A Fragmented Market

Recent media reports have praised yet another sustainable palm oil standard and label, called ‘Palm Done Right’. The standard was started by Natural Habitats, a business organisation formed by various operating companies and which has offices in Ecuador, Sierra Leone and the Netherlands. Natural Habitats produces, collects, processes and trades organic, fair trade and sustainable palm oil.

Currently, only two companies supply palm oil under the standard developed by Natural Habitats and Dr Bronner’s, a US-based personal care company with operations in Ghana. But it appears that any company that sources palm oil within the ‘Palm Done Right’ supply chain may use the logo on its products and marketing materials.

The presence of yet another palm oil sustainability standard complicates the market for businesses and operators in general. Natural Habitats prefers to refer to ‘Palm Done Right’ as an education programme, but has developed its own sustainability standard and has trademark rights to a logo to be placed on products.

In particular, the standard is for ‘conflict-free palm oil’, which it believes means that such palm oil is produced organically – using natural pest management, multi-cropping and composting – in a vertically integrated supply chain. Moreover, the oil palm must only be cultivated on existing crop land or on degraded land, be handpicked, and preferably be transported using animal labour.

Natural Habitats is of the view that its standard goes beyond other certification schemes, such as that of the Roundtable on Sustainable Palm Oil (RSPO), which is the most widely-used internationally.

Another popular certification standard is by the Palm Oil Innovation Group. Its Charter is intended to build upon the RSPO’s ‘Principles & Criteria’ with regard to deforestation, carbon stocks, biodiversity, greenhouse gas emissions, pesticide use and social relations.

At the national level, the best-known and well-structured sustainability standards and related certifications naturally come from the two countries that produce the most palm oil: Indonesia and Malaysia.

• The Indonesian Sustainable Palm Oil (ISPO) standard is a mandatory system. It recognises the differences in capability between large plantations and smallholders, and thus does not serve as an overly burdensome standard on smallholdings around the country.

   

• The Malaysian Sustainable Palm Oil (MSPO) standard is still voluntary, but has come as a welcome addition for small- and medium-size oil palm growers who cannot afford the cost of RSPO certification. The MSPO is intended to become mandatory in future.

Even more sustainability schemes relevant to palm oil exist, including the International Sustainability and Carbon Certification (ISCC); the certification by the Rainforest Alliance/Sustainable Agriculture Network; the Roundtable on Sustainable Biomaterials; the Sustainable Palm Oil Manifesto guidelines; and the High Carbon Stock Approach, which itself is built into other schemes.