Palm oil trade wars with EU as #RSPO must prove itself

Palm oil, and its associated sustainability issues, continues to make headlines; this time of a looming trade war between the EU and Indonesia and Malaysia over the popular vegetable oil. Meanwhile, the largest certifier of palm oil, The Roundtable on Sustainable Palm Oil (RSPO), is preparing to hold its biannual meeting in Paris, France, beginning on 25 June, writes Rainforest Action Network Agribusiness Campaign Director Robin Averbeck.

Despite more than fifteen years of work on the issue, the RSPO is increasingly found to be ineffective as it continues to certify tropical rainforest deforestation, egregious human rights and labor rights abuses, and major greenhouse gas emissions from the destruction of peatlands. Meanwhile, both consumers and the industry look with increasing scrutiny toward the RSPO to see if it can actually ensure “sustainable” palm oil reaches the market.

The RSPO is facing several critical tests as it members convene in Paris. The work before the RSPO will determine whether it becomes a credible certification scheme of the leading ‘No Deforestation, No Peat, No Exploitation’ policies which have already been adopted by many of its members, or fades into irrelevancy. The RSPO is currently undergoing a review of its standards but the current draft continues to allow for deforestation and degradation on carbon-rich peatlands to be certified as “sustainable.”

Beyond the necessary improvement of its certification standard, the question of whether the RSPO is willing to actually implement its standard is also pressing. Another significant test before the RSPO is the case of Indonesia’s largest food company, Indofood, and its palm oil arm, IndoAgri. IndoAgri, the third largest private palm oil company in Indonesia, operates RSPO-certified palm oil plantations across Indonesia.

In April 2018, an independent report was released by one of the RSPO’s own certification auditors –– adding to a growing body of documented exploitation –– that verified ongoing labor abuses and legal violations on palm oil plantations belonging to Indofood. The report found “repeated and systematic failures” that included legal violations on overtime, casual workers, and Freedom of Association. Past reports on Indofood-owned plantations have found poverty wages, toxic working conditions, and child labor.

Many major brands including Unilever, L’Oreal, General Mills, Mars, Hershey's, and Kellogg’s have made public statements specifically addressing the problem of IndoAgri in their palm oil supply chain, and major palm oil traders Golden Agri Resources and Wilmar have suspended direct sourcing from Indofood. PepsiCo and Nestlé have stopped sourcing palm oil directly from IndoAgri, despite maintaining joint venture business partnerships with the parent company Indofood without consequence. Even major bank Citigroup has recently dropped funding from IndoAgri and its subsidiaries. This is the first time that a US bank has dropped financing for a palm company over environmental, social and governance risks associated with its investments in the company.

The case of Indofood casts serious doubt on the integrity of the entire RSPO system. The RSPO has sat on a formal complaint, filed in October 2016, against Indofood for nearly two years now. The RSPO has failed to sanction its member despite years of investigations, the formal complaint, and most of the market moving beyond the RSPO on the issue, and yet, Indofood continues to earn profits for selling certified oil while violating workers’ rights.

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The marketplace has moved beyond the certifier. Will the RSPO follow its members’ lead, adopt a ‘No Deforestation’ standard and suspend Indofood? Or, after years of certifying deforestation and exploitation as “sustainable”, will it become obsolete? These issues must be addressed at their core — nothing less than the survival of the RSPO system is at stake.

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