Transnational vs. national sustainability standards in China's palm oil sustainability governance

Oil palm (Elaeis spp.) is one of the world’s most rapidly expanding crops. Especially prevalent in Malaysia and Indonesia, oil-palm plantations are also increasing rapidly across tropical regions as diverse as New Guinea, Equatorial Africa, Central America, and the Amazon (Butler & Laurance 2009; Koh & Wilcove 2009). Oil palm is an important driver of tropical deforestation, in part, because plantation owners often use timber revenues from old-growth forests to subsidize the initial costs of plantation establishment and maintenance (Fitzherbert et al. 2008). Expansion of oil palm imperils both lowland rainforests and peat-swamp forests, which are, respectively, among the biologically richest and most carbon-dense ecosystems on Earth (Butler & Laurance 2009; Koh et al. 2009a). The rapid expansion of oil palm seems likely to continue for many years because of its high profitability and the growing global demands for edible oils and biofuel feedstocks. Proponents of palm oil emphasize that its main alternatives, including soy, sunflower, and canola (rapeseed) oils, have production efficiencies just 10–20% as high as palm oil on a per-hectare basis and would therefore require much larger areas of cultivated land to have a similar benefit (Basiron 2009). Nevertheless, from climate-change and biodiversity perspectives, the advantages of palm-oil production are greatly diminished when it contributes either directly or indirectly to deforestation (Gibbs et al. 2008; Danielsen et al. 2009). Growing concerns about the environmental impacts of palm oil helped initiate the Roundtable on Sustainable Palm Oil (RSPO), a nonprofit, industry-led trade organization whose stated mission is to “provide RSPO-certified palm oil to the market in a clear and transparent manner” and to “promote the growth and use of sustainable palm oil” (www.rspo.org/What_is_RSPO@.aspx). As implied by the word roundtable, the RSPO professes to advocate a balanced, multistakeholder approach, with considerable emphasis on environmental sustainability. According to the RSPO, this is evidenced by the fact that four of the 16 members of its executive board are from conservation or social-developmental organizations. The RSPO also takes pains to draw a distinction between itself and industry-advocacy groups, such as the Malaysian Palm Oil Council and Indonesian Palm Oil Producers Association, by emphasizing its efforts to improve the industry’s sustainability and transparency (V. Rao, personal communication). The RSPO has considerable potential to improve the environmental performance of producers and users of palm oil. Although established only in 2004, it is strategically positioned within the palm-oil industry and is particularly influential in Malaysia. The growing membership of RSPO already accounts for approximately 35% of the global production of palm oil, although only about one tenth of this oil is currently certified as sustainable (RSPO 2008). To define sustainability in the oil-palm sector, the RSPO has developed 39 sustainability criteria, organized under eight general principles, which are designed to limit environmental impacts of growing and processing palm oil. These criteria focus on issues, such as reducing herbicide impacts, air pollution, and losses of biodiversity as well as on social and legal concerns (RSPO 2006). Nevertheless, some environmental organizations have repeatedly criticized the RSPO and its members, particularly for enabling tropical deforestation and atmospheric carbon emissions under the guise of stated, but unfulfilled, sustainability criteria (e.g., Down to Earth 2004; Greenpeace 2008; Maitar 2009). Here, we critique the RSPO from an environmental perspective and identify some specific ways it can become more effective in reducing threats to tropical ecosystems.

The Indonesian palm oil industry, a global leader, faces growing pressure for sustainability. Roundtable on Sustainable Palm Oil (RSPO) and Indonesian Sustainable Palm Oil (ISPO), while aiming for sustainable palm oil industry, have distinct differences that can hinder efforts to promote sustainability. To address these challenges, this study explores the potential benefits and challenges of harmonizing RSPO and ISPO to be a sustainability certification standard for sustainable palm oil industry. We employ a qualitative thematic analysis to delve into stakeholder perceptions of RSPO’s effectiveness and its potential for harmonization with ISPO. Through in-depth interviews with companies, lenders, and investors, and analyzing sustainability reports, we examine how these stakeholders view RSPO’s ability to promote sustainability and its potential for harmonization. By incorporating stakeholder and institutional theory, we acknowledge the complex interplay of interests and pressures shaping sustainability development in the Indonesian palm oil industry. Dual certification, RSPO and ISPO, complicates the industry. Some companies avoid RSPO due to its complexity. Harmonization is crucial for promoting sustainable palm oil industry and sustainability in Indonesia. RSPO could focus on large companies, while ISPO could concentrate on smallholders. Official collaboration is essential to reduce complexity and improve smallholders’ livelihoods. Both should strengthen its governance.

From an environment point of view, the global oil palm industry is at a crossroad. Organisations in the industry are finding it increasingly difficult to meet the new criteria introduced by the Roundtable on Sustainable Palm Oil (RSPO), in addition to the high cost of implementation of RSPO and certification and the low premium for certified oil. Malaysia and Indonesia have established and implemented, or in the process of establishing, their own domestic version of sustainable palm oil, i.e. Malaysian Sustainable Palm Oil (MSPO) and Indonesian Sustainable Palm Oil (ISPO). This is in line with their own national objective of controlling the destiny of their national oil palm industry rather than being subjected to external control which may clash with their national social responsibilities. Part 1 of this two part article outlines the majority of organisations implementing environment sustainability schemes that may impact the oil palm industry. The impacts are dictated by the concerns of overseas consumers and buyers of palm oil products, which in tum, are dependent on their national requirements and the influence of regional non-government organisations (NGOs). The impacts of MSPO and ISPO are explored in slightly greater depths as these are implemented on a national scale by their respective national organisations on their indigenous oil palm industry. The impasse faced by RSPO is also highlighted. Keywords: Oil palm, environment schemes, MSPO, RSPO, ISPO, ISCC, POIC, environment impasse.

Palm oil mill effluent (POME) is a major concern as open lagoon technology is not environment-friendly. Therefore, the palm oil industry refers to a roundtable on sustainable palm oil (RSPO), Indonesian sustainable palm oil (ISPO), and Malaysian sustainable palm oil (MSPO) standards for POME treatment to reduce greenhouse gas emissions. An alternative POME treatment technology is the combination of open lagoon technology (COLT) with composting, biogas technology plus composting, biogas technology plus membrane, and biogas technology plus land application. The objective of this study is to analyze the life cycle assessment (LCA) result using a multi-criteria decision approach and to determine the implementation of POME treatment in the RSPO, ISPO, and MSPO standards. The LCA system boundary was considered from gate-to-gate and unit per ton of fresh fruit bunch as a functional unit. SimaPro® was used as the LCA analysis tool; Expert Choice® and Super Decision Software® were used to perform the analytic hierarchy process and analytic network process, respectively. In this study, COLT–Biogas plus composting technology had the maximum priority weight (0.470), according to the opinion of experts. The results could help palm oil mill decision-makers in choosing environment-friendly POME treatment technology.

Key messagesGender issues are relegated to the periphery in current debates and approaches concerning the sustainable governance of oil palm in Indonesia. However, ongoing research by the Center for International Forestry Research (CIFOR) points to the critical roles that women play as workers, smallholders and members of affected local communities. Gender inequities follow as oil palm expansion displaces local women from land on which they cultivate food crops. Women workers’ contributions to large and smallholder oil palm production are either less visible, rendering them as shadow workers, or women are overrepresented in the ‘casual worker’ category, with limited entitlement to decent working conditions. Women’s ability to exercise their voice and agency are restricted by structures and norms that route decision-making processes through male community leaders and household heads.The Roundtable on Sustainable Palm Oil (RSPO) could serve as a powerful conduit for raising awareness about gender issues, developing mechanisms for addressing gender inequities in oil palm and offering lessons for other certification standards such as Indonesian Sustainable Palm Oil (ISPO). However, the RSPO principles and criteria (P&C), guidance and auditing mechanisms are not sufficiently gender specific. Gender is often grouped in with other forms of discrimination, or alternatively, gender issues are viewed as a household or communal matter and hence beyond the boundaries of the certification standard.Smallholder dynamics, in which work and employment arrangements are less formalized, present new challenges for auditors. Greater specificity in the P&C guidance and clarity over what should be monitored in auditor assessments are needed. Guidance on the evaluation and selection of social auditors and their training is critical, particularly on gender sensitivity and gender disaggregated data collection. It is also important for the RSPO to look toward other certification standards for good practices on adopting gender equality and women’s empowerment as a principle in its own right, and developing and implementing clearer criteria and guidance for auditing and evaluation.

Sustainability certifications have been introduced for the palm oil industry to ensure its sustainable operation and the production of highly demanded palm oil. At present, there are several sustainability certifications in the market, namely the Roundtable on Sustainable Palm Oil (RSPO), the Malaysian Sustainable Palm Oil (MSPO), and the Indonesian Sustainable Palm Oil (ISPO) certifications. As the crude palm oil (CPO) becomes the largest product been produced and exported in the palm oil industry, it is assumed that the major CPO producers would adhere to the call for sustainability practices by producing certified palm oil. However, the additional cost of acquiring sustainability certification might hinder them from doing so. Besides, it is unclear on the effect of these certifications on firm profitability since there are very few studies have provided quantitative evidence empirical research focuses specifically on the sustainability certification in palm oil industry context. Thus, this intends to fill this gap by examining the effect of local, that is, MSPO or ISPO and international, that is, RSPO certifications on the financial profitability of the world’s top 20 CPO producers which comprises of the leading global palm oil companies based in Malaysia and Indonesia for the period of 2013 to 2018. General Least Regression is employed due to the problems of non-normality of data, heteroscedasticity, and autocorrelation. The main variable under investigation in this study is RSPO, MSPO, and ISPO, proxied by dummy variable. The results showed no significant difference in profitability of locally certified and non-certified CPO producers. Meanwhile, CPO producers with international certification, that is, RSPO recorded reduced profitability of 5% compared to locally certified producers. Hence, the adverse effect of sustainability certifications calls for intervention from both Malaysian and Indonesian governments as well as palm oil authorities in the respective countries, for example, introduction of tax incentives and/or subsidies to compensate for the reduced profitability and the cost of certification.

Peatlands store very high carbon stocks. Damage to peatland ecosystem will have an impact on increasing greenhouse gas (GHG) emissions and increasing the risk of climate change. Peatlands governance is important to prioritize the principle of conservation over cultivation. The aim of this study is to analyze and elaborate the conflict of interests between the Roundtable on Sustainable Palm Oil (RSPO) and Indonesia Sustainable Palm Oil (ISPO). The methods are normative-legal research to diagnose the difference in the application of law between RSPO and ISPO. The findings show that RSPO as one of the world sustainable palm oil management standards has banned palm oil planting on peatlands based on its 2018 Principles and Criteria for the Production of Sustainable Palm Oil (P&C). Unfortunately, the palm management instrument in Indonesia which is ISPO still provides space for palm oil cultivation on peatlands. Relation of this study with climate change issues is that ISPO ideas are counterproductive to Indonesia’s commitment in reducing GHG emissions by 29% in 2030. Indonesia needs to evaluate peatland governance policies to prioritize conservation rather than cultivation.

Palm oil is one of the commodities of plantation products that has an important role in economic activities in Indonesia because of its ability to produce vegetable oil which is much needed by the industrial sector. The potential development of Indonesia's palm oil exports is very high considering the many benefits derived from these products. Therefore, there is a need to ensure that CPO products have a sustainable nature, one of which is that CPO products must be RSPO certified. This study analyzes how the influence of various factors that can affect Indonesia's CPO exports, one of which is RSPO certification using panel regression with the basic gravity model. The data which is used in this research is panel data in the form of time series for 20 years with cross sections from five major importing during 1999-2018. The analysis shows that importer’s GDP and exchange rate significantly and positively affect Indonesia's CPO exports, while the population of the importing country has a significant and negative effect. The RSPO dummy variable shows a significant and positive value, meaning that there was a significant difference between CPO exports when the RSPO certification took effect before and after 2008. Although the RSPO has an effect on Indonesia's CPO exports, there are still a number of indicators from the RSPO that Indonesia has not been able to fulfill. That indicator can be used as a material for consideration to be adopted in national certifications such as ISPO so that Indonesian CPO products can be said to be sustainable so that they can reach wider export markets.

World demand for Crude Palm Oil (CPO) consistently increases. On the other hand, CPO market moves slowly probably due to Roundtable on Sustainable Palm Oil (RSPO) certification. International trade system requires large CPO producers to have a RSPO Certificate as one of requirements for exporting their product. It is expected that this requirement will also be applied immediately to smallholding oil palm plantations. This paper aims to analyze the benefits of RSPO certification on improving oil-palm smallholders' welfare in Jambi Province. Data collected in this study were analyzed using both descriptive and quantitative methods. Results of the study showed that RSPO certification, in several aspects, significantly improved farmers' wealth, timely availability of input factors, oil palm yield, processing and marketing, and CSR financial support. It also indicates that oil palm plantation companies tend to give preferential treatment in transaction process with farmers having RSPO certificates. Abstrak Permintaan Crude Palm Oil (CPO) dunia pada dasarnya mengalami peaingkatan secara konsisten, namun pasar CPO cenderung mengalami kelesuan yang diduga sangat berkaitan dengan sertifikasi Roundtable on Sustainable Palm Oil (RSPO). Sistem perdagangan internasional mengharuskan produsen CPO untuk memiliki sertifikat RSPO sebelum memasarkan produk ke luar negeri. Dapat diduga bahwa kewajiban memiliki sertifikat RSPO tidak akan hanya terbatas kepada pengusaha perkebunan besar, namun lambat laun akan juga diwajibkan untuk dimiliki oleh setiap pengusaha kebun kelapa sawit termasuk petani rakyat swadaya. Tulisan ini bertujuan menganalisis manfaat sertifikasi RSPO terhadap peningkatan kesejahteraan petani kelapa sawit swadaya di Provinsi Jambi. Data dalam penelitian ini dianalisis dengan menggunakan metode deskriptif dan statistik nonparametrik. Sertifikasi RSPO dalam beberapa aspek telah dapat dirasakan berkontribusi terhadap peningkatan kesejahteraan petani khususnya dalam hal ketersediaan input produksi secara tepat waktu, peningkatan produktivitas, pengolahan hasil dan pemasaran, serta dukungan dana CSR dari perusahaan inti. Hasil penelitian juga menunjukkan bahwa perusahaan Perkebunan Kelapa Sawit cenderung memberikan kemudahan dalam melakukan transaksi kepada kelompok tani yang sudah memiliki sertifikat RSPO.

The Roundtable on Sustainable Palm Oil (RSPO) was founded in 2004 to promote the expansion and use of sustainable oil palm products through credible global standards and multistakeholder governance. Though RSPO was widely accepted as a reliable standard, it still lacks into certain extent quantification element to enable proper and smoother standardized measurement. To eliminate this problem, a new indexing method called Environmental Sustainability Index (ESI) was designed and proposed. The paper presents a case study to demonstrate the real-life application of the ESI-RSPO Integrated Environmental Sustainability Index Framework. The framework designed by the fusion of the key features of the ESI of measuring the overall progress towards environmental sustainability and RSPO of encouraging the growth and use of sustainable oil palm products, exhibits an organized, procedural and scientific pathway of measuring the environmental performance of palm oil manufacturing entities. Quantitative approach from ESI coupled with qualitative valuation from RSPO brings about tremendous advantages in the environmental sustainability context in particular by clearly showing where an entity is positioned in relation to the desired target. The results of this case study clearly pinpoint the environmental parameter outlier and prove that integration of ESI and RSPO will not only promote objectivity but also consistency of results across different production units. Both qualitative and quantitative measurement, operating in conjunction, is very much needed in a system as critical and dynamic with complex inter-relationship and linkages between various subsystems such as environmental sustainability.

Early mover advantage in Roundtable on Sustainable Palm Oil certification: A panel evidence of plantation companies

Non-state certification of smallholders for sustainable palm oil in Sumatra, Indonesia

This paper strives to study the presence and impact of Roundtable on Sustainable Palm Oil (RSPO) and Roundtable on Responsible Soy (RTRS) in India today. The reason for choosing these two roundtables is - India is one of the significant producers of soy oil and is one of the largest markets for palm oil globally. With the roundtables being established keeping in mind the case of sustainability for the procurement and usage of soy oil and palm oil, and India playing a major role in both, it becomes extremely important to study how sustainable the Indian market is in terms of product manufacturing and usage involving soy oil and palm oil. The previous papers have done an extensive study on RSPO in India, the global presence, and the impact of RTRS. They have a lot of quantitative and qualitative data regarding the presence of RTRS and RSPO. However, a gap exists, as RSPO and RTRS have not been analyzed together in the Indian context. Thus, this gap shall be addressed in this paper- we attempt to analyze the latest RTRS and RSPO in India by referencing previous papers and looking up the public domain for recent information specific to RSPO and RTRS in India. This paper is a literature review of previous papers on RSPO in Indian reference and RTRS and adds updated information. A comparative analysis of the presence of RSPO and RTRS in India is also added. Both RSPO and RTRS have a lot to increase their influence in the Indian market- especially RTRS. The paper concludes with recommendations for enhancing the influence and opens further discussion on implementing the recommendations and alternative recommendations, if any, in the future.

This paper strives to study the presence and impact of Roundtable on Sustainable Palm Oil (RSPO) and Roundtable on Responsible Soy (RTRS) in India today. The reason for choosing these two roundtables is - India is one of the significant producers of soy oil and is one of the largest markets for palm oil globally. With the roundtables being established keeping in mind the case of sustainability for the procurement and usage of soy oil and palm oil, and India playing a major role in both, it becomes extremely important to study how sustainable the Indian market is in terms of product manufacturing and usage involving soy oil and palm oil. The previous papers have done an extensive study on RSPO in India, the global presence, and the impact of RTRS. They have a lot of quantitative and qualitative data regarding the presence of RTRS and RSPO. However, a gap exists, as RSPO and RTRS have not been analyzed together in the Indian context. Thus, this gap shall be addressed in this paper- we attempt to analyze the latest RTRS and RSPO in India by referencing previous papers and looking up the public domain for recent information specific to RSPO and RTRS in India. This paper is a literature review of previous papers on RSPO in Indian reference and RTRS and adds updated information. A comparative analysis of the presence of RSPO and RTRS in India is also added. Both RSPO and RTRS have a lot to increase their influence in the Indian market- especially RTRS. The paper concludes with recommendations for enhancing the influence and opens further discussion on implementing the recommendations and alternative recommendations, if any, in the future.

This chapter investigates the efficiency of the Roundtable on Sustainable Palm Oil (RSPO) certification system on smallholders in the Malaysian state of Sarawak. It focuses on a plantation that is an RSPO holding company, as well as surrounding villages in the state. The RSPO system was introduced in 2004. First, smallholders can reap substantial profits by cultivating oil palm. Compared to conventional crops, oil palm is currently one of the most attractive cash crops for inland dwellers. Smallholders view it as a flexible livelihood because they can combine it with other economic activities based on each household’s manpower and current financial situation. Second, RSPO certification has the potential to give smallholders more autonomy. Various forms of company support (based on the RSPO system), such as initial investment subsidies, free seedlings, technical support and fertiliser, are very important for smallholders’ success. Such support allows them to cultivate oil palm independently because company aid does not directly compel them to sell oil palm fruits to the company’s mill. Third, this chapter shows that the two-way relationship model gives inland indigenous communities the potential to become producers in the oil palm industry. This research offers a new perspective on how smallholders manage their businesses well by working with other leading actors through RSPO certification.