Nestle's palm oil debacle highlights current limitations of certification scheme

Rhett A. Butler, mongabay.com
March 26, 2010

Last week Nestle, the world's largest food processor, was caught in a firestorm when it attempted to censor a Greenpeace campaign that targeted its use of palm oil sourced from a supplier accused of environmentally-damaging practices. The incident brought the increasingly raucous debate over palm oil into the spotlight and renewed questions over an industry-backed certification scheme that aims to improve the crop's environmental performance.

The palm oil paradox

Palm oil is produced from the oil palm, a tropical species from West Africa that is a highly productive and profitable source of vegetable oil. Its origin—West Africa—makes it well-suited to the tropics and therefore an attractive crop to promote rural agricultural development. But oil palm expansion has often come at a cost to the environment — more than half of new plantations established in Malaysia and Indonesia between 1990 and 2005 occurred at the expense of natural forests. As such, palm oil has been targeted by environmentalists and scientists concerned about biodiversity loss, greenhouse gas emissions, and pollution. Further, the palm oil industry has been challenged by land rights issues, since expansion is occurring in areas where communities may traditionally use forests but lack title to land. New development in these areas spurs charges of land-grabbing and can exacerbate social conflict.

Environmental groups and scientists say that oil palm production has driven large-scale destruction of rainforests across southeast Asia over the past two decades, triggering the release of billions of tons of CO2 and imperiling rare species, including the Sumatran tiger and the orangutan. The palm oil industry maintains that its crop is highly productive, requiring less land and costing less than other oilseeds like soy and canola, and has improved living standards for millions. Industry representatives have tended to dismiss environmental concerns as "colonialism" or masked trade barriers. (Photo: Oil palm plantation and logged natural forest, in Sabah, Malaysia.)
To address these concerns, in 2004 a group of stakeholders, including NGOs, producers and retailers, formed the Roundtable on Sustainable Palm Oil (RSPO). RSPO created a set of criteria to make palm oil production less damaging to the environment, including using natural pests and composting in place of synthetic pesticides and fertilizers whenever possible, implementing no burn policies, sparing high conservation value forests from development, taking measures to reduce air pollution, and creating catchment ponds to prevent palm oil mill effluent from entering waterways where it would damage aquatic habitats. The hope was that certified sustainable palm oil (CSPO) could be sold at a premium to recoup the increased costs that certification entails.

The first shipments of CSPO arrived in Europe in late 2009. Sales were initially slow, but began to accelerate early in 2010. Nevertheless, the initiative has been battered by a series of scandals, including the recent Nestle debacle and a decision last year by Unilever, the world's largest buyer of palm oil, to move outside the RSPO process to investigate PT SMART, a supplier accused of failing to maintain RSPO standards for palm oil production (an independent investigation commissioned by Unilever concluded that the allegations were accurate).

RSPO concerns

Not all environmental groups have bought into RSPO. Concerns over the certification standard have been stoked by pictures which activists claim show RSPO members continuing to clear high value conservation forest areas (HCV) in violation of certification protocol. Some critics have labeled RSPO a greenwashing initiative rather than a genuine effort to improve the environmental performance of palm oil. RSPO members have rejected these charges but concede that the certification process is still evolving.

Some of the recent troubles for RSPO and the palm oil industry center around Sinar Mas, the world's largest palm oil producer. Sinar Mas, and its subsidiaries (for example, PT SMART), has been accused by a several environmental groups for egregious environmental transgressions, including destruction of rainforests and peatlands. The accusations have led several of the company's biggest customers — including Nestle, Unilever, and Kraft — to cancel contracts with it and its subsidiaries. Sinar Mas has responded with a marketing campaign that includes high-profile advertising and attacks on the environmental groups via a pro-palm oil lobby group that portrays itself as an anti-poverty NGO. (Photo: Central Kalimantan - Indonesian Borneo)
A new paper, published in Conservation Biology, examines why RSPO may be falling short of its promise to clean up the palm oil industry. The authors [*], led by William Laurance of James Cook University and the Smithsonian Tropical Research Institute, argue that the initiative's objectives are undermined by the composition of its membership, which is dominated by palm oil industry growers, processors, and traders. The apparent conflict of interest results in lax requirements for membership, underfunding ($500,000 budget for a $30 billion-plus industry), a cumbersome complaints process for reporting violations, and lack of oversight and enforcement.

"Clearly, there is much scope for the RSPO to improve its act," Laurance told mongabay.com. "It needs to get tougher with member companies that are destroying large swaths of primary forest. Otherwise, it risks becoming an apologist for an environmentally destructive industry."

Laurance and colleagues make a series of recommendations that could improve the environmental sustainability of RSPO, including increasing representation and influence of environmental organizations and experts; developing better monitoring and enforcement capabilities; and taking a stronger stance against deforestation and destruction of peatlands. The authors say the formation of "an independent watchdog group that monitors and critiques the organization, ensuring that it abides by its own strictures" could "greatly increase credibility of the RSPO and its members to the public."

There are other ways to mitigate the impact of oil palm expansion. A new review, published in CAB Reviews, examines some of the options, including setting aside high value conservation areas, land-use advocacy, compensating forest carbon stocks and biodiversity, and enhancing regulation and enforcement. Betsy Yaap et al (2010). Mitigating the biodiversity impacts of oil palm development. CAB Reviews: 5, No. 019. (Photo: Data from FAOstat)
Ultimately the best incentive for credible RSPO is consumer demand. If consumers demonstrate with their wallets that they want credible eco-friendly palm oil, the palm oil industry will provide it. The cost of "greener" palm oil is not high — especially for buyers in rich countries. A paper I published in January with Lian Pin Koh found that the average American consumer would need to spend an extra 40 cents per year to cover the cost of switching from his or her annual consumption of palm oil from conventional to certified sources. Thus consumers have the power to change the industry.

CITATION: William F. Laurance et al. (2010). Improving the Performance of the Roundtable on Sustainable Palm Oil for Nature Conservation. Conservation Biology, Volume 24, No. 2, 377–381 DOI: 10.1111/j.1523-1739.2010.01448.x

note: I am a co-author of this paper.

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Rhett A. Butler, mongabay.com (March 26, 2010).

Nestle's palm oil debacle highlights current limitations of certification scheme.