Palm Oil Monitor Weekly Update – 3rd June 2019

The European Parliamentary Elections: Implications for the Industry

The European elections took place last week (23rd to 26th May), and the new makeup of the European Parliament announces change. This will have serious implications for the attitude towards palm oil going forward – both within the Parliament itself and, by association, within the European Commission.

A change in the Parliament means a change to the Commission – and therefore the approach to palm oil.  The workings between the Parliament, the Commission and the Council of the EU are difficult terrain to navigate for most people outside of Brussels.  The Commission President leads Commission programs. The President – on paper – is endorsed by the European Council, but the Council is supposed to take account of the wishes of the European Parliament. The Parliament’s two largest blocs – the centre right European People’s Party (EPP) and the centre left Socialists (S&D) – have lost their absolute majority in the Parliament, paving the way for Liberals, Greens, and various populists to gain power as potential ‘kingmakers’ in the negotiations. There will now be a protracted period of horse-trading between parties – including the Greens – to determine who can or should nominate the ‘lead candidate’ for Commission President.

The ‘Green Wave’ is real. The Greens bloc (known as Greens/EFA) increased its representation from 52 seats to 69 in the 751-seat Parliament. This is a negative for palm oil. But that is not all. The new ALDE group (liberals) campaigned promoting more ‘green’ policies and so did the Socialists. That is a big shift towards environmentalism, as pointed out by the Commission’s Secretary General Martin Selmayr, who emphasised that this Green ‘wave’ will have a strong impact on the next Commission’s program. And let’s not discard the fact that the Greens/EFA lead candidate Bas Eickhout MEP has been a vocal opponent of palm oil. Earlier this year he stated the following on the Renewable Energy Directive:

The good news is that after years of the Greens/EFA group fighting against the incredibly damaging effects of mass palm oil production on forests, animal habitats and the environment, the European Commission finally acknowledges that palm oil is not a sustainable biofuel.

The bad news is that the loopholes in the proposal are too big and will allow the big producers of palm oil to continue to wreak destruction. Exemptions, such as for ‘unused’ land which might serve other important purposes and those for small-holders, while size is no guarantee for good practices, need to be revisited in order to make this proposal strong enough to protect forests, the communities that depend on them and the animals that live there.

But it wasn’t a uniform swing to the Greens. The Greens/EFA gained ground in Germany, France and the UK. However, they gained little or no ground in southern or eastern member states. In Italy and Poland, for example, they failed to win any seats, and went backwards in countries such as Austria and Sweden.  What’s also notable is that the GUE/NGL (European United Left / Nordic Green Left) – the more radical of the Left wing parties, aligned with the communist parties – went backwards in most instances, going from 52 seats to 38. It’s worth remembering the GUE/NGL is home to MEP Katerina Konecna, who led the charge in the European Parliament against palm oil, sponsoring major actions against palm oil. For Konecna, the GUE/NGL representation from the Czech Republic has gone from three seats down to one, leaving her clinging on by her fingernails.


EU Consultation on Deforestation Regulation Skewers Palm

The Commission has published the results of its Public Consultation on ‘Stepping up EU Action against Deforestation and Forest Degradation’. The consultation is part of the EU’s longer-term work on deforestation, which will likely see the introduction of a deforestation regulation, i.e. a rule that limits imported commodities that have links to deforestation.

The consultation asked respondents to nominate which commodities should be addressed by the regulation. More than 80 per cent nominated palm oil, well ahead of meat (54 per cent) and soy (52 per cent). This is a striking indication of how skewed the deforestation and anti-palm debates in the EU have become. It is particularly striking given that EU research has clearly demonstrated the deforestation footprints of meat and soy outstrip that of palm by as much as 500 per cent.

Just as important is the means by which respondents think the EU should achieve goals ‘against’ deforestation. An overwhelming majority think that demand-side measures should be taken by the EU – over and above voluntary mechanisms. In other words, regulation that will impact trade.

An incoming green-leaning Commissioner will clearly take a tougher line on imports of palm oil – and a deforestation regulation will be the tool.


Sustainable Sourcing: Should Retailers Step Up?

British sustainable sourcing consultant Penny Coates has given a good overview of what UK retailers are seeking from suppliers when it comes to deforestation, and in turn, what consumers are demanding from retailers.  Overall, it’s a dismal situation.

According to Coates, retailers are increasingly demanding both sustainability and traceability from suppliers. And consumers want to be reassured that their product is sustainable or traceable, but they don’t want that decision to be made complex. This latter point about consumer information is very much in line with health labelling, where there is some evidence that more labelling information on fat content, for example, has hindered health campaigns.

In other words: consumers want a broad reassurance from brands and retailers that their products are sustainable, but they don’t want specifics.

This is problematic – because sustainability is complex. Coates uses the example of RSPO as a common point on sustainability for palm oil, but as has been pointed out many times before, barriers to smallholder certification remain high.

NGOs and some retailers – specifically Iceland and Selfridges – have not made communicating the sustainability of palm oil any easier. Why? Because they have simplified sustainability to meaning nothing more than being ‘deforestation free’ or ‘palm oil free’.

Despite the claims by Greenpeace and Iceland, palm oil certification standards are strong.

There are some useful lessons to be learned from the paper certification wars that took place in the 2000s. There was significant pressure on major companies from NGOs to only use FSC certified paper. But many companies were adhering to PEFC certification. The default position for purchasers eventually became that they would purchase FSC-certified where possible, and failing that, PEFC-certified.

This position helped break the ‘paper is destroying rainforests’ argument that was common at that time and – ironically– saw a bigger shift to plastic packaging. The choices on certification assured retailers, and retailers were then able to assure consumers.

This is a workable solution for palm oil. RSPO, MSPO and ISPO can be the choices for retailers. There is no excuse for retailers not to buy certified palm. What they need to do now is let consumers know that palm oil – like paper – is ok.