Getting off the couch: The trials and tribulations of sustainable palm oil

The fourth edition of SPOD, which was held in Amsterdam on 20 October 2022, also featured a sofa interview with the topic ‘Social challenges and market access for smallholders’. This particular event was streamed live to an external audience of several hundred.

The nitty-gritty of sustainability

Moderated by Ruben Brunsveld, the conversation during the sofa interview revolved around the future of sustainable palm oil; the creation of access to market for food security, socio-economic developments, further reductions in deforestation, protection of biodiversity, and the securing of human rights.

Three discussants shared their experiences:

  • Matthew Spencer, Global Director Landscapes at idh – A sustainable trade initiative
  • Lanashree Thanda, Director at BC Initiative, and
  • Renaka Ramachandran, Chief Financial Officer and Deputy Managing Director at Sime Darby Plantation Berhad.

Matthew Spencer reminded the audience that reaching sustainability goals is a journey. In the first phase, the big win was that Malaysia has seen ten consecutive years of declining deforestation and Indonesia roughly five.

But now a new phase is beginning where the challenge is smallholders’ certification. This may prove even trickier than the first phase, since smallholders have stronger incentives to fell trees. Therefore, a focus on landscape jurisdictional approaches is needed to work with the local level of government.

Lanashree Thanda shared practical insights from the work BCI is doing in partnership with the Roundtable on Sustainable Palm Oil (RSPO) in the Malaysian state of Sabah. According to information provided on the RSPO website under the heading Partnering for progress, the problem is that although many policies and regulations in support of sustainable palm oil production are in place, there is a disconnect on the ground between ambition and reality.

To fill this gap, RSPO is leveraging the experience of the experts at BCI. But as Lanashree points out there is also a disconnect between the headquarters of companies, NGOs, or governmental agencies in the big cities, and the rural reality.

Oftentimes, the truth is that smallholding farmers are not familiar with the concept of sustainability and what it means for their lives. It is not uncommon for them to not even be aware of the Malaysian Sustainable Palm Oil (MSPO) standards. However, as Lanashree reminds us, it is individuals, not organisations, that make change.

Renaka Ramachandran presented a very interesting topic, addressing head-on – in the words of moderator Ruben –the big white elephant in the room: the WRO against Sime Darby. What is it all about?

In December 2020, the United States Customs and Border Protection (CBP) issued what is called a Withhold Release Order (WRO) against Sime Darby Plantation (SDP) on palm oil that is produced by forced labour in Malaysia. It means that all palm oil and products containing palm oil produced by Sime Darby or its subsidiaries, joint ventures, and affiliated entities in Malaysia, will be detained at US ports of entry.

CBP justified its decision using the presence of all 11 of the International Labour Organization’s forced labor indicators in Sime Darby Plantation’s production process.

The indicators are:

  • Abuse of vulnerability
  • Deception
  • Restriction of movement
  • Isolation
  • Physical and sexual violence
  • Intimidation and threats
  • Retention of identity documents
  • Withholding of wages
  • Debt bondage
  • Abusive working and living conditions
  • Excessive overtime

During the sofa interview at SPOD, Renaka made it clear that the CBP’s decision came as a shock to Sime Darby. As she put it, the organisation went through all seven stages of grief, followed by intense soul searching.

In the run-up to the WRO, Sime Darby implemented sweeping changes in governance and operations. The measures include:

  • Reimbursement of recruitment fees: It had emerged that foreign workers at SDP had been charged fees by recruitment agents to work at the plantations. As this goes against the company’s zero recruitment fee policy, SDP decided to reimburse more than 15,000 workers a total of MYR38.5 million, roughly USD8.5 million. A hefty sum that works out to about USD560 per worker.
  • Ethical recruitment: SDP revised its responsible recruitment procedure to emphasise the appointment of suitable recruitment agents via open tender, and to install necessary checks and balances so that foreign workers are no longer exploited.
  • Social dialogues with workers: SDP operates 121 estates and 33 mills in Malaysia. In all of them, the company says a communication platform has been established and social dialogues which are conducted fortnightly in the native languages of the foreign workers have allowed them to raise issues and find solutions swiftly.
  • Structural changes: According to company information, the SDP management board approved an ESG (Environmental, Social, Governance) scorecard that carries as much weight as the operational scorecard. On top of this, a new department for social welfare and services has been established.

Conclusion: Keep on keeping on

The discussions during this enlightening SPOD session made one thing clear: the sustainability journey is long and there are no quick fixes. Real change takes time, if for no other reason simply because it ultimately concerns human behavior.

In addition, the road to success is winding. Take the case of the WRO against Sime Darby. On one hand, the company has submitted a comprehensive report to the US-CBP detailing all measures taken to improve its governance and management systems. Since then, SDP has been waiting for a reply from US law enforcement, by now for over six months.

On the other, news reports in November 2022 said that an RSPO-led assessment of the situation following the WRO has unearthed further areas wherein SDP needs to improve.

But that is just the thing: the pursuit of making palm oil production sustainable often reminds us of Sisyphus, the tragic figure from Greek mythology who is forever condemned to push his boulder up a hill, only for it to roll down once he reaches the top.

However, the palm oil industry must never consider sustainability a punishment.

Instead, it is an uphill struggle that soon will carry the reward of a seat at the peak above the clouds, basking in the sun. So, to all those who sometimes feel that the push for the summit of sustainability is mission impossible, they should keep at it relentlessly to reap its fruits in the future.

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