Palm Oil Monitor was fortunate enough to participate in an extensive webinar in Jakarta earlier this week, covering the future of Indonesia Sustainable Palm Oil (ISPO) certification in the global environment.
The webinar was hosted by INDEF, one of Indonesia’s leading think thanks on economic and development policy in Indonesia and in the ASEAN region.
The webinar received widespread coverage in local media in newspapers such as Antara, CNN Indonesia, Koran Tempo, Merdeka and more. A full recording of the webinar is available here. It features presentations from the Ministry of Agriculture, Ministry of Industry, RAN-KSB, Yayasan Kehati and Sinar Mas.
ISPO and International Recognition
Our presentation focused on the international pathways for ISPO certification going forward. We’ve identified clear regulatory points in emerging sustainable trade policies where certification might be considered a solution for compliance.
So, what are they?
European Union
The EU already has certification requirements for the Renewable Energy Directive (RED) – which bans palm oil – and endorses certification systems such as ISCC, SSAP (US soybean) and previously RSPO-RED to fulfill its requirements.
It may introduce pathways for certification systems under future regulations, including its Deforestation Regulation, which aims to eradicate ‘embedded deforestation’ within supply chains. It may do the same for its regulations on due diligence and human rights, though this seems less likely.
The question is whether the EU will listen to the Government of Indonesia on ISPO certification.
In the past, the EU has developed a joint certification for legality for Indonesian timber products under the EU Timber Regulation, known as SVLK. This effectively gives Indonesian products a ‘green light’ under the EU regulation.
United Kingdom
The UK – as we have mentioned many times before – is finalising rules to prevent the importation of commodities that are associated with illegality and illegal deforestation in particular. There was some debate about whether it would be possible for the UK to introduce regulation that would prevent any deforestation in supply chains, or introduce sustainability requirements for imported commodities.
The UK has chosen a legality rather than a sustainability path. There are two main reasons for this.
- First, regulation of imports based on ‘sustainability’ is likely to be met with a legal challenge under the WTO Agreements.
- Second, the UK is seeking to improve its trade relations with a number of countries in the region, and it recognised a potential pathway for certification recognition going forward in a joint UK-Indonesia communique.
United States
The US is currently using elements of its existing Customs and Border Protection (CBP) regime to block imported goods that are claimed to be produced with forced, slave or child labour. This has to this point included palm oil in Malaysia. This is less of a regulation than a trade disruption, but it gives an indication that officials will be looking closely at claims made by NGOs against palm oil suppliers.
Senator Brian Schatz of Hawaii is also potentially proposing new legislation that will seek to prevent the importation of commodities produced on land that has been deforested illegally. Details are scarce at this stage, but it is possible that it will be based on the US Lacey Act amendments.
In addition, there are elements of the new US CLIMATE bill that seek greater efforts to reduce deforestation with an emphasis on bilateral cooperation with Indonesia.
Switzerland
Switzerland is a member of the European Free Trade Area (EFTA) and has signed a new agreement with Indonesia. The agreement allows for a preferential tariff on palm oil if its sustainably produced. Swiss regulators are currently assessing which certification schemes will qualify. RSPO is highly likely, meaning many Indonesian producers will be covered. However, ISPO recognition under this agreement would be significant.
In addition, the agreement contains special provisions for bilateral cooperation on palm oil certification.
Other paths: A PEFC model?
PEFC (Programme for the Endorsement of Forest Certification) is an ‘umbrella’ certification for forest sustainability schemes. PEFC assesses different sustainability schemes against a set of international benchmarks and endorses them if those benchmarks are met. PEFC has endorsed schemes on every continent, including Indonesia’s scheme, IFCC.
The scheme is based on the Helsinki Declaration, which was a set of principles on sustainable forest management endorsed by European forest ministers in 1993. This was used to develop a set of operational guidelines in 1998, which became the basis for ‘Pan European Forest Certification’, which eventually led to global certification in the form of PEFC.
It could be possible for palm oil producing countries to use an existing forum such as CPOPC or ASEAN itself to establish a set of principles on sustainable palm oil production. Criteria and indicators for sustainable agriculture and other sustainability benchmarks could be drawn from the Sustainable Development Goals (SDGs).
This could then be used to ‘cross endorse’ the national systems of Indonesia (ISPO) and Malaysia (MSPO). It could also be used as guidance for other producing countries to develop national certification systems.
One thing palm oil producers should be seeking to avoid is a ‘Western consensus’ on sustainable vegetable oil production.