RSPO Daily Update: 15th November 2018

The final day of the Roundtable and the General Assembly produced the results that were expected – with a few minor hiccups. Here are the key takeaways from both, plus some broader questions about the financial future of RSPO.

Sabah’s Deputy Chief Minister took a swipe at European NGOs. Deputy Chief Minister YB Datuk Seri Wilfred Madius Tangau – also the Minister for Trade and Industry – gave a speech that questioned whether European NGOs have a sufficient understanding of Malaysia’s economic, social and environmental context to be so critical of plantation practices in Malaysia. Tangau was at one point part of the Malaysian Timber Board, and travelled extensively with Plantations Minister Bernard Dompok when the country’s timber industry was singled out by European forest campaigners. Clearly that experience rubbed off on him.

The RSPO Board has signalled a new agenda. RSPO co-chair Dato Carl Bek-Nielsen gave an applause-inducing closing address that pointed out the long road ahead for RSPO. Bek-Nielsen highlighted a number of areas. His big point was uptake; he basically said that 65 per cent uptake is simply not good enough going forward. Reading between the lines, the message could be interpreted as follows: with the ‘no deforestation’ principles and criteria now approved (see below), there is simply no excuse for customers not to be buying RSPO. And more pointedly, purchasers and NGOs have got everything they wanted out of the RSPO process and then some; it’s now the growers’ turn, particularly smallholders.

Some big-ticket resolutions got through the GA. The revised P&Cs had overwhelming support in the GA, which included the new ‘no deforestation’ criteria. That said, it wasn’t without some discontent. Growers complained about the ratcheting of standards and the consequent increase in costs. Sadly, board members couldn’t respond to these concerns. UK retailers seemed to just brush off these concerns around cost completely. Perhaps they all need to spend a little more time in rural Sumatra.

One point that was made by one Indonesian grower is that significant delays in the HCVRN assessment proposal already add to costs and uncertainty – and there’s now a new process that will require additional training, capacity building and outreach.

A resolution to have lists of third-party suppliers published made it through, but a proposal to have auditors and companies financially ‘delinked’ didn’t. This was a thankful show of common sense. Although auditing isn’t perfect, conventional audit processes are used in safety standards for medical equipment, hygiene and food. These are things that have an immediate impact on a daily basis. Until there’s a resolution that proposes a compelling reason for re-thinking the audit relationship, this should be thrown in the trash.

Two smallholder resolutions got over the line that were important. One was an exemption for smallholders from ‘immediate suspension’ in the lead-up to the smallholder standard; another was for the continuation of the Smallholder Interim Group’s work on standard development.

RSPO’s financial health has some question marks.  This year’s financial report was possibly the biggest surprise of the GA. In short, RSPO is burning through its cash and isn’t quite meeting its revenue projections. The financials indicate that much of the expenditures have gone into outreach and engagement activities. This isn’t entirely surprising. One of the comments from the floor was a criticism of using PR and advertising agencies to undertake much of the outreach work, particularly in European markets.

Here’s a broader question: is the organisation simply trying to do too much? RSPO can and should be proud of everything it is achieving on environment, labour and livelihoods. But it can’t be everything to everyone. Mission creep is risky – and expensive.

Notably, the Board was cognisant of the fact that opportunities for broadening the revenue base are limited. Their main sources of income are membership fees and levies on the palm oil trade. Volumes are flat. Certified area may expand, but only if there is a greater demand response. This places an additional onus on the uptake question, which is not just about ‘shared responsibility’ in terms of sustainable outcomes, but the very financial sustainability of the organisation.