Corporate commitments and state regulations
shaping the palm oil governance system
Pablo Pacheco
Land and Poverty Conference WB
Washington DC, March 2017
BACKGROUND
•
We have entered an era of commitments from public and private actors
•
Governments are committing to reduce their GHG emissions and LEDS
•
Companies are committing to delink deforestation from their supply chains
•
Landholders are increasingly prompted to adjust to these commitments
•
Still no consensus on definitions, targets to be achieved and timeframes
•
More complex institutional architectures and arrangements are emerging
•
Anticipated risks related to smallholder exclusion and market segmentation
•
Potential of jurisdictional approaches to enhance effectiveness and manage risks
OIL PALM: A POLEMIC CROP
 Oil palm has expanded rapidly with contradictory impacts
 Positive impacts on local growth and poverty alleviation
 BUT plantations development also creates social conflict
 AND often expands in detriment of forests and peatlands
 THAT expansion leads to biodiversity loss and GHG emissions
 Three critical performance issues are visible in the sector
•
Land conflicts between companies and local populations + immigrants
•
Differences in yields between smallholders and industrial plantations
•
Large carbon debt resulting from oil palm expansion in forestlands and peatlands
OIL PALM IN INDONESIA
10.5
27.8
Million hectares
cultivated
Million tons CPO
Farmers
2.1
3.5
Million households
Tons CPO/ha/yr
Indonesia
53%
Labor
3.0
Million people
Smallholders
42%
of total cultivated
area
25
corporate groups
control most of
the supply
global CPO supply
~850
Palm oil mills
THE PLEDGES AS THEY STAND

About 266 companies along the value chain made commitments to
support sustainable palm oil supply – 112 on ‘zero deforestation’

Pledges are individual and collective

Prominent pledges on ‘zero deforestation’, including main consumer goods
companies (CGC), producers, processors and traders of palm oil are:


Consumer Goods Forum (2010) on zero net deforestation

Sustainable Palm Oil Manifesto, SPOM (July 2014)

The New York declaration on forests (Sep. 2014)

Indonesian Palm oil Pledge, IPOP (Sep. 2014)
Pledges on ‘zero deforestation’ have been embraced by the largest
corporate groups (producers, processors and traders) but have not yet
reached to their third-party suppliers, particularly mid-size companies
Based on http://supply-change.org/commodity/palm, accessed on March 21, 2017
THE POLITICS OF IMPLEMENTATION
 Most activity taking place at the international arena (consumer countries, corporate groups)
 Different definitions and methods (HCSA and HCS+), yet efforts to harmonize them
 The Government of Indonesia (GoI) has strongly opposed the ‘zero deforestation’ movement
 YET, some provincial government devised regulations that backed up private initiatives
 The GoI initiated a process to strengthening ISPO under a multistakeholder working group
 ALSO, issued regulations to restore peatlands and halt oil palm expansion on these lands
 Different company initiatives (e.g. FFA) to fire prevention linked to oil palm expansion
 Major corporate groups piloting projects to support smallholder oil palm suppliers
AN EVOLVING
INSTITUTIONAL
ARCHITECTURE
 Disparate views on
sustainability: clean,
sustainable and legal
 Multiple public and
private arrangements
and at different levels
 Persistence on
informal economies
and social arrangements
Pacheco et al. (under review)
 Different tensions
disconnects, and
complementarities
BUT PERSISTENCE AMIDST CHANGE
 Land speculation and encroachment of state forests [land mafias]
 Growth of independent mills fostering uncontrolled oil palm expansion
 Enough informal finance driving oil palm plantations expansion
 Many (illegal) smallholders not entitled to receive state support
 Incentives for plantation expansion due to growing biodiesel targets
 STILL some open questions are:
•
What will happen to the land banks hold by companies?
•
How extended is the process of market segmentation?
•
What are the likely indirect effects of the commitments?
WHAT IS HAPPENING ON THE GROUND?
ATLAS OF
DEFORESTATION
AND
INDUSTRIAL
PLANTATIONS IN
BORNEO
ATLAS OF DEFORESTATION AND INDUSTRIAL PLANTATIONS IN BORNEO
 Capture the history of
deforestation and
plantations expansion
 1973 to 2016 over
Borneo island (annual
since 2000)
 Helps companies and
banks track their
deforestation footprints
http://www.cifor.org/map/atlas/
EMERGENCE OF JURISDICTIONAL APPROACHES
Preferential sourcing from specific jurisdictions
[Unilever and Marks & Spencer, Produce and Protect]
- Monitor and rewards for improvements in performance
- Technical assistance with flexible technological packages
Extend palm oil certification to the whole jurisdiction
[Central Kalimantan, Indonesia and Sabah, Malaysia]
- Watershed approach to certification / reduce adoption costs
- Improve uptake of improved practices across producers
Project-based interventions with a territorial focus
[South Sumatra, Sustainable Landscapes Project]
- Spatial planning with attention to peatlands
- Good practices with traceability and affordable finance
CONCLUSIONS
 Palm oil value chain is more complex over time
 The institutional architecture is also growing in complexity
 Different views of palm oil sustainability co-exist
 Tensions persist but complementarities are emerging
 Public policy and government responses are contradictory
 Different views between corporate players and national producers
 Still disputes on ‘what’ and ‘whose’ rules to follow
 Potential on jurisdictional approaches, but also limited