The European Commission (EC) has released the findings of its ‘Study on the environmental impact of palm oil consumption and on existing sustainability standards’, which had been requested by its Directorate General for Environment. Published on March 16, 2018, it appears to be motivated by the EC’s initiatives with respect to environmental protection and policy measures against deforestation.

The EC stated that it had launched the dedicated study ‘with a view to strengthening the knowledge base on a subject which is prominent in the public debate both at EU level and in many member-states’.

It is only timely that the EU’s knowledge base on palm oil be strengthened. It must now ensure that this study informs the public and corrects the biased, discriminatory, protectionist and often misguided policy initiatives, in particular those of Members of the European Parliament (MEPs).

It is also high time for balanced and objective information to be introduced into the debate on palm oil and sustainability. This concerns, in particular, initiatives by the European Parliament, which has been the driving force in linking palm oil with issues of deforestation and sustainability.

This included organising a public hearing on the issue in 2016. Following this, the European Parliament’s plenary adopted a ‘Resolution on Palm Oil and the Deforestation of Rainforests’ on April 4, 2017. It was blatantly anti-palm oil and, while not binding on any EU institution, put further pressure on the EC and the Council of the EU, as well as garnered media attention.

The Resolution contained a number of statements and calls for action in ways and forms that would be detrimental to palm oil, and which were often arguably inconsistent with WTO rules. Perhaps most worrisome was the call on the EU ‘to introduce minimum sustainability criteria for palm oil and products containing palm oil that enter the EU market’.

Evaluation of palm oil production
The EC awarded the contract for its study to external consultants at the end of 2016. It noted that the objectives were to:

  • Review the environmental, social and economic aspects of palm oil production and consumption, and the actions undertaken by economic operators, EU governments and third parties, focusing on palm oil
  • Analyse existing sustainability standards and schemes, including those of the Roundtable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO), to evaluate their completeness (especially concerning biodiversity and carbon aspects), and to map such schemes and how they relate to the environmental objectives in relevant EU and international policy instruments
  • Summarise and examine existing initiatives at the EU level and in member- states, as well as in India and China, concerning the sustainable production and consumption of palm oil

The study provides a rather objective assessment of palm oil production and a detailed analysis of existing sustainability schemes. It supports evidence that the expansion of oil palm cultivation had resulted in deforestation, biodiversity loss and net greenhouse gas (GHG) emissions – and that oil palm had, in some instances, expanded onto land traditionally used by indigenous and local communities.

However, it puts this into perspective. It notes that other sources of vegetable oils, the most important of which is soybean, occupy much larger areas per tonne of oil produced, and have their own environmental and social impacts to overcome and improve. These have received much less attention by institutions like the European Parliament.

According to the study, expansion of oil palm cultivation had in certain areas contributed to peat swamp deforestation, drainage and fires, with related impacts on biodiversity and GHG emissions. However, there is insufficient information to assess the likelihood of significant future expansion of oil palm cultivation into peatlands and, hence, whether its contribution to global GHG emissions is likely to increase.

More importantly, the study notes that, when oil palm trees are planted on grassland or scrubland, there could actually be a net uptake of carbon dioxide. The plantations can also contribute to a reduction in GHG emissions through the use of palm oil biofuels and biomass in power boilers, thereby replacing fossil fuels.

Throughout the study, the various benefits of palm oil and its production become apparent. It notes that oil palm cultivation often provides higher income opportunities for smallholders than other forms of livelihood, and thereby contributes to the development of rural economies and to the overall economy of palm oil producing countries.

In terms of economics and agronomics, palm oil is by far the most important source of vegetable oil in the world, having overtaken soybean oil in 2006. The high yield of the oil palm means that significantly less area is required per tonne of oil produced than for competing oil crops. This makes oil palm cultivation a very attractive source of income for smallholder farmers.

With regard to its benefits for food production, the study holds that palm oil is an important ingredient in the production of confectionery, snacks and many baked goods, particularly in markets where products are required to be free of trans fats. An initiative by the World Health Organisation intends to ban artificial trans fats from the global food supply by 2023.

Artificial trans fats are usually made by partially hydrogenating vegetable oils, which turns them solid at room temperature and increases shelf-life. Food companies often use palm oil as a replacement for partially hydrogenated vegetable fats. On this basis, it would be misguided to ban palm oil or restrict its use as a food ingredient, as often proposed by EU legislators.

Analysis of sustainability standards
The study comes to the conclusion that ‘credible and rigorous certification’ is the only option in providing a degree of confidence among consumers, by showing that ‘palm oil supply chains are free from the worst forms of environmental and social impacts’.

At its core, the study assesses four sustainability standards – two voluntary industry standards by the RSPO and the International Sustainability and Carbon Certification (ISCC) respectively; and two government schemes, namely the mandatory ISPO standard and the MSPO standard, which will become mandatory by the end of 2019.

The study finds that all four schemes rely on third-party independent audits in order to verify compliance with the standards, and that surveillance audits are repeated annually. Still, there are certain differences in the approaches, with significant implications, that should be considered.

While the voluntary schemes might be more ambitious, their reach is limited to those operators who agree to meet the standards. By contrast, the two government standards are applicable to the entire industry and have the potential of raising the bar across the sector.

Initially, the level of ambition of mandatory standards, as noted by the study, does not always match the level of the voluntary schemes. With respect to the four standards, the study says that the ISCC standard generally addresses the environmental objectives of a range of EU and UN policies, principally because of its stringent definition of High Carbon Stock forests.

The RSPO certification system appears to address, to the largest extent, policy objectives relating to social and labour rights. The ISPO standard least addresses the various policy objectives under consideration in this study, while the MSPO occupies an intermediate position.

The study confirms that the governance and transparency of the four schemes, in particular their level of independence vis-à-vis relevant interest groups, also vary. Although most palm oil producing countries have by now introduced environmental and social regulations relating to palm oil production, their enforcement remains at times ‘selective, incomplete or ineffective’ and should be improved.

According to the study, critical elements concern the ‘vested interests of established plantations and political elites in some major producing countries’, as well as a ‘lack of legal and geographical clarity around protected areas and concession boundaries’, which appears prone to cause conflicts between the various parties involved.

The advantage of public and mandatory sustainability standards, and their industry-wide application, cannot be ignored. Over time, these standards would need to be improved, so as to increase their scope and effectiveness.

Support for multilateral standard
The study appears to support the idea of a general, multilateral sustainability standard for palm oil. At the very least, it provides the key rationale for this. Most notably, it underlines that none of the analysed sustainability schemes address all environmental and social aspects that form part of EU and UN policy objectives.

At the same time, it finds that the ever-increasing number of palm oil sustainability standards and commitments lead to ‘a promising ready-made platform’, creating a good basis for improvements.

It is only natural that this be driven by the governments of palm oil producing countries, in a collaborative approach with producers, processors, trade associations, consumers and trading partners. Indeed, the study holds that public policy would play an important role in overcoming existing issues and in further developing public-private partnerships.

The issue of standardisation should not be left to the EU alone, without taking into account the positions and interests of palm oil producing countries. The study reconfirms the need for a balanced and fair multilateral standard for sustainable palm oil that is developed by producer countries, as well as importing countries.

The development of an international standard does not mean that national standards, such as the ISPO or MSPO, would have to be given up. Rather, an international standard could align domestic standards and set an international baseline to which the EU and other importing countries would be required to adhere or explain why their own standards deviate from the baseline.

All 396 pages of the study should be mandatory reading for MEPs. This being rather unlikely, the study should be used vis-à-vis the EU and its member-states. This should especially be the case should the EU consider imposing a unilateral standard, as proposed by the European Parliament’s Resolution. The study provides a much more objective take on palm oil than EU officials or MEPs have so far been willing to recognise and factor into their proposals.

The study provides, for the most part, an objective and balanced review of palm oil production and sustainability standards, noting the good aspects and those in need of improvement.

While certain findings could be taken out of context to further denigrate palm oil, the study provides strong arguments for balanced discussion with stakeholders and public authorities, while serving as an authoritative source of information. Of particular relevance is that the study cannot be discredited as originating from palm oil producing countries – it was commissioned by the EU and prepared by UK-based consultancies.

MPOC Brussels


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