Palm oil

Increasing production while protecting the environment

Our Palm Oil program supports the production of traceable and sustainable palm oil at scale. We do this through partnerships with local and international companies and governments in Indonesia and Malaysia, and by working on the demand side in Europe.

The Palm Oil program focuses on scalable interventions in supply sheds: geographic areas where mills and refineries draw their supply. The interventions should create sufficient volume to allow mills and refineries in supply sheds to process 100% traceable, sustainable palm oil, improving cost efficiency and the potential for mainstreaming.

The program builds coalitions to solve key challenges such as traceability, smallholder productivity, access to finance, and sustainability monitoring. This is expected to improve the livelihoods of hundreds of thousands of smallholders, and reduce pressure to expand palm oil plantations into tropical forests.

Our focus remains on avoiding deforestation and greenhouse gas emissions due to expansion of palm oil, while also improving the productivity and sustainability practices of smallholders.

To accommodate the growing demand for palm oil, production needs to increase crucially without harming the environment. Several of the world’s largest palm oil users and producers have committed to using only deforestation-free, traceable, sustainable palm oil.

IDH builds coalitions within the industry to transform these aspirations into workable solutions, supported by a sound business case. IDH’s Palm Oil Program supports improvements in palm oil sustainability through several workstreams implemented at scale.

IDH convenes the industry in the Traceability Working Group (TWG). The TWG will find a common definition for traceability and develop a roadmap for the steps needed to increase understanding on the flow of palm oil products on existing land and transparently link to supply sheds. This will allow companies to ensure that they are sourcing responsibly (for example that their supply chain is deforestation-free), and to identify areas where improvement and support is needed, such as increasing the productivity and sustainability practices of farmers.

IDH contributes in developments and support investments in smallholder inclusion in targeted supply sheds. This will help smallholders to become organized, increase their productivity, use better production practices, access working capital and investment finance, and improve their livelihoods. This should expand market access, reduce pressure to expand into forests and allow smallholders to become compliant with the responsible sourcing policies of buyers (through robust monitoring).

Through partnerships with manufacturers and refiners, IDH is also working to support improved sustainability amongst third-party suppliers such as small and medium-size oil palm growers and millers. This includes work to support improved productivity and efficiency in return for on- and off-plantation forest conservation, restoration and management, community development and engagement and peatland best practice.

As part of its work to drive sector-level change IDH also supports industry level initiatives and best practice that can be applied across multiple landscapes. For example, IDH supported the high carbon stock (HCS) study; HCS Study-HCS Approach convergence work; palm oil risk assessment tools and peatland management best practice for smallholders and other relevant industry level studies and initiatives.

To drive the uptake of more sustainable palm oil in Europe, IDH and MVO (the Dutch Oils and Fats Industry) established the European Sustainable Palm Oil, or ESPO, project in 2015. The project was initiated to stimulate the uptake of more sustainable palm oil in Europe, and its objective is to achieve ‘100% sustainable palm oil in Europe by 2020’. ESPO works in close collaboration with various National Palm Oil Initiatives on sustainable palm oil, the RSPO and umbrella EU associations, such as Caobisco (confectionary), Fediol (refineries) and Imace (margarines), and connects to the green sourcing areas.

An example of a National Initiative is the Dutch Taskforce Sustainable Palm Oil, of which IDH has been a founding partner. In May 2016, the Dutch Taskforce Sustainable Palm Oil announced the results of the sustainable use of palm oil in the Dutch food & feed industry. The taskforce members, eight food and feed industry associations, all achieved the ambition they set in 2011: ‘100% sustainable palm oil for the Dutch market by the end of 2015’.

The success of the Dutch Taskforce has also led to the establishment of various national Palm Oil initiatives in ten European countries.

With the support of these national initiatives, ESPO instigated in December 2015 a ‘Commitment to Support 100% Sustainable Palm Oil in Europe by 2020’. Eleven organizations signed and supported this commitment. In response, the governments of five key European Union countries declared their support towards the project by signing the Amsterdam Palm Oil Declaration during the EU and Global Value Chains’ high-level conference on 7th December 2015. This was the first time that Europe spoke with one voice with regards to sustainable palm oil. In June 2016, Norway declared governmental support to the Commitment to Support 100% Sustainable Palm Oil in Europe.

As a certification-neutral organisation, IDH is not an RSPO member but works closely with the RSPO in several projects. For example, IDH has a partnership with a number of companies to support the certification of smallholders to RSPO standards in Riau, Jambi, South Sumatra and North Sumatra. In addition, IDH has supported the development of a simplified approach to HCV management for smallholders. We are also working on innovations with the RSPO, including an innovative approach to smaller certification which integrates traders (collectors) with Unilever and PTPN3 in North Sumatra; and a pilot of the forthcoming RSPO jurisdictional certification approach in South Sumatra.

As part of the supply shed integrated approach, we will identify go/no-go areas in context of spatial plan and risk/priority level. We will clarify resources and responsibilities in conservation, enforcement, etc., and addresses provincial level issues such as legality. The supply shed integrated approach is led by local government through multi-stakeholder platforms.

Growth planning is essential to effective landscape and supply ship management. Green growth plans provide a roadmap to sustainable landscapes, setting out the responsibilities, benefits, roles and expectations of different stakeholders, as well as identifying strategic priorities, go/no-go areas, policy requirements and so on. Green growth plans are developed through a consultative process involving multiple stakeholders, and are designed to be supporting documents to assist stakeholders in understanding green growth requirements and integrating these into their own development plans.

It has become increasingly clear that a single commodity-focused approach will not be sufficient in some areas. By considering the entire landscape, IDH ensures that interventions on palm oil do not have negative unintended consequences on other commodities or communities. In addition, by working across commodities within a single landscape IDH can direct efforts on production and protection towards the areas with greatest potential impact.