Moving Away From Win-Wins and Towards Sustainable Solutions in Palm Oil

Kedar Mankad, EcoAgriculture Partners

It seems that a week doesn’t pass these days without a new editorial on palm oil. Sometimes they highlight the bad, other times they highlight the good. When speaking of solutions, the dialogue on both sides inexorably leads toward “win-win” solutions, where consumers, the environment and companies all come out on top. It’s understandable that those suggesting solutions would frame them in this way, especially when losing may mean loss of livelihood, loss of land, loss of profit, or more. However, describing potential solutions as “win-win” takes away from the fact that what forward thinking value chain actors must do is not think about finding wins for themselves, but come together to manage the inevitable tradeoffs (and synergies) that commercial agriculture brings to the fore.

Palm oil production overlaps significantly with hotspots of globally significant biodiversity. Sources: Monfreda et al. (2008), “Farming the planet: 2. Geographic distribution of crop areas, yields, physiological types, and net primary production in the year 2000, Conservation International (2011) “Biodiversity Hotspots.” Map by Louise Willemen/EcoAgriculture Partners and Cornell University.

Commercial agricultural production in tropical forests comes with huge tradeoffs; economic growth from palm oil has been coupled with deforestation, air and water pollution, loss of critically endangered species, and livelihoods implications for local populations. But though advocacy campaigns from groups like Greenpeace and Forest People’s Program, and scorecards from the Union of Concerned Scientists and WWF are important for bringing consumer awareness to these issues and keeping companies feet to the fire, for many actors the underlying financial incentives must change in order to tilt them towards reevaluating business as usual.

The Roundtable on Sustainable Palm Oil (RSPO), currently representing about 16% of the global market, has been the choice for frontrunner companies in the value chain to find ways to shift these incentives. Purchasing RSPO certified palm oil is a major part of a commitment to sustainability by retailers like Unilever. Recently, financiers like HSBC have made RSPO certification a criteria for finance for any new palm oil projects, moving the onus beyond growers to include processors and traders. Discounted finance for responsible actors throughout the value chain can unlock yet another path to sustainable production. However before these benefits can be realized, there are some issues to take up.

At present, there is a lack of robust demand for RSPO certified palm oil, especially from buyers in the Global South. Parsing out the drivers of demand is difficult, but there are two key issues at play, marketing and credibility.

For one, it isn’t always obvious that you are eating (or using) palm oil. It is fractured into dozens of different uses, and often winds up just a minor ingredient in final products. This distance from farmgate to store shelves is an issue that isn’t going away, but a credible certification system that advocates can point to would be a major step in the right direction.

The RSPO has the potential to be that system, however many civil society groups claim that the RSPO doesn’t go far enough in its environmental and social performance standards. They cite the lack of robust environmental and social impact assessments, monitoring and enforcement of high conservation value (HCV) areas, production on peat lands, and perfunctory free, prior and informed consent. These are not trivial accusations, and put into question the long-term sustainability of the standard. Companies acknowledge many of these issues, but claim that at times, the data just isn’t available, and that monitoring and enforcement of HCV lands is too expensive considering the lack of a price premium for certified palm oil.

The bottom line – companies that have committed to certification are hesitant to commit further resources if no one is following suit, or if the certification isn’t considered credible.

So how can we make sure that companies like Unilever and HSBC, which are at present considered frontrunners, don’t eventually become outliers?

Making data available

Just five short years ago, the landscape for conservation in palm oil was very different. Spatial data at scales that district governments and companies could effectively use was hard to come by, and for areas where such information was available, the data was inaccessible or plantation managers weren’t trained in utilizing it. So institutions like Flora and Fauna International (FFI) and the World Resources Institute (WRI) sought to collect and help companies use this data through large scale mapping exercises that resulted in publicly available maps of high conservation value areas for protection.

These maps are critical to understanding how to effectively integrate conservation and production. WRI’s efforts focused mainly on helping companies ‘swap’ concession land on native forests for degraded lands. FFI worked with major palm oil companies and district government in West Kalimantan to incorporate HCV areas in their spatial planning processes. This research can help make the difficult decisions on where production can and cannot take place. Much of the research to date has been in Indonesia and Malaysia. With West Africa and South America emerging as new regions for palm oil expansion, the need for more high quality spatial data is urgent.

Reducing the costs of compliance

But raw data isn’t enough. Evidence from the Biodiversity and Agricultural Commodities Program (BACP) shows that even companies that are willing to comply with stricter standards need low-cost, user-friendly tools to address some of the challenges of monitoring and managing the high conservation value areas that fall under their concessions. BACP supported the Zoological Society of London (ZSL) in creating such a tool, the HCV Threat Monitoring System, now formally endorsed by the RSPO. The system enables plantation sustainability and patrol teams to collect high quality data with limited budgets and technical capacity, and the software program which accompanies it gives managers the ability to do the kinds of analysis and reporting which allow for effective management.

Supporting the roundtable process

Bilateral partnerships with frontrunner companies can only take us part of the way. The RSPO is not without its flaws, but as a multi-stakeholder initiative it delivers in one key area, serving as a platform for stakeholders throughout the value chain to manage tradeoffs and develop common sets of solutions to the myriad social and environmental issues surrounding palm oil production. BACP assisted in building the technical capacity of the RSPO through directly supporting the creation of a Biodiversity Technical Committee. This committee eventually evolved into the Biodiversity and High Conservation Values Working Group, and has spawned the Compensation Task Force (focused on excluding primary forest from concessions) and the Indonesia HCV Task Force. The working group membership has been critical in moving the needle towards more robust HCV assessments and providing integral evidence to support biodiversity assessment and monitoring capacity.

Incremental steps are being taken to create a credible cost-effective certification standard, through better, more accessible data and multi-stakeholder coordination. There are priority actions for the entire value chain. Governments are of critical importance, and must concurrently take actions, such as reducing perverse incentives for land clearing, recognizing tenure rights of smallholders and marginalized populations, and cooperating with spatial planning processes to truly shift incentives towards sustainable palm oil. Concessional finance from banks like HSBC is promising, and though in the early stages, has huge potential for shifting the market by rewarding value chain actors that act responsibly.

Over the past four weeks, I’ve discussed just a few of the myriad insights from five years of work towards transforming markets for conservation in soy, cocoa and palm oil. What we learned is that there is no single “win-win” solution – it takes incremental steps towards building an enabling environment, better production methods, generating demand-side support and financing by actors across the value chain to generate sustainable solutions to the complex issues surrounding commodity landscapes.

This post is the fourth in a four-part series (check out the first, second, and third posts) highlighting key lessons learned from EcoAgriculture Partners role as Monitoring & Evaluation Unit of the Biodiversity and Agricultural Commodities Program.  These insights are collected in the recent work Transforming Markets for Conservation, co-authored by Kedar Mankad, Christine Negra and Lee Gross, and published by EcoAgriculture Partners.