POM Update: CDP Report | New Attack on Palm | Palm Pandemic Folly Returns | Back to Iceland

CDP: Palm Oil Leading on Deforestation Commitments

A new report from the Carbon Disclosure Project (CDP) highlights – once again – the lower environmental impact of palm oil, as well as the greater levels of commitment among palm oil firms to zero deforestation.

The report shows that the average number of firms reporting on palm oil traceability, certification and engagement effectively outstrip commitments from any other commodity grouping. Other commodities assessed include timber, beef, soy, rubber, cocoa and coffee.

In other areas, such as compliance, ecosystem restoration and supplier engagement, it generally finishes in the top two.

The report also notes that the palm oil sector has effectively overtaken the timber sector – which has been at the forefront of sustainability commitments for many years. The report states:

“Companies are making more progress towards eliminating deforestation from palm oil supply chains, even outpacing companies in timber products supply chains – the commodity that has seen most effort in the past. Companies have been slow to adopt the comprehensive progress required in cattle and soy supply chains, which continue to trail behind.”

The CDP report is worth noting for the following:

  • First, it serves as a strong rebuke to the report released by Greenpeace two weeks ago that heavily criticised palm oil certification, particularly the national systems – ISPO and MSPO – that operate in Indonesia and Malaysia.
  • Second, it underscores that the commitments – and implementation – by palm oil firms continues to be ignored by EU policymakers. This is despite overwhelming evidence that shows palm oil in Indonesia has fared much better than other commodities in other regions:
    • In Brazil, most deforestation is associated with expansion of pasture, which mean expanded beef production. According to recent data, deforestation in Brazil hit a 12-year high in 2020.
    • In Ukraine, deforestation and illegal logging are also a problem. Specifically, there is genuine concern regarding illegal logging and deforestation in the forest areas in the Carpathians.

However, the report is not error free. Unfortunately, CDP re-hashes several myths that have been a part of the anti-palm oil narrative. The most notable of these is the claim that 70 per cent of palm oil expansion between 2008 and 2015 occurred on forest land. This particular claim is from the EU’s flawed report into indirect land use change (ILUC), which ultimately produced the ban on palm oil in the EU’s renewables programs. The claim was made using a set of commodity maps that, by the EU’s own admission, were incomplete.

As we wrote in 2019 when assessing that analysis:

The EU is attempting to do something that has never previously been achieved: align deforestation data with crop data. There’s a reason this hasn’t been done previously: it’s very difficult … If this was a research project, it would require months, possibly years of refining and improving existing data and analytical techniques … These conclusions are supposed to be informing a regulation that will have far-reaching implications for global vegetable oil markets and for millions of farmers.”

This methodology underscores a truth about European policymaking: do as I say not as I do.

It is worth reminding that the EU’s ILUC policy did not affect significantly the crops that CDP assesses are far worse than palm oil in terms of deforestation – and far less advanced in terms of certification. The WTO case brought by Indonesia, targeted at the RED II, continues in Geneva.

Overall, the CDP report is a rare example of a balanced and fact-based look at commodities and palm oil. However, on using the biofuel data it is clear that the EU’s myths unfortunately persist.

Another EU attack on Indonesian exports?

Although the palm oil community has been focused on the Swiss referendum on the Indonesia-EFTA trade agreement, the question of Indonesia’s agreement with the EU continues.

A new round of negotiations – the first in nearly a year – was held earlier this month, and although the progress in many areas has been good, the question of the sustainability elements in the agreement has been thrown up in the air.

The wild card for Indonesia – and negotiators around the world, including in countries such as Australia – is a new document that was published by Brussels in February.

The document states: “The Commission will further reinforce the sustainability dimension of existing and future agreements in the implementation of all chapters. It will strengthen the enforcement of trade and sustainable development commitments on the basis of complaints made to the Chief Trade Enforcement Officer (CTEO).”

Generally, in trade agreements, the ‘sustainability’ elements of an agreement are non-binding.

There is a reason for this: they are trade agreements, not international environmental agreements, and most countries agree to them in the spirit of international environmental cooperation.

Brussels is now seeking to change that up and make the environmental requirements a lot tougher. For a country like Indonesia – where its largest agricultural export, palm oil, is constantly under threat from EU regulation – this means Brussels has moved the goalposts in the middle of the game.

It raises a bigger question: if a trade agreement is just going to be another Trojan horse for more regulation of your biggest exports, is it really worth it? For countries like Indonesia – and the Mercosur – it changes the calculation on the negotiations significantly.

The Palm-Pandemic Folly Returns

A new paper from researchers in France attempts to argue that oil palm expansion is basically responsible for the rise in zoonotic and vector-borne diseases in those countries. The paper – as all papers that denigrate palm oil – has had some international coverage, including in the Guardian (they are always the first to raise their hand).

But there is some faulty logic being used in chasing palm oil as an agent for disease here:

  • First, the authors appear to take palm oil as a proxy for land-use change or deforestation in specific countries. This, obviously, ignores two major elephants in the room. First is that Brazil, and the broader Congo region have significantly higher deforestation rates (and virtually zero oil palm). Second is that soybean and beef have significantly higher deforestation footprints globally.
  • Second, the disease and pandemic data used by the researchers appears to include every single vector-borne disease registered in a country like Indonesia. It therefore includes diseases like measles and even rubella. So, the correlations that might appear include between oil palm area increases and measles outbreaks. It doesn’t appear as though there has been a systematic regression to exclude diseases where the deforestation-linked vector isn’t apparent. There also doesn’t appear to be a regression for anything else, for that matter.

This is pretty basic stuff, and underscores the lazy scientific thought that went into the report, but not the political agenda, to say the least.

Unfortunately, the correlation-causation fallacy appears to be alive and well among those denigrating palm oil.

Carbon Border Adjustments in Brussels

The EU has also signalled its intention to introduce carbon border adjustments to imports.

This means that exporters will be expected to pay a tariff based on the amount of carbon used in making and shipping their products.

Will this apply to agriculture and palm oil? A discussion on this has already started in Germany.

Ultimately the target of this measure is steel, where low-cost producers across Asia have led the way, including Indonesia. Last year, the EU imposed anti-dumping tariffs on Indonesian steel. Will this be another attack on one of Indonesia’s major exports?

Indonesia has put manufacturing and investment at the heart of its COVID recovery – including for steel production. This has included limiting exports of nickel, an essential ingredient in stainless steel. This has riled the EU, which has taken Indonesia to the WTO as a result. 

The EU’s Ambassador to Indonesia, Vincent Piket, stated last week that the EU wants to assist Indonesia with its COVID recovery. The EU’s trade moves towards Indonesia appear to show the opposite.

Back to Iceland

One of palm oil’s biggest detractors in the UK, Iceland CEO Richard Walker, is set to release a book on April 1, April Fool’s Day. The book, according to its author, sets out the CEO’s approach to activism, along with some re-telling of his 15-minutes-of-fame moments, notably when he used a Greenpeace anti-palm oil video as a Christmas advertisement. However, it’s worth remembering what drove the success of the original Greenpeace-Iceland palm oil campaign. It was the banning of the advertisement by the UK’s advertising regulator that drove him to fame.  

There is some admiration of Walker’s ego for his expectation that the palm oil policy of his supermarket (which commands around a 2 per cent share of the UK market) would warrant him or his family being followed by foreign agents.

Judging by the lack of interest in Indonesia and Malaysia since the Greenpeace video, it doesn’t seem as though anyone in southeast Asia is losing sleep about Richard Walker’s corporate strategy.

Similarly, Iceland (the supermarket) gained significant publicity when it lost a five-year trademark case against Iceland (the country) when it tried to register ‘Iceland’ as a trademark; not to mention the various journalistic exposes – such as an alleged failure to abide by food standards and hygiene rules.

Is the date for the book launch an unexpected flash of self-awareness?