Monday, 17 November 2008

Certify palm oil producers for sustainable development

Certify palm oil producers for sustainable development

Edi Suhardi, Jakarta

The Roundtable on Sustainable Palm Oil (RSPO) will hold its sixth annual meeting Nov. 18 to 20, 2008, in Bali to discus issues ranging from the certification program for members, palm oil small-scale growers, RSPO and government, market standards, biofuel, and other issues the palm oil industry faces looking forward.

Considering its urgency, perhaps the certification-program issue will draw the most attention among meeting participants and international observers, including NGOs.

There are pros and cons to such a certification program, which ensures the members are complying with voluntary standards RSPO has set out.
Those who support it have said it is a positive initial step to instill green practices in palm oil industries. They note the industries should be given a chance to put in place such environmentally sound principles in the field.
Opponents, especially NGOs, have criticized the step calling it a "greenwash", a public-relations gimmick designed only to give the public the impression they conduct their business according to environmentally sound principles.

Critics have accused palm oil plantations and industries of contributing to global warming, destruction of forest, biodiversity loss and conflicts with adjacent communities.

It is indeed difficult to align the differing interests of NGOs such as Greenpeace -- which once blockaded a ship carrying crude palm oil (CPO) in Riau -- with the palm oil industries. NGOs are often biased against any kind of initiative from the business sector because they only see the extractive nature of the capitalist system.

Some industries do consider their corporate social responsibility (CSR) as only a tool for controlling stakeholders and risk. However, some industries are committed to more authentic CSR initiatives and implement principles and practices of sound environmental management.

Against the backdrop of such contradictory streams of discourse, RSPO emerged to bridge differing and sometimes conflicting opinions and misconceptions about palm oil plantation development held by an array of stakeholders, including the private sector, civil society and government agencies.

This multistakeholder organization, set up cooperatively by a number of NGOs including World Wildlife Fund for Nature (WWF) and palm-oil industries, initially aimed to persuade all stakeholders, especially the palm growers, to comply with generally accepted sustainability principles and criteria.

To realize such a goal, RSPO set out eight principles: namely commitment to transparency, legal compliance, long-term economic and financial viability, application of best practices, commitment to biodiversity conservation, care for employees and local communities, responsible development of new palm-oil plantations, and commitment to continuous improvement in their operations.

On the basis of those principles, RSPO is currently in the process of certifying members in Indonesia and elsewhere. RSPO will only certify members that strictly comply with the eight principles and their associated criteria.

Such certifying will prove to the general public that their commitment to the environment and to communities is in line with their commitment to earning a profit.

Critics have also pointed out that implementing these principles could not proceed as expected since they were voluntary, not legally binding. Keeping in mind that even laws have been breached in several countries, especially Indonesia, they consider such voluntary compliance destined to fail.

Currently, however, palm oil businesses tend to prefer voluntary guidelines amid the absence of comprehensive government regulations regarding corporate governance and corporate social responsibility.

It should be noted as well that for certain issues voluntary compliance is very often more effective than government regulation.

RSPO has showcased voluntary initiatives from concerned stakeholders to advance green principles in palm oil commodity development. The organization itself also models sustainable stewardship as demonstrated both by the institutional arrangement and by how it has carried out its agenda.

The RSPO certification standard is expected to provide credibility for the management practices of the member companies, and bolster public confidence. It should also convince peripheral agents, such as banks and regulators, to act as a risk-management tool, strengthen relationships with stakeholders, and assure the quality of compliance to the sustainability principles.

To best implement the principles, RSPO needs to consider a transition period with a guiding mechanism of comply or explain. While all RSPO signatories are obliged to implement all the principles and criteria, during this transition period, the enterprises will have to provide reasonable explanations for why they had not yet complied with the principles and the steps they are taking to get to full compliance.

RSPO also needs to set up a mechanism for reporting on the implementation of its principles among members. Like the signatories of the UN Global Compact, which are required to adhere to the reporting format outlined in the Global Reporting Initiative, RSPO could also adopt and replicate something similar so that progress on implementation could be compared among palm oil industries and related industries.

The writer is CSR manager for Agro Harapan Group. This article reflects his personal view. He can be reached at or edis@agrohold