CSR Asia Highlights the Benefits of Sustainable Palm Oil

Promulgating the notion that they are developing “green” biofuels, the palm oil industry has actually been associated with a wide range of predatory business practices, extensive damage to ecosystems and biodiversity, and an abundance of air pollution and carbon emissions.

For more than 15 years, affected communities and environmental and public interest NGOs, as well as governments, have been pressuring palm oil producers to clean up their act. In a new white paper, CSR Asia, in partnership with Oxfam, examines the experience of 'the little guy' – smallholders participating in the palm oil value chain – with an eye towards instituting equitable, sustainable business practices industry-wide.

Focusing primarily on the work of the Roundtable for Sustainable Palm Oil (RSPO) – which was established in 2003 to define and implement sustainable palm oil standards – CSR Asia focuses on “the certification of sustainable palm oil and the opportunities that this can provide for smallholders.”

Sustainability and palm oil

The conversion of huge tracts of land in developing countries by large business groups for palm oil production, particularly in Southeast Asia, has elicited strong, widespread criticism for a range of economic, social and ecological transgressions.

Environmentally, the negative impacts of palm oil production include “extensive deforestation, habitat loss for threatened and endangered species, poor air quality from burning forests and peatlands, as well as greenhouse gas emissions deriving from land use change.” Socially, concerns center on land rights of communities, labor conditions in plantations, and the “potential exploitation and exclusion of smallholders from the value chain,” CSR Asia highlights in, "Mulit-Stakeholder Initiatives: Smallholders and inclusive business opportunities in palm oil."

Critics of the way palm oil is being produced see a better way. To promote methods and means of producing palm oil in ways that are socially, ecologically and economically beneficial, groups of stakeholders are joining together to engage large palm oil corporations and press them to change their ways.

Greater inclusion of smallholders in development and management of palm oil plantations and production plays a central role in sustainable palm oil initiatives, CSR Asia highlights in its paper. Smallholders' land makes up more than 40 percent of planted palm oil trees in large palm oil producing countries, such as Malaysia. In countries where palm oil production is emerging, such as Thailand, smallholders' land makes up nearly 80 percent of planted palm oil hectares.

Furthermore, given the lack of strong, inclusive governance mechanisms, multi-stakeholder initiatives (MSIs) such as the RSPO “are seen as potentially powerful institutions filling the governance gap that exists around complex sustainability issues ... Voluntary initiatives across an entire sector can change policies and practices,” the report authors write.

“MSIs have the potential to create sector-wide, systemic change, focusing on joint solutions, resulting in better informed, better supported and more sustainable policy and practice changes. Inclusive business interventions associated with a MSI can help to address the interests of underrepresented, marginalized and vulnerable groups.”

Focusing on the activities of the RSPO, CSR Asia lists the following among its key findings:

• Robust land governance is a prerequisite for sustained success of smallholder and community programs and avoidance of conflict. RSPO social tools have proven useful to address these challenges, but more robust implementation is still needed;


• Private sector companies are best placed to drive inclusive business opportunities for smallholders and enhance productivity, but may need support for funding and capacity building;


• The most important role of government is to provide clarity on legal land titles and enable civil resolution of conflict without interference. In addition, government can supply funding and capacity to companies wishing to engage smallholders in marginal locations;


• Intergovernmental and Non-Governmental Organizations play critical roles as watchdogs, facilitators and advocates for communities and smallholders;


• Multi-stakeholder initiatives have the potential to create sector-wide, systemic change, focusing on joint solutions, resulting in better informed, better supported and more sustainable policy and practice changes;


• As pressures on companies to reduce carbon emissions and protect forests are mounting, specific consideration and participatory frameworks must be developed to ensure that land set-asides does not prevent communities from access to development and basic needs;


• Women’s economic empowerment has received little attention within the RSPO framework, but robust free prior and consent approaches can be adjusted and improved to strengthen opportunities for women;


• Reliance on retailers and brand support is unlikely to drive inclusive agriculture models, as there is scant willingness to pay a premium. Instead focus on traceable and low-risk supply chains can be leveraged as a strategic advantage.

Images credit: CSR Asia