Communities challenge palm oil industry promises of sustainability

Down to Earth No 68  February 2006

After a year of negotiations and pressure from Indonesian and international civil society groups, the Roundtable on Sustainable Palm Oil (RSPO) accepted the Principles & Criteria drafted by its working group at its meeting in Singapore on 22 - 23 November 2005. This decision has the potential to improve social and environmental practices in the oil palm industry and could even lead to new laws on corporate responsibility.

Several hundred participants from different backgrounds and countries took part in the Roundtable on Sustainable Palm Oil, including plantation companies, manufacturers and retailers of palm oil products, investors, consultants and civil society groups. Two days of speeches, PowerPoint presentations, side events, Q&A sessions and discussion groups on various aspects of palm oil and sustainability, plus a multitude of opportunities for lobbying and exchanging information over meals or around the exhibition stands, culminated in the RSPO General Assembly - the real decision-making body.

What was achieved?
The main achievement of this third Roundtable meeting (RT3) was that RSPO's members accepted the 8 Principles and 39 Criteria for Sustainable Palm Oil Production as a complete package. The industry-dominated forum was not unanimous: of 68 ordinary RSPO members, 55 accepted the whole package; one abstained (PT Agro Indomas, the Central Kalimantan plantation which received loans from CDC and Rabobank in 1999); and the rest did not attend.

The message sent out from RT3 was that sustainability can be profitable if done the right way. This was just what RSPO members, particularly the palm oil producers, wanted to hear. But these are mostly the big companies which can best afford to implement good practice measures. Only a handful of the roughly 600 palm oil companies in Indonesia are currently RSPO members. Experience with FSC timber certification suggests national and regional legislation will make compliance hard for Indonesian plantations.

Moreover, these voluntary measures are only enforced through market forces from Europe where there is higher consumer awareness about sustainability. In contrast, India and China are huge markets which are much less demanding for Indonesian and Malaysian palm oil producers.

Unanswered questions
NGOs and community groups received the news with a mixture of relief and suspicion. They had expected more open opposition from Malaysian and Indonesian industry associations. It was also surprising to see unlikely companies (including LonSum) rushing to volunteer for the all-important two-year field tests of the Principles & Criteria.

Did the palm oil companies only agree because they intend to hide behind weak national laws? Or because they hope the results of the pilot studies will water down the standards in two years’ time? Is the RSPO building an exclusive club to control a niche market, rather than encouraging all companies to improve their standards? Is RSPO approval just a marketing device which palm oil producers will try to implement at minimum cost? Will consumers prefer a cheap rather than a sustainable product? These and many other questions remain open for the present.

What is not in question is that the RSPO Principles & Criteria represent a potentially useful tool for civil society groups to evaluate companies' social and environmental practices and to hold them to account. The key issue for local communities in Indonesia is whether the RSPO's measures will provide any benefits in practice. Jakarta largely ignores local people's concerns, but it does care about foreign investment. A the same time, district government heads (bupati) in oil palm growing regions pay more attention to local revenues than to national policies.

Challenges for civil society
A priority for the members of the NGO network on oil palm, Sawit Watch, other Indonesian NGOs is, therefore, to take the Principles & Criteria to local communities and explain what they mean, so that people affected by palm oil developments can leverage better conditions. NGOs also have an important role to play in ensuring that all those in decision-making positions - local government officials, district administrators, local assemblies and government ministers and their staff - understand better about the RSPO and its standards. At present, Indonesian CSOs only have limited capacity to monitor palm oil companies' activities in the field. Yet there is also a need to monitor the real impacts of oil palm expansion over the two-year trial period, not just the RSPO pilot projects.

A major challenge for international NGOs is to push for RSPO standards to be made mandatory at the international level. This will put pressure on the Indonesian government to change national legislation. In addition, international NGOs need to raise public awareness in consumer countries about palm oil and sustainability. This includes the investors, traders, supermarkets and food manufacturers.

It is no coincidence that, shortly after the Singapore meeting, ASDA (Britain's second largest supermarket and part of US giant US retailer Walmart) applied to join the RSPO. Friends of the Earth has been lobbying UK supermarkets to ensure that the products they sell only contain palm oil from plantations which have not caused forest destruction or human rights violations.

Developing links between civil society groups, especially those engaged in oil palm issues in the South, is another strategic priority. Some groups, including those from PNG, have boycotted the RSPO process. They see it a vehicle for the implementation of large-scale monoculture with all the attendant social and environmental problems. In their view, 'sustainable palm oil' is a contradiction in terms. NGOs and community organisations in Indonesia have also taken a strong position against oil palm plantations, notably in West Kalimantan (see DTE 66).


RSPO principles
  1. Commitment to transparency
  2. Compliance with applicable laws and regulations
  3. Commitment to long-term economic and financial viability
  4. Use of appropriate best practice by growers and millers
  5. Environmental responsibility and conservation of natural resources and biodiversity
  6. Responsible consideration of employees and of individuals and communities affected by growers and mills
  7. Responsible development of new plantings
  8. Commitment to continuous improvement in key areas of activity.

Each Principle has a number of Criteria attached to it with guidance on their implementation (see box in article 'From Singapore to West Kalimantan', for two examples).


Next steps
For those groups who see the RSPO as an opportunity, much remains to be done to ensure that there will be strict verification of compliance and control of sustainability claims; secure chain of custody procedures so that palm oil can be traced from producer to consumer; and an adequate process to engage smallholders.

The RSPO Criteria Working Group (CWG) meets in Kuala Lumpur, February 21-22, to discuss in the detail the guidance provided for the implementation of each criterion. This is important both for field testing the Principles & Criteria during the two year pilot implementation period, and for national interpretation processes. Key issues will be the position of smallholders, customary rights and the use of specific indicators - for example, to measure continuous improvement of performance (Criterion 8).

A Verification Working Group will look at methods to identify palm oil produced and supplied according to the demands of the RSPO standards. Sawit Watch and WWF will be involved in verification at the national level. Several aspects of the Principles & Criteria are far from clear. For example, will a company be able to sell its oil as sustainable if it fulfils all the environmental criteria, but none of the social ones? Is 10% compliance with all the Principles good enough or not? Moreover, the RSPO has opted for a tracing system which allows a certain amount of oil that may not meet RSPO standards to be mixed with 'sustainable' palm oil. Industry argues this is a realistic approach; critics consider that this endorses the use of unsustainable palm oil.

The RSPO Board also accepted that a Task Force on Smallholders be set up. While large-scale oil palm plantations are much the same in Indonesia, Malaysia or PNG, small-scale oil palm cultivators are highly diverse. In Indonesia, some 30% of production is by those designated as 'smallholders'. The term covers peasant farmers who have chosen to grow oil palms on their own certificated plots; transmigrants brought to plantations as cheap labour; indigenous people whose land has been taken from them; farmers in debt to company-led co-operatives; and many others. As the Principles & Criteria were drawn up by big companies, they are not all appropriate to smallholders, so compliance is a potential problem. Furthermore, there is, as yet, no independent body that represents smallholders' interests in Indonesia.

Other achievements
The meeting presented an opportunity for DTE and other groups to raise concerns about the Kalimantan border plantation megaproject (see DTE 66 and separate item, above). However, a proposal to oppose this potentially destructive scheme - via a technical measure that that no oil palm should be planted on steep slopes above a certain altitude - was rejected on the debatable grounds that there is no firm legal basis for such a ban. Incredibly, the RSPO maintained a polite silence over the responsibility of palm oil companies for the annual forest fires and air pollution caused by burning to clear land. Genetically modified palm oil was not on the agenda either, as RSPO members believe it is so far in the future.

Arguably the most significant achievement was that community representatives lobbied companies and raised their concerns as equals in the public arena. Investment specialists and manufacturing companies were challenged by the very different perspectives and perceptive questions put directly to them by indigenous people whose livelihoods are threatened or have been destroyed by oil palm plantations.

The Principles & Criteria agreed can be viewed on the RSPO website at


'Poisoned and Silenced'

Missing from the RSPO criteria so far is a list of banned agrochemicals (see DTE 66). Anti-pesticide activists from Malaysia failed in their attempt to change the RSPO's position through the Singapore meeting. The Swiss-based NGO, the Berne Declaration (a member of the Pesticide Action Network), and the IUF (International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations) released a pre-conference press statement. This criticised the RSPO criteria as too weak and called for Paraquat to be forbidden from the production of any 'sustainable' palm oil.

Syngenta, a manufacturer of Paraquat, is an affiliate RSPO-member and sponsored the official dinner at the RT3 meeting. WWF responded, on RSPO's behalf, that "such details would be part of the guidance notes" to be developed later. It refuted charges that pesticide producers influenced the criteria in their favour, explaining that the criteria were drawn up by a working group where there was no representation of the agrochemical industry.

The Berne Declaration & IUF press release (18/Nov/05) is at