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Making sustainable palm oil a reality

Palm oil is cheap to produce and a versatile ingredient in many household products. It is in chocolate, cosmetics and even in soap. The growing demand for this ubiquitous ingredient is putting pressure on our tropical rainforests and contributing to climate change.

Making sustainable palm oil a reality

Workers unloading palm fruit in Indonesia. About 3 million palm oil smallholders worldwide contribute to 40 per cent of total global production. Photo: Reuters

Palm oil is cheap to produce and a versatile ingredient in many household products. It is in chocolate, cosmetics and even in soap. The growing demand for this ubiquitous ingredient is putting pressure on our tropical rainforests and contributing to climate change.

The expansion of oil palm plantations has been the leading cause of deforestation in Indonesia and Malaysia, two of the top producers of palm oil in the world. Cutting and burning these forests result in the loss of wildlife habitats, and can affect the cultural identities of communities that have for decades depended on the rainforests.

The process also increases the severity of haze in the South-east Asian region. However, palm oil as an agricultural commodity can be sustainable. Compared to other vegetable oil sources, palm oil plantations produce higher yields from less land and require far less fertilisers and pesticides. Consumers should, therefore, not boycott palm oil but demand its sustainability, as replacing it means having to use more land, thereby compounding deforestation.

Companies will be the key drivers of a sustainable palm oil industry, and leadership from businesses is crucial. There are some encouraging developments over the past few years in the private sector. Companies representing about 60 per cent of the global palm oil production have pledged to eliminate palm oil-related deforestation from their supply chains. These firms range from major suppliers such as Cargill to consumer goods companies such as Unilever.

As consumers, it is also paramount that we demand transparency from the whole supply chain. Supply chains remain opaque and consumers often have little way of finding out the palm oil content in the products they purchase. Companies can build and improve their trustworthiness by being able to trace the palm oil they use to plantations that meet credible standards. The recent announcement by the Roundtable on Sustainable Palm Oil (RSPO) to make publicly available the concession maps of its members is a step in the right direction in creating transparency in the supply chain.

Sharing best practices in sustainable land use amongst commercial plantations and developing innovative solutions to maximise yield would be extremely important to push forward the sustainable palm oil agenda. With smart collaborations, groups with different perspectives can find common ground and turn a rapidly growing industry into a successful model for sustainable development.

Responsible sourcing will earn a brand the priceless but intangible trust and respect of its customers. Ensuring that social and economic development do not come at the expense of irreversible deforestation is one of the great challenges which businesses must be held accountable to. The risk of inaction may seem insignificant now, but if brands are to grow, they have to be proactive rather than reactive.

The Asian markets will shape the global palm oil industry, with Indonesia and Malaysia alone producing about 85 per cent of the world’s palm oil. When consumers in Asia demand certified sustainable palm oil products, more brands will seek to certify with RSPO.

Smallholders who manage a significant amount of palm oil land have a role to play, too. In Malaysia, smallholder farms cover about 38 per cent of the total area of oil palm cultivation. With their average annual yield of 17 tonnes of palm oil per hectare, including them as a key piece in the puzzle will help to balance economic growth with healthy forests.

Looking at the bigger picture, there are an estimated 3 million palm oil smallholders worldwide who contribute to 40 per cent of total global production. Smallholders face many challenges. They lack knowledge about good agricultural practices and have difficulty in gaining market access.

Due to their smaller plot sizes, smallholders are less efficient than other producers, with their yields much lower than those of commercial plantations. Hence, it is imperative that smallholders are able to participate in national supply chains if sustainable palm oil is to become the norm.

In some producer countries where deforestation is not illegal, regulatory reform is required. Transforming the RSPO Principles and Criteria into law is a good start to put a framework in place. Several countries such as Columbia and Gabon have taken the initiative to come up with national interpretations of RSPO Principles and Criteria for use in local context.

However, teething issues such as cultural differences and the establishment of minimum wages for workers do exist and hinder interpretation processes. At the same time, some countries such as Belgium and Denmark have gone the extra mile by making national commitments to use fully certified sustainable palm oil.

Governments can work on developing scientific tools, financial incentives, and policy and regulatory measures to help shift palm oil production to already degraded lands. Companies would have to compensate for forest lands they have damaged and undertake efforts for the conservation and restoration of areas that have high quantities of carbon stored within them and are of ecological and cultural significance. The renouncement of peat clearance for new plantations and support for independent smallholders would be equally important.

Countries can take a leaf out of the books of the European Union, which has mandated that retailers identify specific vegetable oils on food labels. Palm oil has often been hidden as generic vegetable oil and other misleading synonyms on food labels.

And while it is commendable to see a host of celebrities coming together to address palm oil-linked deforestation, the next crucial step would be for the world at large to send a message to retailers, suppliers and organisations.


Kavickumar Muruganathan is head of eco-certifications and lead environmental engineer at the Singapore Environment Council.

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