The Chain: Asian Markets’ Uptake of Certified Palm Oil Still Low Despite Positive Trends


September 24, 2021

A new report by WWF sheds light on the low uptake of Roundtable on Sustainable Palm Oil (RSPO) certified palm oil in Asian markets, predominantly in the east, south, and southeast regions. The report identifies that the ongoing discussion on certified palm oil is still driven by Western markets. Only 3-4 percent of the total volume consumed in 2019 in China, India, Indonesian, Singapore, and Malaysian was RSPO-certified palm oil, compared to 19 percent globally.

These findings are in line with CRR’s analysis of Asian markets. Previous reports on certified palm oil products entering Japan, China, and South Korea markets found that the three countries are laggards when it comes to NDPE policy compliance, and RSPO-certified palm oil uptake was low. In Japan, one of the top importers of palm oil products in the world in large part because of demand in the food processing and biomass sectors, some buyers have NDPE policies, such as KAO and Fuji Oil, but implementation so far has not been sufficient to ensure deforestation-free supply chains.

China is a significant land developer in Indonesia and also a major buyer of palm oil. But the growth in Chinese RSPO members has not resulted in an increase in certified palm oil, as China’s share of RSPO-certified palm oil by mid-2020 was only around 2 percent. South Korean companies, both plantation developers and buyers, are linked to a number of social and environmental cases such as deforestation, land conflict, and water pollution.

WWF’s report documents positive developments in some key markets, despite the laggards. Singapore’s processed food sector is now dominated by RSPO-certified palm oil (at 54 percent market share). Indonesian and Indian surfactant sectors have seen 16 percent of its palm oil as RPSO certified. Membership in national platform coalitions is growing in India and China through India Sustainable Palm Oil Coalition and China Sustainable Palm Oil Alliance respectively. A civil society study conducted by WWF also found that 80 percent of consumers are concerned about the environmental impact of the products they consume.

WWF’s report makes various recommendations, such as the need for continued commitment by multinational companies, the importance of adopting NDPE policies for regional and domestic producers/processors, and the need for increased transparency along the supply chain. Crucial key industries to further drive NDPE compliance are the cooking oil sector, the instant noodle sector, and the oleochemical sector. The role of the food sector is particularly important, as CRR previously reported. The sector — consisting of instant noodles, restaurant chains, and processed food segments — accounts for 80 percent of palm oil use in China, compared to 20 percent for industrial processes.

Enhanced transparency is required to create a system that allows consumers to know from where the raw materials of the products they buy come. As well as purchasing RSPO-certified palm oil, palm oil buyers cold publish a list of all supplying mills and utilize a grievance mechanism with a regularly updated grievance list. Committing to NDPE policies is one step toward reducing the risk of deforestation in palm oil supply chains, while increased transparency can show commitment to implementation. A best-in-class implementation, execution, and monitoring of an NDPE policy offers an enormous benefit to companies. Relative costs (compared to earnings generated on products containing palm oil) can be relatively limited, and reputation value can be created. Failure to do this could lead to reputation risk as well as market-access risk, both of which could undermine the value of investments in a material way. The uptake of certified palm oil and adopting voluntary measures are signs of awareness among companies and demonstrate their commitments, but they are not sufficient replacements for regulations.

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