Background

The Roundtable on Sustainable Palm Oil (RSPO) is a multi-stakeholder non-profit group founded in 2004 with the objective of “promoting the growth and use of sustainable oil palm products through credible global standards and engagement of stakeholders.”

Established by a small group of business partners and the World Wild Fund for Nature (WWF) as a result of a global call for sustainably produced palm oil. 21% of palm oil produced internationally is now RSPO certified and the scheme unites seven sectors of the palm oil industry in regular dialogue. The sectors are:

  1. Banks and Investors
  2. Consumer Goods Manufacturers
  3. Environmental or Nature Conservation Organisations (NGOs)
  4. Oil Palm Growers
  5. Palm Oil Processors and Traders
  6. Retailers
  7. Social or Development Organisations (NGOs)

The RSPO also promotes the production of sustainable palm oil by facilitating and encouraging the sales of certified sustainable palm oil (CSPO) in a business-to-business model (e.g. manufacturer to wholesaler or wholesaler to retailer). It is important that businesses work together and coordinate their efforts to improve practices, especially when dealing with a supply chain as complex and large as that of palm oil. The RSPO uses a consensus voting system to develop standards and criteria for its members and it is now the dominant certification scheme for palm oil in foodstuffs and household products.

For more information, see Who Is RSPO?

Structure and Certification Coverage

The RSPO started as an informal cooperation between a number of business partners and WWF. An organising committee was formed in January 2003 to arrange the inaugural Roundtable meeting in Kuala Lumpur and to make preparations for the formal establishment of the RSPO. The RSPO has grown substantially over the past 15 years and now has over 2,000 members.

According to the RSPO’s website:

  • 2.7 million hectares of land are now under certification
  • Over 12 million tonnes of CSPO has been produced
  • 60 certified grower companies and over 300 mills
  • 100+ licenses have been granted to consumer goods manufacturers for the use of the RSPO trademark in over 14 markets

RSPO worldwide impact

 

Principles and Criteria for certification

In 2007 the first set of Principles and Criteria (P&Cs) were drawn up to form the basis of company assessments for certification. The basic seven Principles include:

1)    Commitment to Transparency

2)    Compliance with Applicable Laws and Regulations

3)    Commitment to Long – Term Economic and Financial Viability

4)    Use of appropriate Best Practices by Growers and Millers

5)    Environmental Responsibility and Conservation of Natural Resources and Biodiversity

6)    Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers

7)    Responsible Development of New Plantings

8)    Commitment to Continuous Improvement in Key Areas of Activity

The current P&Cs can be found on the RSPO website together with the breakdown of the indicators and guidance, the P&Cs are currently going under a consultative review which began this year (2012) and are due to be complete in 2013

RSPO logo

RSPO logo

Working groups and task forces

The RSPO is made up of a number of standing committees with subcategories of working groups and task forces, set up to encourage members to address complex and difficult challenges and work towards developing solutions. As a multi stakeholder, participatory roundtable that works on the basis of consensus, it is essential that all members feed in to the decision making process.

The committees and subgroups are made up of a representative from each of the stakeholder groups and are periodically created to deal with a specific issue. Current groups include the:

Standing Committee on Standards & Certifications

Biodiversity and HCV working group  Green House Gas working group  National Interpretation working group  New Planting Procedure working group  Smallholder working group  P&C Review task force 
Compensation task force Operational Emissions Indonesia Malaysia Documents and systems
Ad Hoc task force on HCV in Indonesia Peatland working group Colombia  Indonesia Support mechanisms
  Scientific Panel Ghana   Knowledge management
  Policy Panel  Thailand   Trials
  Emissions from other RSPO members     Funding mechanism
  Engagement with RSPO members      

Standing Committee on Communication and Claims

Trademark Review task force

Standing Committee on Trade and Traceability

Derivatives working group RED task force

Standing Committee on Finance

Grievance Panel

 

The Grievance Process addresses complaints against RSPO members.  There are three decision-making levels (legitimacy of case, member notification, grievance panel decision) and at each level there is a choice to escalate the grievance or dissolve it. The purpose of the Grievance Panel is to preside and deliberate on grievances that are brought to RSPO and provided detailed recommendations for resolution that are then fine-tuned and adopted by one or both (or more) parties involved in the conflict. For more information see the Complaints section on the RSPO website.

 

Certification Process

Company Audits are carried out by an independent RSPO recognised third party auditor. There are two types of RSPO audits:

1)    Plantation & Mill (based on the P&Cs)

2)    Chain of custody and Refinery (supply chain certification systems)

Audits occur twice:

  • Audit one: The first audit identifies where there are gaps in the companies practices, which will prevent them from meeting the RSPO P&C’s. Once the gap assessment has been completed the company is given a fixed time to resolve these issues before the final audit
  • Audit two: The final, audit will review the companies progress in addressing the gaps in standards and assess if the company’s practices adhere to the RPSO P&Cs for that stakeholder group

More information about the certification process can be found on the RSPO website.

 

Sourcing and trading certified palm oil

There are four supply chain models for RSPO Certified Sustainable Palm Oil (CSPO).

  • Identity preserved: CSPO is segregated and a batch of certified palm oil can be traced from farm to factory to retailer.
  • Segregated: certified palm oil is kept segregated from non-certified palm oil, but is blended with other batches of CSPO and cannot be traced back to a specific plantation.
  • Mass balance: Certified palm oil is mixed with conventional palm oil, but quantities are monitored administratively so that claimed volumes are matched.
  • Book and claim: Certified palm oil is not kept apart. Instead producers earn certificates, which they then sell to users (retailers, manufacturers) so that claimed volumes are matched.

Multiple trading mechanisms are necessary for palm oil because of the inherent complexity and lack of transparency in the supply chain. Crude palm oil and palm kernel oil may undergo several stages of fractionation, refining and manufacturing before it ends up in a finished product. This makes traceability incredibly difficult and without broad regional uptake of CSPO, prevents companies accessing segregated CSPO. The RSPO has set up a system to allow manufacturers and retailers to source and support sustainable palm oil.

RSPO PalmTrace is the RSPO’s traceability system for certified oil palm products. From the mill to the refineries, certified members of RSPO register their physical sales and processing activities of palm oil, palm kernel and its (double) fractions under the supply chain models Identity Preserved, Segregated and Mass Balance. The usage of RSPO PalmTrace is part of the RSPO certification program. Announcements are made for CSPO transfers, the mill declares the amount of CSPO to be shipped and a refinery will claim and collect it.

RSPO PalmTrace also offers a marketplace and the possibility to register off market deals (Book and Claim) for RSPO Credits (previously known as GreenPalm). Producers using sustainable business practices but who are unable to access segregated or mass balance CSPO supply chains (e.g because they only produce small volumes of CSPO) earn credits for the CSPO they produce. However the CSPO they produce feeds in to a normal mill with normal, uncertified palm oil. The producers are then able to sell their credits via the PalmTrace platform and earn a premium for their CSPO. Manufacturers and retailers, who are similarly unable to access segregated CSPO supply chains, but wish to source CSPO, are able to cover the palm oil found within their products with credits.

 

 

 

Certification costs and fees

RSPO membership costs depend on the type of membership. for more information see Membership)

  • Ordinary Member: € 2,000.00 per year
  • Ordinary Member (small grower < 500 ha): € 500.00 per year
  • Affiliate Member: € 250.00 per year
  • Supply Chain Associate: € 100.00 per year

The costs of certification varies depending on the accredited auditing firm that is being used and whether it is Plantation or Chain of Custody certification and the size of the operation.

 

Challenges and criticisms

The RSPO is still facing many challenges and barriers but is working to resolve these through its standing committees, working groups and task forces. As with any multi stakeholder roundtable initiative, progress may be slow and standards may not be as rigorous when trying to factor in the views of all stakeholders. But roundtables often encourage higher levels of participation from stakeholders throughout the supply chain – this allows for increased buy in from all parties to fully embrace the standards in transforming the market.

Strengths

Weaknesses

Multi stakeholder roundtable that encourages active participation and discussion by business along the length of the supply chain. Roundtable consensus structure can slow the development and implementation of new standards.
Representation in the different stakeholder categories along the length of the supply chain is growing and becoming more balanced – better communication of the needs of downstream stakeholders as well as clear commitments demonstrated by member companies through the Annual Communications of Progress (ACOP) Reports The business-to-business model means that there is currently limited recognition of the RSPO label amongst consumers and limited understanding of the sustainable standards the RSPO is trying to achieve.
A broad range of members provides greater capacity for influencing change along the length of the supply chain. Limited collaboration with other certification schemes to strengthen and streamline certification processes for stakeholders.
A range of working groups and task forces working to resolve specific problem areas. Remains south east Asia centric in terms of producers (but working to raise awareness of RSPO in new production areas in West Africa and South America and Australasia) as well as consumer markets such as India and China
A consensus based agreement system allows for inclusive decision-making where no group can dominate discussion.

 

For a unique insight and perspective on RSPO membership and certification see our case studies section for case studies by

  • Wilmar – The Case of Segregated vs Mass Balance
  • WWF – WWS’s view on the early days of the RSPO
  • GreenPalm – Encouraging independent smallholders to work sustainably

For more information about the RSPO visit their website www.rspo.org

We are always looking for new and interesting resources. If you would like to contribute a report, article, weblink, or case study, please message us via our contact form and subscribe to our quarterly newsletters.