A new study suggests shifting to certified palm oil production increases profitability despite higher production costs.
The study, which was conducted by WWF, a major backer of the Roundtable on Sustainable Palm Oil (RSPO), indicates “that the business benefits gained from achieving RSPO certification “typically outweigh the costs of implementation—in many cases significantly.'”
The benefits however come through “indirect” channels.
“While many firms were initially attracted to RSPO for the price premiums commanded by certified sustainable palm oil, the larger financial gain often turned out to be resulting improvements in operations, documentation systems, labor relations, and other internal factors.”
The findings are interesting because they suggest palm oil companies may be doing better than commonly believed by participating in the RSPO. Until now, complaints about the lack of a price premium for certified palm oil have at times cast a shadow over the initiative. Although consumption of “certified-sustainable” palm oil (CSPO) has surged in the past three years, demand for certified palm oil still lags behind production.
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“This study shows that getting RSPO certified makes good business sense as well as good environmental and social sense for growers. WWF hopes that the findings will persuade all producers to join the RSPO and to start getting certified.” said Adam Harrison, WWF’s representative on the Executive Board of the RSPO, in a statement. “But the responsibility for making the industry sustainable also lies with those companies that buy and use palm oil. WWF urges them to immediately commit to increase purchases of certified sustainable palm oil and to ensure that 100% of their palm oil use is certified by 2015.”
The RSPO is made up of palm oil producers, refiners, traders, and buyers, as well as NGOs, governments, and retailers. The body sets basic social and environmental criteria for palm oil production, including waste treatment and conservation of wildlife-rich forest in concession areas. Supporters say the RSPO offers a greener path forward for the palm oil industry, which has been criticized for driving deforestation and social conflict in some areas. Critics argue that standards and oversight need to be strengthened to make the initiative effective at safeguarding biodiversity, reducing greenhouse gas emissions, and protecting local land rights.
