Speaking at the RSPO Annual Roundtable Conference on Sustainable Palm Oil (RT16), the panel addressed key issues and motivators that drive the various stakeholders in the palm oil industry towards – or away from – sustainable practices.
The expert panel comprised of Lukita Setiyarso (UNICEF), Denise Westerhout (WWF Malaysia), Danny Chua (Mewah Oils & Fats), and Tulio Dias (Agropalma).
The session, moderated by Wathshlah Naidu from RSPO, generated several interesting key areas of discussion, including:
Supply chains and shared responsibility: Lack of ‘palm pride’
Shared responsibility was identified as a major area of concern, especially along the palm oil supply chain.
“Shared responsibility is a key underlying principle of [the RSPO] theory of change, which is important when it comes to accountability and commitment, […] as well as maintaining the integrity of all systems and all actors [when talking about sustainability] in the palm oil supply chain,” said Naidu.
Presenting a processor’s point-of-view, Chua said: “[Mewah Group] has long-focused on environmental and social issues in our supply chain [as part of recognising our shared responsibility].
“When it comes to palm oil, the supply chain is very complex, very fragmented, and very challenging. […] Mewah drives our environmental performance by minimising our environmental impact, [including our] carbon footprint, water footprint and waste footprint.”
Westerhout presented a view that was more upstream of the supply chain, and less optimistic, saying that: “We see some grave concerns along the supply chain.”
“First is the growing number of players that consistently tell us that there is no demand for ceritified sustainable palm oil (CSPO). […] There is also a backwards slide on commitments that were made [some] years ago, which is prevalent even amongst the larger MNCs.
“Communications have not been strong enough [as to how] buyers and even consumers should be selling the responsibilities along the supply chain.
“[The spotlight is consistently] being shone on the growers, [but increasingly] I think the buyers need to step up. [Many are] buying from certified palm mills, but not buying actual CSPO.”
She also highlighted the reluctance of many in the industry to admit that palm oil is a component of their products.
“Another disturbing area is [the lack of] ‘palm pride’ among buyers. […] Buyers cannot do without palm oil, but very few are willing to step up and say they are using palm oil in their products,” she added.
“They would rather [keep it as] a ‘secret ingredient’.
“As long as we allow [buyers] to remain closeted in their support for CSPO, then we will not see much movement, [as well as a continued trend of] backwards slide in commitments.”
Demand for sustainably produced palm oil: Big brands play a major role
On the topic of how buyers and consumers can influence the supply chain to drive CSPO uptake, Westerhout was very clear that it is all about supply and demand.
“As long as there is demand, the growers will conform,” she said.
“When there is an increased shift in demand towards responsibly produced palm oil, it will soon become taboo to be irresponsibly producing. It’s very simple.
“The push has to come from the top. […] If you look at the wineglass theory, you need to apply pressure on the key buyers of palm oil because that is where most of the consumers resonate. […]
“They trust the brand and believe what the brand says, and as long as the brands don’t talk about it, they [won’t realise anything about CSPO].”
She also reiterated the importance of communication, saying that it “needs to change. We need to shift the focus from a negative narrative to a positive narrative for a start. […] All of us have to do it [together].”
That said, Chua added that although Mewah Group has spent millions on certification in order to provide assurance, the fact was there are few buyers for CSPO, so it sends a discouraging message to growers, processors and traders.
“[Mewah has] three million tons of processing capacity per year. However, the sales of CSPO this year was only [around] 3%. The palm oil is there, but here we’re talking about the willingness to pay,” he said.
“What we have seen is an economic disconnect between the consumer demand, and the willingness to pay.
Supporting sustainable palm oil in emerging markets
According to Dias, there is currently enough financial power available to develop sustainable palm oil in emerging markets, especially in developing countries.
“[In many developing countries], the [palm oil] market is very consolidated and it’s big,” he said.
“[Using the RSPO website], I identified 10 big companies which are RSPO members and, to me, the most well-known. [Together], they have a value of US$1tn per year, [so we have here] enough power to push CSPO in emerging markets in developing countries.
“We should not say that because it’s an emerging market, the global corporate commitment will be delayed. [We] have enough financial power here, good mindsets and creativeness (sic) to figure out how to deliver good oil to these markets.”
Westerhout added that it is also important to identify what is important to players in these markets in order to push CSPO forward.
“[We need to start asking things like] why did you choose palm oil over other oils?” she said.
“[Is it because] it is a good solution […] that allows certain characteristics, e.g. crispiness in noodles and greater flavours for products? […] If these are the things [that matter to them], maybe we should be focusing on these instead of the other issues like deforestation and child labour [in order to effect changes].”
