This article first appeared in The Edge Malaysia Weekly on June 20, 2022 - June 26, 2022

Joseph D’Cruz, who took up the CEO position at the Roundtable on Sustainable Palm Oil (RSPO) in March, has a handful of challenges ahead of him as he attempts to change the negative perceptions around the commodity.

D’Cruz has more two decades of experience in sustainability. Most recently, he was the special adviser for strategic planning and innovation at the United Nations Development Programme in New York. Born and bred in Kuantan, he witnessed how the palm oil sector contributed to the nation’s economy in the 1970s and 1980s.

“I understand on a first-hand basis the positive and negative impact [of oil palm cultivation]. We used to see peat fires [in plantations] along the East Coast, south of Pekan, in the late 1980s and early 1990s,” says D’Cruz.

“I started to recognise that it’s not a question of sacrificing benefits in order to save the planet. It’s about establishing a way forward that balances these trade-offs in a way that maximises the good for all of us.” 

It is definitely a big task for D’Cruz. In the past two years, several Malaysian palm oil companies that are RSPO-certified have got into trouble for alleged mistreatment of foreign labour. Palm oil also faced a boycott campaign by non-governmental organisations (NGOs) that accused those companies of deforestation, destroying biodiversity and causing the annual haze due to open burning.

In 2019, non-profit organisation Greenpeace published a report titled “Certifying destruction”, criticising RSPO and other certification standards for letting businesses get away with destructive activities due to weak implementation, among other failures.

These events lead one to question if certification schemes such as RSPO are still relevant and trustworthy.

When asked, D’Cruz says he still believes the RSPO standards to be one of the best globally. One thing that they could improve on is to educate the public on the merits of sustainable palm oil, he suggests. 

“Unfortunately, the consumer perception is on what they hear about the unregulated palm oil. We need to make a clearer distinction within those two [sustainable and unregulated palm oil] and do a better job at demonstrating that.”

The public can submit reports to the RSPO if they believe a member has violated its standards. An independent complaints panel will review the reports and can instruct the companies to respond if further actions are needed, D’Cruz says.

For instance, in 2020, the RSPO suspended the certificate of FGV Holdings Bhd for violations in one of its mills, and ceased processing the certification of its other units until the directives set out in its Complaints Panel’s decision from 2018 were fully implemented. The company was banned by the US Customs and Border Protection (CBP) agency in 2020.

The RSPO also launched an investigation into Sime Darby Plantation Bhd after the CBP made similar accusations on the company in 2020. However, it noted that the initial review of audit findings on SDP earlier that year did not generate any red flags.

The RSPO conducts audits for compliance annually. These audits are facilitated by third-party auditing firms such as Assurance Services International (ASI) and Bureau Veritas. 

“If any violations are picked up during the course of those audits, those [violations] are immediately reported, and an investigation is launched,” says D’Cruz. Any other appropriate action will also be taken. 

All ordinary and affiliate members of the RSPO must submit the Annual Communication of Progress (ACOP) to gauge their headway in 100% RSPO-certified sustainable palm oil. 

“We announce publicly the criteria [for sustainable palm oil] that we’ve agreed on. The principles and criteria were last updated in 2018 and will be reviewed again next year,” says D’Cruz.

The 2018 update included a prohibition on any type of deforestation for oil palm plantations. Prior to this, only virgin forest was prohibited. Now, deforestation of secondary and peat forests to make way for plantations is not allowed as well. 

RSPO members comprise various players in the supply chain, including farmers, manufacturers and NGOs. There are 23 certified growers and at least 50 palm oil processers and traders (all member types) in Malaysia under the RSPO. 

D’Cruz shares that the RSPO is working on a much clearer and more proactive communication strategy to make the case for sustainable palm oil. 

“Our independent analysis shows palm oil grown by smallholders in Malaysia and Indonesia who follow the RSPO standards and criteria have demonstrably lower greenhouse gas emissions.”

The emphasis, he says, is also on environmental, social and governance (ESG) factors, such as protecting labour rights and prioritising the health and safety of workers and their families. 

He believes that being part of the RSPO can benefit its members during tough times. Russia’s invasion of Ukraine, for instance, has caused commodity prices to shoot up. 

The RSPO works with its circle of growers and buyers to ensure that they are able to meet the demand for palm oil.

“Being a part of the RSPO actually allows them to communicate and understand where the shortages are and help alleviate them,” says D’Cruz. 

Conversely, smallholders make up a significant portion of palm oil supply in the Southeast Asian market. The production from smallholders makes up 40% of Malaysia’s palm oil production, according to a 2020 research article by the Yusof Ishak Institute. 

While smallholders still have varying opinions on sustainability, D’Cruz has personally met a few who are eager to demonstrate that they are able to meet RSPO standards.

“Initially, they thought this (complying with RSPO standards) was a burden, but as they accumulated the data, they started to realise that it gave them a much stronger basis to manage their lands. They’ve been telling me how their productivity has gone up,” says D’Cruz.

To assist smallholders in onboarding the sustainability journey, the RSPO has introduced the more simplified Independent Smallholders Standard. Additionally, the RSPO dedicates a specific portion of revenues to empower smallholders by conducting training and sponsoring their auditing and certification fees. 

At a recent forum, Malaysian Palm Oil Board (MPOB) director-general Datuk Dr Ahmad Parveez Ghulam Kadir expressed his concerns over the ever-changing sustainability international benchmarks that may be difficult to comply with, especially for smallholders.

But D’Cruz says it is necessary for sustainability standards to change with the times. “I believe that the process of continuous learning and development is necessary for any standard that believes in sustainability. I believe that is the case for any international standards as well.”

He stresses that the RSPO standards are created and approved by the people within the palm oil industry itself.

Malaysia has its own palm oil certification scheme called the Malaysian Sustainable Palm Oil (MSPO) Certification Scheme. As at March 31 this year, 97.33% of Malaysia’s oil palm plantations are MSPO-certified, according to the MPOB director-general in April 2022.Could all MSPO members, which include many small- and mid-sized growers, also achieve the RSPO’s standards? D’Cruz is confident it can happen.

“Both of these processes are highly complementary, and in fact, I would certainly like to see us working much more closely with the MPOB and the MSPO standard to be able to align with what we do,” adds D’Cruz. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.