At Roundtable (RT) 2022 - Day Two

On the second day of #RT2022, we attended a few presentations which focused on the topic of enhancing workers' rights and reducing climate change. Segi Enam’s Khor Yu Leng was also invited to present the future of consumption and production patterns of palm oil. Day One observation can be found here.

The presentations were on “Enhancing Human Rights and Labour Rights, Adapting to Future Due Diligence and Deforestation Legislation”, the panels spoke about the proposed EU Deforestation Legislation. Key points from this is that EU businesses will need to know where the product comes from and that RSPO certification is not sufficient. The panel also shared on the EU future plans for supply chain legislation, Corporate Sustainability Due Diligence Directive and Forced Labour Regulation.

Source: RSPO (2022)

In the presentation on “Operationalising Labour Standards in the Palm Oil Sector”, the panel discussed how companies can do better to improve labour standards. The speakers were from industry and they shared how grievance mechanisms are important but the moderator also stressed the importance of the need to balance the power between workers and employers for it to be effective.

Segi Enam’s Khor Yu Leng spoke on “Future Proofing the RSPO - The State of Palm Oil 2050”. She curated findings about the future of consumption and production patterns of palm oil (in the context of other vegoils) with major forecasts for expansion according to key end uses. This is led by volumes from liquid biofuels (renewable diesel, sustainable aviation fuel), an uptick in oleochemicals (think hand wipes, sanitizers and the cleanliness drive of the Covid pandemic; and also for animal feed), but with more muted expectations for the rising food use of vegoils. See screenshots and comments in (I) and (II) below.

Source: Presentations at RSPO RT, annotated by PalmTrack, yuleng@segi-enam.com, 2 Dec 2022

The key narrative for palm oil’s yield per hectare needs to be replaced by a comparative on palm oil’s carbon footprint. The presentation by Jannick Schmidt (see III, IV above) highlights:

• A certified palm oil benchmark is almost as good as sunflower oil, but rapeseed oil is significantly better on a CO2e per kg oil measure.

• This certified palm oil benchmark is a bit better than diesel on a CO2 per km measure.

In the question and answer was a point about the lack of a business model for nature conservation. In that regard, readers should note how conservation is a notable part of United Plantation’s transition to a lower carbon footprint and also refer to the large-scale conservation project of the Rimba Collective for 500,000 hectares of conservation and restoration.

Yu Leng was also invited to speak at two side events.

At the Rimba Collective’s “Delivering on Half a Million Hectares of Forest Conservation & Restoration”, where she talked about the multi-year journey of palm oil to reach a large-scale conservation mindset. She emphasized data (transparency), scale and governance.

Rimba Collective, “Delivering on Half a Million Hectares of Forest Conservation & Restoration”: From the left: Neil Judd (Senior Advisor at Lestari Capital), Reuben Blackie (Manager, Sustainable Agriculture at PepsiCo), Girish Deshpande (Global Sustainability Director at Proctor & Gamble), M R Chandran (Advisor to RSPO), Khor Yu Leng (Segi Enam)

At Fortasbi’s 3rd Appreciation Event, she gave her insight into China’s Palm Oil Market.

Khor Yu Leng of Segi Enam speaking at Forstabi’s 3rd Appreciation Event.

Asked to speak about China market opportunities for Indonesia independent smallholder (ISH) RSPO Credits, we referred to two key reports in which Segi Enam was author/co-author:

• Business Case for Certified Sustainable Palm Oil, (WWF,2022)

• Sustainable Palm Oil Uptake in Asia: Where do we go from here? (WWF, 2021)

Source: Presentations at FORTASBI event, referring to two WWF reports on sustainable palm oil market, compiled by PalmTrack, yuleng@segi-enam.com, 2 Dec 2022. Link to the presentation.

Fortasbi also awarded their top 12 buyers at the event. They were:

• Unilever

• PepsiCo 

• ACT Commodities

• Proctor and Gamble

• Saraya

• Nestle

• Estee Lauder

• Werner & Mertz

• Blommer Chocolate

• KAO Corporation

• Give and Go Prepared Foods Corporation

• Johnson and Son

There were also exhibition booths by various NGOs and other palm oil-related organisations promoting their sustainable initiatives.

Proforest

Rainforest Alliance

High Carbon Stock Approach (HCSA)

Sime Darby Plantations

Palmoil.io

Fortasbi

We will post further views for PalmTrack (subscribers only).

research@segi-enam.com | 2 Dec 2022

At Roundtable (RT) 2022 - Day 1 Observations

From 28 to 30 November 2022, the Segi Enam team attended the RSPO’s Roundtable (RT) 2022 #RT2022 at the Shangri-La Hotel, Kuala Lumpur, Malaysia. The theme was “Scaling up the sustainable palm oil value chain through collective action.”

We contributed to the judging effort for the conservation and smallholder segments of the RSPO Excellence Award, with Yu Leng as one of the three judges, alongside conservationists Dr Erik Meijaard and Dr Nadine Ruppert. The awards were given out at the evening event preceding two full days of conference proceedings on 29-30 November.

Day one kicked off with a celebration of smallholder certification:

Palm Oil Smallholders receiving certification

Professor Tan Sri Dr Jemilah Mahmood gave the keynote speech. In her down-to-earth address, she touched on issues related to the palm oil industry and stressed that more needs to be done. The open questions about palm oil include those on zoonotic diseases, air and water pollution, floods and impact on indigenous people.

There were 13 discussion sessions (over two days) covering issues related to sustainability, conservation, certification and labour rights. We attended presentations on “The Asian Dialogue - Catalyst for Sustainable Palm Oil”, “Balancing the Needs of People, Planet and Prosperity in Sustainability Standards” and “Ensuring the Development of Sustainable Palm Oil Drives Smallholder Inclusion at Scale”, and had numerous meetings on the side lines, which covered diverse topics from labour issues to smallholder inclusion. We also looked in at evening events hosted by Musim Mas and WWF.

The Asian Dialogue - Catalyst for Sustainable Palm Oil. Key points on the businesses in Asian countries are promoting sustainable palm oil products. SuperIndo is the first business to promote RSPO certified palm oil in Indonesia.

Balancing the Needs of People, Planet and Prosperity in Sustainability Standards. Key points on how to achieve sustainability and not leaving certain stakeholders out.

Please, view the list of discussion sessions and speakers here, and presentations can be accessed here. RSPO also published its Impact Report 2022. Below are some excerpts from it. We will post further views for PalmTrack (subscribers only).

Indonesia and Malaysia remain the largest producers, collectively 80% of the CSPO volumes.

Growth in RSPO Certified Area. Stark increase in RSPO Certified Area in Africa.

Certified smallholders (scheme and independent), 22,000 globally with 65,603 hectares and FFB production at 1.2 million Biggest is in Indonesia, where there are 10,953 farmers, with an area of 26,839 hectares.

research@segi-enam.com | 2 Dec 2022

MTCC Stakeholder Dialogue

Segi Enam attended a Stakeholder Dialogue at Tamu Hotel & Suites Kuala Lumpur organised by the Malaysian Timber Certification Council (MTCC) from 31st October to 1st November 2022. Former Minister of Plantation Industries and Commodities opened the dialogue emphasising the need to focus more on the upstream market with concerted efforts to comply with US and EU regulations. The keynote address by Dr Michael Berger, CEO of Programme of the Endorsement of Forest Certification (PEFC) was focused on the recent policy change by Forest Stewardship Council (FSC) on the cut-off date. During the FSC General Assembly in Bali on 13th October 2022, the members passed Motion 37/2021 which changes the cut-off date for authorised forest conversion from November 1994 to December 31 2020. Read more about it here.  

CEO of MTCC, Siti Syaliza Mustapha spoke about Malaysia’s commitment to maintaining 50% of forest cover. Currently, approximately 5.6 million ha is certified by Malaysian Timber Certification Scheme (MTCS), which is also looking to expand certification to non-timber forest plantation products, primarily natural rubber, bamboo, rattan and honey/honeycomb - essentially rubber and NTFPs gone industrial. There is also ongoing work to maintain its status with PEFC every 5 years and plans to look into the European Union (EU) new deforestation regulation.

The dialogue was separated into a few different sessions, each with its own focus. Stakeholders from various groups were invited to speak and share their thoughts, and the meeting was convened primarily on the new non-forest certification draft titled “Guidelines on Application of Requirements for Non-Timber Forest Products Certification in MTCS ST 1002:2021 Malaysian Criteria and Indicators for Sustainable Forest Management under the Malaysian Timber Certification Scheme”. 

Source: MTCC (2022)

In the first session, “Policy and Direction of Forest Plantations in Malaysia”, the Malaysian Timber Industry Board, Forest Development Sarawak and Sabah Forestry Department shared about the current status of Malaysia’s forest plantations and the latest goals for forest plantations. There are concerns about the lack of workers and the lack of markets. 

The second session focuses on the current and future trends of timber. As reported by MTC, Malaysia's total timber trade for 2022 (up till August) is at RM23.5 billion (Export: RM17.4 billion; Import: RM6.1 billion). Exports to the USA, Japan, Singapore and Australia grew at double digits; dominated by (45%) wooden furniture. 

Source: MTCC (2022)

Source: MTCC (2022)

The various challenges in obtaining certification include labour, the previous cut-off date by FSC and land dispute issues. 

Green Building Index (GBI) presented a brief of its rating tool which was launched in 2009 to assess and recognise buildings that meet the green standards; unfortunately, use of certified product is only one out of its 100 indicators, which is hardly encouraging of its use!

Source: Green Building Index Assessment Criteria for Non-residential New Construction (2009)

During the panel discussion, the main focus was on how stakeholders are affected by forest certifications, whether the 2010 cut-off date is still relevant and what are the impacts of any changes in the cut-off date. Seems that forest certification to some extent greatly affects businesses due to compliance but certification also helps to protect native people’s way of life. However, it seems new players in the timber industry find it difficult to be certified due to the 2010 cut-off and will benefit from the changes in the cut-off date.

The second day of the dialogue was on non-timber products. Main focus on bamboo, herbal plants and Agarwood. Global Platform for Sustainable Natural Rubber (GPSNR) also presented its involvement in the natural rubber industry and its future plans to develop the Knowledge Sharing Platform for Smallholders. In 2021, GPSNR published the Good Agriculture Practices which can be found here.

The final presentation of this session created much buzz. The Malaysia Forest Funds (MFF) introduced the country's REDD Plus plan, to help Malaysia’s commitment to achieving net neutrality under the Paris Agreement. Read more about it here, and in our upcoming blog post on it.

Source: MTCC (2022)

Source: MTCC (2022)

MTCC discussed further details of the draft guidelines on the Certification of Non-Timber Forest Products (NTFP), asking participants to provide feedback. From the floor, this included comments about the need for a more defined term as to “appropriate safety and operational equipment”, more commitment to help smallholders, to expand the coverage to plantations outside of forest areas and not to affect the rights of indigenous people. A remark was also made by SIRIM that guidelines cannot be audited. This means that MTCC needs to develop principles, criteria and indicators. 

research@segi-enam.com | 25 Nov 2022