Consumer Brands, Big Investors Call for Stronger Sustainable Palm Oil Standard

In business, as is in other areas of regulated human endeavor, it pays to cheat – at least until you're caught and if the penalties are commensurate with the seriousness of the transgressions.

Technically it may not qualify as cheating, but market participants that comply with the sustainable palm oil certification standard established by RSPO (Roundtable on Sustainable Palm Oil) are playing on a field tilted in their favor as compared to those who have adopted stronger and more comprehensive standards, according to a group of prominent industry players.

A group of investors and consumer food, beverage and products companies see long-term threats to both consumers and their businesses from RSPO sustainable palm oil certification standards that are too weak and/or narrowly defined. More specifically, they're calling out RSPO with regard to the aspects of its sustainable palm oil certification standard regarding human rights and deforestation.

Joining with multinational companies representing leading brands, institutions responsible for investing some $4 trillion in assets sent a letter to RSPO on June 1, just days ahead of its hosting the European Roundtable. Assembled by New York Comptroller Thomas P. DiNapoli and mutal fund company Green Capital Management, the petitioning group calls on RSPO “to prohibit deforestation in palm oil supply chains and include additional environmental and human rights protections.”

Pushing for stronger palm oil sustainability standards

From cosmetics and candy to industrial lubricants and biofuels, studies have shown that palm oil is used in no less than 50 percent of packaged goods sold worldwide. Given such widespread and intensive use, palm oil plantations have big impacts, not only on ecosysems and wildlife, but also on human populations and local economies.

Huge palm oil plantations developed on peatlands in southern Malaysia, for instance, have not only destroyed habitat of threatened and endangered species such as the orangutan, but they have also produced air pollution that spreads across the region. Long-burning fires in these peatland palm oil plantations have caused air pollution in Singapore to reach toxic levels at times.

Albertsons-Safeway, ConAgra, Coop Switzerland, Dunkin’ Brands, General Mills, Mars, Inc., Seventh Generation, Starbucks, the Kellogg Co. and Walmart are signatories to the letter requesting RSPO to strengthen its standard. So are five of the top 10 corporate purchasers of palm oil globally: Colgate-Palmolive, Kao Corp. (Japan), PepsiCo, Procter & Gamble and Johnson & Johnson.

In the letter, they urge RSPO to prohibit palm oil plantation development and production on high-carbon forest and peatlands. They also call on RSPO to strengthen its standard in terms of enhancing protection of human rights.

The nonprofit Ceres, which advocates for the implementation of sustainability standards that address climate change, water scarcity and other pressing issues, hosted a press conference call on June 1. During the call, signatories to the RSPO letter discussed their effort to prompt the self-regulatory organization to strengthen is sustainable palm oil certification standard and enforcement capabilities. As the group explains in a press release:

“[We] recognize deforestation as a significant risk to long-term business models and, consequently, investments ... Palm oil production offers both challenges and opportunities to promote thriving, sustainable economic development. As such, we urge the RSPO to set and enforce standards for truly responsible and sustainable palm oil production.”

Specifically, the signatories recommend RSPO

• Conduct an accelerated review of RSPO’s Principles & Criteria and related documents. The review should include recommendations leading to adoption and implementation in 2016 of the following requirements for producers:
  
  
  • Conserve High Carbon Stock areas;
  
  
  • Protect peat, regardless of depth;
  
  
  • Report on greenhouse gas emissions and reduction targets;
  
  
  • Ensure full traceability back to the field;


• Strengthen transparency and monitoring:
  
  
  • Improve quality control measures for high conservation value and human rights assessments to ensure objective, rigorous auditing and verification, and grievance processes.

With estimated annual revenues of some $44 billion, palm oil producers are leading agents of deforestation in tropical regions that are home to the earth's rapidly diminishing stock of tropical rain forests. These not only serve as massive carbon sinks, but also the foundation of ecosystem-based livelihoods and modern versions of traditional lifestyles. Globally, the palm oil industry is the source of 15 to 20 percent of greenhouse gas emissions, according to the EPA, the letter signatories point out,

“Companies and investors increasingly recognize that widespread forest clearance degrades the environment and drives conflicts with local communities in ways that pose real risks to shareholder value,” Lucia von Reusner of Green Century Capital Management, an environmentally responsible mutual fund company, was quoted as saying.

“We are calling on the RSPO to provide the assurance that strong protections are being upheld throughout palm oil supply chains, and to maintain its credibility in the marketplace by strengthening its standards to align with best practices that many of its member companies have already adopted.”

RSPO has faced challenges from a variety of direct and indirect stakeholders that call into question the legitimacy and credibility of its standards and enforcement capabilities. That's followed over the course of decades of rapid palm oil plantation development and growth in production and market demand.

This past March, RSPO took the unprecedented step of revoking the memberships of a lengthy list of members. More than half of those ejected were companies from leading palm oil-producing countries such as Malaysia and Indonesia, as well as others from Colombia and the Philippines. Also among those ejected from RSPO were U.S.-based consumer products companies, including Hain Celestial Group, WestSoy, Rice Dream and Alba Botanica.

*Image credits: Showtime, "Years of Living Dangerously" via the Breakthrough Institute; 2) FAOstat