Sustainability certification that focuses on a whole state is being piloted in Malaysia, with benefits for smallholders and conservation.
By Louise Hunt, China Dialogue
Adopting an approach to sustainable palm oil that focuses on entire landscapes could help regions that produce the commodity align with more stringent traceability requirements, such as the European Union’s impending deforestation regulations.
This approach would be a significant shift from the current focus on certifying individual businesses and estates.
It may be some time before the approach is widely used for palm oil, according to Eugene Mark, a PhD candidate at the S. Rajaratnam School of International Studies in Singapore. “There is a lack of clarity on how it will be implemented. It’s still in the pilot phase,” says Mark, who is researching pilot schemes of the approach in Malaysian and Indonesian Borneo.
In addition to the Borneo pilots, which are based on the Roundtable for Sustainable Palm Oil (RSPO) certification system, different versions of the approach are being trialled in Southeast Asia and South America. For example, in the Siak and Pelalawan districts of Sumatra, Indonesia, the local government is implementing a green district plan.
The overarching idea is to bring together relevant stakeholders, including businesses, local communities, smallholder farmers, civil society and government, into multistakeholder committees to agree on sustainability standards for the whole region or jurisdiction.
“The model has gained traction in recent years as traditional actions [such as voluntary certification] appeared to be limited in addressing deforestation and environmental degradation,” says Mark.
“There can be deficiencies when it comes to governance if there is a voluntary supply chain certification scheme and a lack of regulatory innovation or enforcement, because it really depends on the company and plantations to fully implement,” he adds.
Advocates hope that this multistakeholder approach will be more effective in trying to solve landscape-level issues, like identifying areas with high conservation value and high carbon stock, as well as addressing land rights and labour rights.
This could be through a mix of planning policy and support for sustainable land-use projects, suggests a report by Forest500.
“Given that governments have legal authority, jurisdictional approaches allow for better monitoring and enforcement as compared to voluntary initiatives alone,” says Mark.
The Sabah pilot
Sabah, in Malaysian Borneo, became the first region to pilot a jurisdictional approach for palm oil in 2015, when the government committed to achieving, by 2025, state-wide RSPO certification. The initiative was driven by Forever Sabah, a civil society organisation with a focus on improving sustainable livelihoods, and the RSPO.
Soon after, the then governor of Central Kalimantan in Indonesian Borneo followed suit with a commitment to pilot the RSPO jurisdictional approach in Seruyan district, mirroring key aspects of the approach taken in Sabah.
“It was not so much a case of being enamoured with certifications and standards, but using the RSPO as a platform for better housekeeping in Sabah,” says Cynthia Ong, co-founder and chief executive facilitator of Forever Sabah, who was instrumental in initiating the pilot with RSPO. She lists the protection of HCV areas and the right to free, prior and informed consent for local communities, as target areas for improvement that are addressed within the RSPO standards.
From RSPO’s perspective, “this was the first attempt to include government and local stakeholders to work on achieving something with much larger impacts than what RSPO was already delivering,” says consultant Darrel Webber, who was CEO of RSPO at the time and is now advising the Sabah government on delivering the jurisdictional approach.
The potential for larger impacts comes from being able to pull resources together through a multistakeholder approach, says Eugene Mark. In this approach, the local jurisdiction (be it state or district) is in charge of introducing the necessary laws and regulations that incorporate RSPO principles and criteria in a way that fits the local context. Before jurisdiction certification can be given, palm oil producers must comply with the local laws and regulations, he explains.
The RSPO commitment was made before the national Malaysian Sustainable Palm Oil (MSPO) standards became mandatory in January 2020 and Sabah is working on both standards concurrently, says Ong.
For the Sabah jurisdictional pilot, a multi-stakeholder committee has been formed, with sub-committees and a full-time secretariat working towards reaching a consensus on how the guidelines and regulations will be implemented.
“The tricky part will be deciding which agency will be responsible for these guidelines because it’s never been done before,” says Webber.
“Forever Sabah is bringing together different working groups across the sector to come to an agreement on the concept. We’re at a good place with most committees,” says Ong, adding: “I don’t think every actor in Sabah agrees on this approach. We’re slowly moving people along a spectrum. It really requires systemic change.”
Some of the reticence is likely down to uncertainty over the details of how the RSPO jurisdictional certification will work, says Mark. “At the moment, this is unclear, partly because RSPO is in the process of coming out with a certification systems document for a jurisdictional approach,” he says.
RSPO told China Dialogue that it is in the process of developing certification systems guidance and structures based on its existing standards that are being adapted for the jurisdictional context. “This will be an additional approach to complement the ‘management unit approach’ and further increase sustainability in the palm oil sector,” said a spokesperson. In the management unit approach, each of the mills and plantations belonging to an RSPO member company must be individually certified.
The spokesperson added that due to the complexity of developing the new guidance, it could be another two years before it is ready.
Benefits
In the meantime, the jurisdictional approach is showing its potential to improve the livelihoods of smallholder farmers and to conserve important forest areas for biodiversity and ecosystem services such as carbon storage, as evidenced by some of the work in Sabah.
One of the key benefits of the approach is that it allows for better conservation and spatial planning. The current approach to protecting high conservation value (HCV) and high carbon stock (HCS) areas is “uncoordinated”, says Eugene Mark.
As China Dialogue has reported, the expansion of oil palm plantations in Sabah over recent decades has created fragmented landscapes between protected forests.
“There may be pockets of HCV and HCS protected areas without much connectivity, which is crucial for wildlife populations to thrive,” says Mark. “By addressing HCV and HCS protection at the jurisdictional level, some of these problems can be resolved.”
To this end, Sabah Forestry Department has recently mapped HCV/HCS areas across the state to form a proposed protected area network. “We have identified nine landscapes that ought to be classified as protected areas,” says Dr Robert Ong, deputy chief conservator of forests, and brother of Cynthia.
If the proposed network is agreed, this will sufficiently cover all the key areas and prevent further fragmentation, says Ong. “Rather than having individual estates certified separately, the idea is to have the whole state certified, rendering Sabah a green economy to demonstrate sustainable land use overall,” he adds. The exercise is in line with Sabah’s commitment to expand its totally protected forest areas to at least 30 per cent by 2025.
Having identified the areas critical for protection, this should streamline the process for achieving certification. “If the land that a company is on doesn’t overlap with an HCV area, then they pass,” says Webber. He adds that the design of the approach is not intended to “inspect every square inch of palm oil land”. Instead, there will be samplings of different parts of Sabah, checking for non-conformities and systemic problems.
Monitoring of compliance will be down to the jurisdictional entity which oversees certification. This entity will have the power to sanction non-compliant producers, or terminate their certificates, explains Mark. Neither the Sabah or Central Kalimantan pilots have so far established such entities.
Smallholders
Smallholders are typically seen as the weakest link in the supply chain, lacking access to the best land to cultivate, or the technical and logistical resources that commercial oil palm estates have. This means they have the least capacity to deliver sustainable, or legal, agricultural practices.
“The perception is that independent smallholders plant in illegal areas,” says Mark. This creates a vicious cycle by making it harder for them to sell their fresh fruit bunches to producers that are under pressure from increasing traceability requirements.
It is hoped that the jurisdictional approach can address these inequities by pulling resources together to create enabling conditions for smallholders to participate and, in turn, to build up technical capacity.
Forever Sabah is one of a handful of organisations in the state and over the border in Indonesia’s Central Kalimantan that are supporting smallholders towards certification through training in sustainable practices and raising awareness of their rights.
A limiting factor in the RSPO certification model is that smallholders have historically struggled to participate, due in no small part to a shortage of capacity and finance necessary to adopt the latest sustainable practices.
“If there’s state certification, it means smallholders are at the table in a more equitable way. They are not being exploited with regard to price and land access,” says Cynthia Ong. To date, about 26 per cent of palm oil produced in Sabah is RSPO-certified, out of which less than 5 per cent of Sabah’s estimated 50,000 smallholders have completed RSPO certification, Ong says.
“We are hoping to reach a tipping point by 2025 to get 20 per cent of smallholders certified, so that starts to become the practice,” she adds.
Where does the approach go from here?
Impetus to increase uptake of smallholder certification is likely to come from increasing transparency and traceability requirements, in particular the newly adopted EU deforestation regulations, which from November 2024 will require geolocation down to the plot level. “A jurisdictional approach that provides companies with a verified sourcing area can meet the EU halfway with sustainability guarantees,” says Mark.
However, he adds that the EU regulations have become “a highly politicised issue” in recent months, with the Malaysian and Indonesian governments threatening palm oil export bans against what they see as discriminatory regulations, and smallholders holding protests against the new rules, fearing that they could find themselves excluded from EU markets.
Waiting game
For the jurisdictional approach to gain the necessary buy-in from businesses and governments for wider implementation, the incentives need to be clear, says Mark. The approach could help buyers in North America and the EU meet their No Deforestation, No Peat and No Exploitation (NDPE) requirements. It could also be more cost-effective to source from one jurisdiction, for example Sabah or Seruyan district in Central Kalimantan, “rather than pinpointing certain producers they are going to source from,” Mark says. “And for the jurisdiction itself, the benefits would be greater access to these markets.”
But Mark does not think there have been any commitments so far to preferential buying and selling from Sabah or Seruyan district. “This is because they are still in the pilot phase and have yet to achieve jurisdictional certification, so everyone is still playing a waiting game.”
With the increasing demands on traceability, proponents of the jurisdictional approach are urging palm oil buyers in Europe and elsewhere to do more to support and incentivise these pioneering efforts to improve sustainability.
“Right now, it’s all stick and no carrot,” says Webber. “The supply chain actors that want to source from sustainable sources need to extend their hands across the sea and help out directly. For example, buyers should recognise the efforts of smallholders in Sabah if they are legally compliant, at that point they should be told: ‘Good job, here’s something to recognise your efforts and get to the next level.’ You can’t wait for everything to be done and then provide the rewards.”
This article was originally published on China Dialogue under a Creative Commons licence.
