Palm Oil Monitor – Weekly Update 4th May 2018

Certification Leaders Come Out Against RED II

The latest organisation to argue against the EU’s proposed ban on palm oil biofuels is the ISCC (International Sustainability and Carbon Certification).

This is a significant intervention because ISCC is the leading figure in the European sustainability certification market. They are a member-based organisation headquartered in Germany, and they have credibility on carbon certification that is unmatched by anyone else in the market. The ISCC standard addresses the environmental objectives of the assessed EU and UN policy instruments more closely than the other standards. They are trusted by suppliers to help certify their products in compliance with European carbon requirements: they don’t have political or geographical allegiances.

Last week ISCC released a paper pointing out the significant flaws in the EU Parliament’s reasoning on the palm oil ban. The key takeaways are as follows:

  • The EU ban will mean lower demand for certified palm oil (i.e. palm oil that complies with existing RED standards using ISCC RED or RSPO RED);
  • This means that existing suppliers will have no incentive to remain certified or gain certification for new operations;
  • Plantations will not adhere to the higher standards associated with certification, and there will be a reduced incentive for new players not to deforest;
  • Other social gains from certification will also be lost.

But the core point made by ISCC is that the proposed ban will not do anything to reduce deforestation and provides no incentives for plantations to move towards more sustainable production – quite the opposite.

This intervention is particularly interesting because not many in the palm oil sustainability world have so far engaged in the RED debate – in fact, not many palm oil organisations in Europe have engaged at all. Perhaps others will follow where ISCC has led?


The Guardian  … in favour of palm oil?

The Guardian managed to surprise Palm Oil Monitor this week with what seemed like a defence of palm oil and palm oil producers.

Guardian Southeast Asia correspondent Hannah Ellis-Peters wrote an extraordinary rebuke to those campaigning against palm oil, stating:

“Yet for Malaysia’s smallholder farmers, many of whom were rescued from poverty when the government’s land authority, Felda, gave them 10 acres of land to harvest palm oil in the 80s, the allegations of environmental destruction are baffling. They account for 40% of Malaysia’s palm oil output and yet none engage in any land-grabbing, the slash and burn or deforestation practices that were pivotal proponent for MEPs voting to ban palm oil in biofuels.”

The Guardian, to its credit, has always attempted to balance its reporting on palm oil – and a sponsorship from RSPO certainly helped. The position was always: palm oil with certification, as long as it’s the right kind of certification. This appears to be the first time that they’ve covered smallholders with any depth. At POM we’re hoping this is a sign that this post-colonial guilt will now be applied to the shortsighted trade policies dreamed up in Brussels …


Palm Oil Free Certification Makes Tracks?

Two brands – the UK’s Bloomtown and the US-based Enjoy Life foods – both joined the relatively small number of certified ‘palm oil free’ products on both sides of the Atlantic. The former is certified to Orangutan Alliance’s Palm Oil Free certification, and the latter to the Palm Oil Free Certification Accreditation Program.

Both programs are relative newcomers to the certification landscape. The key difference between these certifications and broader, non-certified ‘palm oil free’ claims is as follows: A broad claim implies there are clear benefits from not having an ingredient (in this case, palm oil); A certified claim needs to have an established testing procedure to prove the claim, and a trademark or certification mark associated with it.

In the International Palm Oil Free Certification Accreditation Program, it is outrageous to read a list of so-called alternate names for palm oil. This list contains many products derived from saturated fatty acids, fatty alcohol etc. that can come from many sources, not just palm oil or palm kernel oil.

The scientific incompetence and dogmatism of this organization can only lead to stupid and unjustified psychosis.

However, there is clearly a demand for this in the same way a slice of the population demands vegan or organic standards. Palm oil free most likely falls into that same segment. By way of parallel, the demand for sustainable palm oil, for example, has not exceeded the supply.

Would major food companies and brands consider following this route? Possibly, but it has already been tried to some extent in European markets, specifically with brands attempting to compete with Ferrero’s Nutella. Nutella stood up to several challenges from ‘palm oil free’ alternatives. What Nutella proved is that the strength of the brand and the quality of the product matter more than tinkering at the edges.

Despite this, dismissing ‘palm oil free’ certification as a fad would be a mistake. There are plenty of products that don’t contain palm oil that will certify just to differentiate themselves, even if it seems ridiculous. Expect to see ‘palm oil free’ beer sometime soon.

There are two other points to consider. Enjoy Life in particular is owned by Mondelez, a member of RSPO. RSPO requires that members are not permitted to make denigratory claims about palm oil. The palm-free certifications have a certification process, but their claims are implied. Both use pictures of orang-utans in their logos. How will both RSPO and Mondelez respond to this?

The second point is that Enjoy Life is a health-oriented brand. It provides gluten-free and other “free from” brand lines to offer health choices to specific consumers, concentrating specifically on allergens. Certifying something on environmental grounds is something different altogether and deviates from this branding that has given them a great deal of success. Is Enjoy Life about to become Mondelez’s new ‘eco brand’?


Macron makes an impassioned defence of free trade, WTO

French President Emmanuel Macron has made an impassioned defence of the world’s multilateral trading forum, the World Trade Organization (WTO) and of free trade more broadly in a speech to US Congress.

In his speech, Macron stated that “commercial war is not the proper answer” to solve economic problems – such as trade imbalances or uncompetitive sectors.

The speech was targeted at Trump Administration policies, particularly on steel, where the EU and France are seeking exemptions from new tariffs. Macron’s views also express a broader concern that Trump’s policies may simply end up jamming the WTO entirely. Indeed, the US’ delaying of appointments to the Appellate Body means that disputes simply aren’t being resolved quickly.

However, the speech could quite easily be directed at the EU itself. If the EU is so concerned about the integrity of the international trading system and making sure trade is free and fair, it should consider not using the system so cynically. Imposing a tariff or trade regulation in full knowledge that it isn’t WTO compliant – such as biodiesel tariffs or palm oil bans – and then enjoying a four-year period of zero-consequence trade restrictions is the kind of cynicism that has been on display in the EU for years. And sure, a lot of countries engage in this kind of thing; but true leadership means staying above the fray.