by a meeting in Gland on 17 December 2002. These organizations constituted themselves as an Organizing Committee to organize the first Roundtable meeting and to prepare the foundation for the organizational and governance structure for the formation of the RSPO. Reinier de Man was the Organising Committee's facilitator until April 2004.

The inaugural meeting of the Roundtable took place in Kuala Lumpur, Malaysia on 21 - 22 August 2003 and was attended by 200 participants from 16 countries. The key output from this meeting was the adoption of the Statement of Intent (SOI) which is a non-legally binding expression of support for the Roundtable process. As of 31 August 2004, forty seven organisations have signed the SOI.

On 8 April 2004, the "Roundtable on Sustainable Palm Oil (RSPO)," was formally established under Article 60 of the Swiss Civil Code with a governance structure that ensures fair representation of all stakeholders throughout the entire supply chain . The seat of the association is in Zurich, Switzerland, while the secretariat is currently based in Kuala Lumpur.

Objectives of RSPO

RSPO is an association created by organisations carrying out their activities in and around the entire supply chain for palm oil to promote the growth and use of sustainable palm oil through co-operation within the supply chain and open dialogue with its stakeholders.

 In particular, the RSPO will work on the following tasks:

  • Research and develop definitions and criteria for the sustainable production and use of palm oil;
  • Undertake practical projects designed to facilitate implementation of sustainable best practices;
  • Develop solutions to practical problems related to the adoption and verification of best practices for plantation establishment and management, procurement, trade and logistics;
  • Acquire financial resources from private and public funds to finance projects under the auspices of the Roundtable on Sustainable Palm Oil;
  • Communicate the Roundtable's work to all stakeholders and to a broader public.

Background on Palm Oil

Environmental, social and cultural impact of Palm Oil       

Palm oil production is a basic source of income for many of the world's rural poor in South East Asia, Central and West Africa, and Central America. An estimated 1.5 million small farmers grow the crop in Indonesia, whereas about 0.5 million people are directly employed in the sector in Malaysia, plus those connected with spin offs. Not only does the palm represent a pillar of these nation's economies but it is a catalyst for rural development and political stability. Many social initiatives use profits from palm oil to finance poverty alleviation strategies. Examples include the direct financing of Magbenteh hospital in Makeni, Sierra Leone, through profits made from palm oil grown by small local farmers, the Presbyterian Disaster Assistance's Food Security Program, which draws on a women-run cooperative to grow palm oil, the profits of which are reinvested in food security, or the UN Food and Agriculture Organisation's hybrid oil palm project in Western Kenya, which improves incomes and diets of local populations, to name just a few.

In the two countries responsible for over 80% of world oil palm production, Indonesia and Malaysia, smallholders account for 35-40% of the total area of planted oil palm and as much as 33% of the output. Elsewhere, as in West African countries that produce mainly for domestic and regional markets, smallholders produce up to 90% of the annual harvest.

As of 2006, the cumulative land area of palm oil plantations is approximately 11 million hectares. In 2005 the Malaysian Palm Oil Association, responsible for about half of the world's crop, estimated that they manage about half a billion perennial carbon-sequestering palm trees. Demand for palm oil has been rising and is expected to climb further.

This rising demand is resulting in tropical forest being cleared to establish new palm plantations. According to UNEP, at the current rate of intrusion into Indonesian national parks, it is likely that many protected rain forests will be severely degraded by 2012 through illegal hunting and trade, logging, and forest fires, including those associated with the rapid spread of palm oil plantations. There is growing concern that this will be harmful to the environment in several ways:

  • Significant greenhouse gas emissions. Deforestation, mainly in tropical areas, account for up to one-third of total anthropogenic CO2 emissions.
  • Habitat destruction of certain endangered species (e.g. the orangutans in Borneo, the Sumatran tiger, and Asian rhinoceros.)
  • Potential extinction of some such species
  • Many places that are of interest for growing palm are biodiversity hotspots, increasing the impact of this development on the environment. In addition to environmental impact, the logging, land-clearing and planting of oil palm continues to occur on native (Dayak) land, despite their frequent objections. This has caused the degradation of their food, water, forest product sources as well as destroying their cash crop farms such as fruit and rubber trees in Sarawak, Sabah and Kalimantan, Borneo.

Damage to peatland, partly due to palm oil production, is claimed to contribute to environmental degradation, including four percent of global greenhouse gas emissions and eight percent of all global emissions caused annually by burning fossil fuels, due to the large areas of rainforest that are cleared to make way for palm oil plantations. The pollution is exacerbated because many rainforests in Indonesia and Malaysia lie atop peat bogs that store great quantities of carbon that are released when the forests are cut down and the bogs drained to make way for the palm oil plantations.

NGOs have accused the growth of new palm oil plantations as also being responsible for peat forest destruction in Indonesia and for accelerating global warming. Greenpeace concluded that many food and cosmetics companies, including ADM, Unilever, Cargill, Proctor & Gamble, Nestle, Kraft and Burger King, are driving the demand for new palm oil supplies, partly for products that contain non-hydrogenated solid vegetable fats, as consumers now demand fewer hydrogenated oils in food products that were previously high in trans fat content. Friends of the Earth have concluded that the increase in demand comes from biofuel, with producers now looking to use palm as a source.

Environmental groups such as Greenpeace claim that the deforestation caused by making way for oil palm plantations is far more damaging for the climate than the benefits gained by switching to biofuel. The world's centres for oil palm production are Indonesia and Malaysia where rapid deforestation and the drying out of associated peatlands are, Greenpeace claim, releasing huge amounts of carbon dioxide into the atmosphere and thereby speeding climate change. Greenpeace identified Indonesian peatlands, unique tropical forests whose dense soil can be burned to release carbon emissions, that are being destroyed to make way for palm oil plantations. They represent massive carbon sinks, and they claim their destruction already accounts for four percent of annual global emissions. Greenpeace recorded peatland destruction in the Indonesian province of Riau on the island of Sumatra, home to 25 percent of Indonesia's palm oil plantations. There are plans to expand the area under concession by more than 11,000 square miles, which would deforest half of the province. They claim this would have devastating consequences for Riau's peatlands, which have already been degraded by industrial development and store a massive 14.6 billion tons of carbon, roughly one year's greenhouse gas emissions.

Research conducted by Greenpeace through its Forest Defenders Camp in Riau documents how a major Indonesian palm oil producer is engaging in the large-scale, illegal destruction of peatland in flagrant violation of an Indonesian presidential order, as well as national forestry regulations. Palm oil from peatland is fed into the supply chain for global brands. They accuse major multinational companies of turning a blind eye to peatland destruction to supply cheap vegetable oil. FoE and Greenpeace both calculate that forests and peatlands that are replaced as palm oil plantations release more carbon dioxide than is saved by burning biofuels in place of diesel.

In Africa, the situation is very different compared to Indonesia or Malaysia. In its Human Development Report 2007-2008, the United Nations Development Program says production of palm oil in West-Africa is largely sustainable, mainly because it is undertaken on a smallholder level. The United Nations Food and Agriculture program is encouraging small farmers across Africa to grow palm oil, because the crop offers opportunities to improve livelihoods and incomes for the poor.

Environmentalists and conservationists have been called upon to become palm oil farmers themselves, so they can use the profits to invest in their cause. It has been suggested that this a more productive strategy than the current confrontational approach that threatens the livelihoods of millions of smallholders.

Many of the major companies in the vegetable oil economy participate in the Roundtable on Sustainable Palm Oil, which is trying to address this problem. In 2008 Unilever, a member of the group, committed to use only palm oil which is certified as sustainable, by ensuring that the large companies and smallholders that supply it convert to sustainable production by 2015.

Meanwhile, much of the recent investment in new palm plantations for biofuel has been part-funded through carbon credit projects through the Clean Development Mechanism; however the reputational risk associated with unsustainable palm plantations in Indonesia has now made many funds wary of investing there.

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