Palm Oil Monitor Weekly Update – 10 December 2018

Norway excludes palm from biodiesel

Norway has attempted to follow the lead of the European Union and exclude palm-based biodiesel in its biofuels programs. The Norwegian Parliament passed a proposal that called on the current government “to formulate a comprehensive proposal for policies and taxes in the biofuels policy in order to exclude biofuels with high deforestation risk”.

Although the parliamentary action directs the Norwegian Government to develop a regulatory measure, any concrete action still has some way to go.

Norwegian politicians would be well aware that the EU has tried – and failed — over many years to have palm oil excluded from its renewable programs.

Norway is a very small user of bioenergy; it is often forgotten that it is one of the world’s larger producers of fossil fuels. Around half of its exports are crude petroleum and natural gas; and around one third of its exports to Indonesia is crude oil.

Biofuel programs were supposed to be about switching away from fossil fuels; Norway appears to have forgotten this.

It also appears to have forgotten that it’s close to the end of a set of trade negotiations with Indonesia. The Indonesia-EFTA (European Free Trade Area – comprising Norway, Iceland, Switzerland and Liechtenstein) concluded its negotiations in principle.

But that might not mean much; Indonesia had also finalised its trade agreement with Australia, but pulled back completely when Australia decided to move its embassy in Israel to Jerusalem. Indonesia’s politicians saw an opportunity ahead of Indonesia’s elections in April and ran with it.

Norwegian policymakers would do well to learn that free trade agreements don’t get a great deal of political support in Indonesia – particularly at a time when the country is running a sizeable trade deficit.

Polman exits Unilever

Paul Polman has stepped down from Unilever after a decade-long stint as CEO. Polman was always a polarizing CEO. His emphasis on sustainability riled many shareholders, analysts and investors. It also baffled a number of sustainability analysts and commentators, who noted that his ‘sustainability plan’ for the company – which mostly concentrated upon the sourcing of raw materials and climate emissions – ignored a number of areas that eventually became a problem for the company, such as sexual harassment, excessive plastic packaging, and contamination lawsuits.

Sustainability also didn’t appear to include a top-down crackdown on illegal behaviour, with the company facing the wrath of many regulators over cartel and anti-trust activities. But for palm oil, the biggest controversy involving Unilever came in 2013. As the company attempted to implement a traceable supply chain, it had to cut 80 per cent of its smallholder suppliers – remembering that Unilever is the world’s largest palm purchaser. Unilever executives said it was a ‘cull … to ensure standards’ and that social concerns lost out to environmental ones – a slight to the UN’s Sustainable Development Goals (SDGs) that seek to balance social and environmental concerns.

Unilever responded by attempting to re-incorporate smallholder farmers two years later. But for a smallholder farmer, losing a contract for a couple of years is a big deal. The move cost Unilever a lot of support amongst palm oil producing governments.

Clearly, for Polman, Dutch green politics came before the development needs of non-European small farmers, especially in the Netherlands’ former colony, Indonesia.

COMMENT: What’s wrong (and right) about Iceland’s letter on palm oil

Iceland’s Richard Walker has strengthened his resolve on Iceland’s decision to ban palm oil from its in-house products.

Iceland maintains that as a small ‘outsider’, “the only way we could create meaningful change was to shout very loudly from outside the established palm oil industry” and that Iceland “decided simply to stop using palm oil until the industry cleaned up its act.”  In addition, Walker says that palm oil’s big problem is that palm is “grown almost exclusively in areas of tropical rainforest.”

What’s wrong with these statements?

First, Walker may be an outsider, but working with Greenpeace is no small undertaking. They are arguably one of the richest and most effective PR companies in the world. Playing the ‘naïve’ card looks disingenuous.

Second, Iceland had other options when making its decisions on palm oil. If orangutans were the concern, it may have been possible to purchase segregated supply from New Britain Palm Oil in Papua New Guinea. Or from palm grown in Africa or Colombia, where orangutan have never lived. Or from established plantations in Thailand.

If this decision was not about marketing, but about ‘doing the right thing’, the other option would have been to simply make the change. No press releases or TV chat show appearances, just a switch.

Third, the ‘tropical’ problem. Soybeans and beef are responsible for extraordinary levels of deforestation in the Amazonas region of Brazil, according to EU research (far higher levels than palm oil). Also, the palm is not “grown almost exclusively in areas of tropical rainforest”, it’s grown where the environmental (soil, climate, etc) and social conditions are satisfactory for the plant. A tropical rainforest can develop there, but also an anthropic savannah or another vegetation. Why, then, is Mr Walker, not banning beef or soy products in Iceland?

So what did Iceland get right?

First, Walker “accept[s] entirely that a wholesale boycott of palm oil is not the right long term solution”.

Second, people (generally those in Europe) really do care about environmental degradation. This is also true, and his customers have responded positively to Iceland’s other major campaign, on reducing plastic waste.

But here’s a challenge to Iceland. Deforestation from beef is ten times that of palm. Soy is more than double. Perhaps Iceland should arm its customers with the full facts about deforestation, rather than simply a narrowly-focused hit-job on one commodity. That would show real leadership.