Action on zero deforestation pledgesThe challenge of aligning public and private sustainability goals

Pablo Pacheco

Global Landscapes Forum

Paris, 2015

HIGHLIGHTS

Oil palm is one of the most polemic commodity crops Governing oil palm constitutes a multifaceted puzzle Public policy and state’s responses are contradictory The private sector is playing a more prominent role Pledges to ‘zero deforestation’ entail opportunities and risks Still a major issue is ‘what’ and ‘whose’ rules to follow

BACKGROUND

A rapid expansion of oil palm in Indonesia in the last years, with contradictory impacts

Palm oil sector contributes to generate fiscal earnings and stimulates economic growth

It has important spillover effects on local development and people’s livelihoods

Yet, plantations development also creates social conflict, and benefit sharing is an issue

Oil palm expansion has become one of the major drivers of deforestation in Indonesia

Leads to forest and peatland conversion - biodiversity loss and GHG emissions

10.5Million

hectares cultivated

Labor

3.0Million people

27.8Million tons

CPO

Smallholders

42%of total

cultivated area

~600 Palm oil mills

25corporate

groups control most of the supply

Indonesia

3.5Tons

CPO/ha/yr

53%global CPO

supply

OIL PALM IN INDONESIA

Farmers

2.1Million

households

THE POLICY CONTEXT

Progress on standards for sustainable palm oil (RSPO), but limited adoption

A system of mandatory public standards (ISPO) is also been implemented

Major palm oil groups have made bold commitments to halt deforestation

Commitments are driven by civil society advocacy and consumer pressure

Frontrunners consider that adopting pledges work on their own interest

Some national public and private actors position against the commitments

The political arena is divided in terms of ‘what’ and ‘whose’ rules to follow

THE PLEDGES AS THEY STAND

Based on http://supply-change.org/commodity/palm#company-profiles

About 188 companies made commitments to support sustainable palm oil supply – 61 on ‘zero deforestation’

Pledges are individual and collective Prominent pledges on ‘zero deforestation’, including main

CGC, producers, processors and traders of palm oil are: Consumer Goods Forum (2010) on ZND Sustainable Palm Oil Manifesto, SPOM (July 2014) Indonesian Palm oil Pledge, IPOP (Sep. 2014) The New York declaration on forests (Sep. 2014)

Pledges on ‘zero deforestation’ embraced by most of the processors and traders at the downstream stage of the value chain, but have not yet reached to their suppliers

PROGRESS ON IMPLEMENTATION Capacity to incorporate social and environmental

criteria into operations is improving in some large firms, which helps to inform the practices of others

Traceability is being clarified, but most efforts only comprise flows from refineries back to the mills

Main challenge is the ability to trace third-party sources of supply (from mills to growers)

Company disclosure is improving, but some companies are more transparent than others

BUT independent evidence is lacking, and when it does exist, is questionable – transparency is an issue

AND questions still surround definitions of forests, mainly with regards to HCV/HCS methods

AND notions of sustainable oil palm tend to differ between private actors and the government

THE PUBLIC SECTOR AGENDA

Conflicting ambitions for the palm oil sector across public agencies – some support expansion and others try to prevent negative impacts

Confusing state policies relating to land use (expansion targets, food security, moratorium, GHG reduction targets, peatland regulations)

Opposition from national government to ‘zero deforestation’ movement – justified around issues on sovereignty and equity

YET some governments at the sub national level are embracing policy innovations. They see the potential and the need for:

– Land use planning and land tenure clarification

– Legal clarification (e.g. HCV in oil palm concessions)

– Smallholder inclusion and improved production practices (burning)

– Provincial regulations for enforcing sustainability practices

AND a presidential instruction recently issued banning clearance and exploitation of peatlands and new planting in burned areas

A THREE PART CHALLENGE

Goals to be achieved simultaneously: Zero deforestation, smallholder inclusion and sustained growth

There are some unique opportunities – Incentives to intensification / improve plantation management

with more efficient use of inputs

– Upgrading of smallholders’ production practices/systems

– More productive use of ‘degraded’ or ‘low-carbon’ lands

– Meeting national GHG reduction commitments

But there are also some likely risks– Exclusion of smallholders from deforestation-free supply

chains due to legality issues and capacity constraints

– Pressures on community and smallholder lands considered as ‘low-carbon’ lands may lead to people displacement

– Value chains fragmentation may lead to leakage effects

– Retarded economic development of underdeveloped regions

KEY QUESTIONS• What are the differences between the sustainability goals of private

sector under ‘zero deforestation’ commitments and public policies?

• What are the potential consequences of differing private and public definitions of sustainable oil palm in Indonesia?

• Is there scope for reconciliation in definitions, policies and practices? And is there scope for public-private governance arrangements?

• Is it possible to address the likely social and environmental risks associated with the ‘zero deforestation’ commitments?

• What business models can be more effective to upgrade the production systems of smallholders and promote greater social inclusion?

• What safeguards need to be put in place to protect smallholders and SMEs in the palm oil sector associated to ‘zero deforestation’?

• Will it be possible to transfer in equitable ways the rewards or share the costs across stakeholders in the deforestation-free supply chains?