Top palm oil producers say the industry is making strides towards transparency and sustainability across its supply chain despite campaigns against use of the oil.
Campaigners say that the industry is responsible for deforestation of tropical rainforests and human rights abuses and have initiated consumer boycotts of palm oil, which is found in everything from pizza to lipsticks.
However, such campaigns are hindering the industry’s efforts to achieve sustainability certification and develop a market for certified sustainable palm oil (CSPO), top palm oil producers said during last week’s Reuters Next conference.
The panelists said sales of more expensive sustainable palm oil, certified by bodies including the Roundtable on Sustainable Palm Oil (RSPO), are still lacking.
“The supply of CSPO outstrips demand by a factor of two … Even if you are certified, it does not necessarily mean you’re able to get that to the market,” Mohd Haris Mohd Arshad, MD at Sime Darby Oils said.
Sime Darby Plantation is the world’s largest palm oil company by land size and the largest producer of CSPO.
Indonesia and Malaysia, which together account for 85 per cent of global output, in particular have come under fire for clearing biodiversity-rich rainforests and allegations of forced labour.
The US last year banned imports of palm oil from Malaysian producers Sime and FGV Holdings over allegations of forced labour during production.
Mohd Haris said in a recent radio interview that there was not a systemic problem and Sime has asked the NGO involved and the US Customs and Border Protection (CBP) for more information on the allegations.
“The palm industry is a very large industry so … yes, you can have a few bad apples but does it mean that it is a systemic issue and the systems are not in place?” Olivier Tichit, director of sustainable supply chain at Musim Mas, said.
“The issue is how do we regain the trust we seemed to have lost?” said Tichit, adding that the industry has a high level of transparency compared to other commodities.
To boost their green credentials, both Malaysia and Indonesia have implemented national sustainability standards, but NGOs say these are not stringent enough.
“We can’t afford for people to continue undermining efforts to get certification, because for everything that we do it seems like it is one-step forward and two-steps back. It will disincentivise others (to) get on board,” Mohd Haris said.
The palm oil industry has been linked to forest fires in Indonesia where in 2019 at least 1.6 million hectares of forest and other land were burned and losses were estimated at US$5.2 billion as a choking haze blanketed the region.
Greenpeace said in October that nearly a third of Indonesia forest fires are in pulp and palm areas.
Ravi Muthayah, secretary-general of Malaysia’s Plantation & Commodities Ministry called for greater recognition of industry efforts instead of being singled out for driving deforestation.
“It’s better than not having any sustainability standards and causing further damage, no matter what crop you’re in.”
- Reporting by Mei Mei Chu; Editing by Alexander Smith, of Reuters.