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Can Palm Oil Be More Sustainable?

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By Cristina Larrea, David Perri, May 13, 2020

IISD’s latest Global Market Report focuses on one of the world’s most controversial crops: palm oil. The report examines sustainable production and consumption trends in the sector, specifically the use and impact of voluntary sustainability standards (VSSs). Cristina Larrea, one of the report’s authors, answers some of our questions about it.

A palm oil worker shovels palm fruit kernels from a truck
A worker shovels palm fruit out of a truck in Thailand / Credit: iStock

How sustainable is palm oil?

Not very. It has become synonymous with deforestation and biodiversity loss. Large tracts of tropical forests and peatlands have been converted into palm oil plantations, affecting about 200 threatened species and releasing significant stores of carbon. More than half of the deforestation on the island of Borneo, Indonesia, was reportedly linked to this commodity between 2005 and 2015. Consequently, it's facing consumer boycotts in some markets, and the European Union has resolved to cut palm oil imports for biofuels by 2030 over environmental concerns.

With a track record like that, why do we need palm oil?

Today, it is the most consumed edible oil in the world. It can support food security, poverty reduction, and economic growth; plus, it’s nutritious, versatile, and shelf-stable. As a crop, it's remarkably productive, five to 10 times that of other vegetable oil crops. One estimate showed that palm oil accounted for 39% of global vegetable oil while occupying just 7% of land dedicated to oil vegetable crops in 2014. However, its monoculture is clearly responsible for major negative impacts on our planet, and we can’t afford this.  

How can voluntary sustainability standards (VSSs) mitigate environmental destruction and biodiversity loss in the palm oil sector?

VSSs encourage producers to follow more responsible practices, such as protecting high-conservation-value and high-carbon-stock forests, as well as rare, threatened, and endangered species. The good news is that producers are increasingly using sustainability standards. Our report found VSS-compliant palm oil production had a 110% compound annual growth rate between 2008 and 2016 to make up at least 17.4% of global production. These standards can limit some of the worst environmental impacts but will not completely prevent deforestation and related habitat loss.

Which standards are most effective?

From an environmental stewardship perspective, reports have shown the most robust standards are the International Sustainability and Carbon Certification (ISCC) and the Roundtable on Sustainable Palm Oil (RSPO). The latter is the most widely used standard, and it certified more than 50 million tonnes of palm oil in 2016.

How are these standards enforced?

Enforcement capacity remains difficult in the sector. Some VSS-certified producers have reportedly continued land grabbing and clearing forests outside their concessions. VSSs are increasingly adopting a continuous improvement approach and incorporating new technologies to help strengthen their criteria and enforcement. For instance, satellite-based sensor technology is now used to monitor illegal logging in palm oil operations. Increasing collaboration between governments and buyers also shows the potential to strengthen standards enforcement.

Do consumers care about certification?

It depends. Europe and the United States are driving demand for certification, largely via corporate sourcing commitments that are meant to help manage supply chains, reputational risk, and compliance with regulations. But on a global scale, supply is outstripping demand, with only half of the RSPO-certified palm oil sold as such in 2018. It is critical to grow demand for VSS-compliant palm oil in Asia. India and China, which consume the most of this product, have committed to raising VSS-compliant sourcing of it to 30% and 10%, respectively, by 2020.

Can palm oil ever be sustainable?

It is hard to imagine it as a fully sustainable industry. Such a transformation would require a massive effort from all stakeholders, including consumers, producers, investors, governments, and international organizations. But palm oil production and consumption will continue for the foreseeable future, so we need to use all the tools available to mitigate the damage, including VSSs.