The Chain: New High Carbon Stock Approach Rules Key to Transforming the Palm Oil Sector


February 16, 2021

The High Carbon Stock  Approach (HCSA) has issued a new statement clarifying its procedures for how HCSA assessments should be conducted and how companies can claim to be compliant with the HCSA. The new rules, announced on February 4, follow the announcement of the organization’s first grievance mechanism and come amid increased focus on how companies in palm oil supply chains claim HCSA compliance.

The HCSA was established in 2014 and oversees the application of an HCS methodology. HCSA is a methodology that distinguishes what forest areas should be protected from degraded lands with low carbon and biodiversity values that may be suitable for development. It is a key part of No Deforestation, No Peat, No Exploitation (NDPE) policies and the predominant framework by which the palm oil sector measures deforestation. The HCSA methodology recognizes six different categories of forest and land cover: High Density Forest Medium Density ForestLow Density ForestYoung Regenerating ForestScrub, and Cleared/ Open Land. Reference to deforestation in palm oil discourse typically (but not always) refers to the first four categories.

There are two types of HCSA assessments: stand-alone HCSA assessments and combined HCS/High Conservation Value (HCV) assessments. HCSA’s new statement clarifies rules for stand-alone HCSA assessments. HCSA assessments must be registered with the HCSA on its website and conducted by a Registered HCSA Practitioner. All assessments must then be submitted for peer review following HCSA Quality Assurance procedures.

In contrast to stand-alone assessments, combined assessments are overseen by the HCV Network (HCVN). Guidelines for combined assessments are laid out in the assessment manual. Combined assessments must be conducted by HCVN Assessor Licensing Scheme (ALS) Licensed Assessors, with at least two team members being Registered HCSA Practitioners. Once completed, the assessments go through the ALS quality control process, which is essentially a peer-review. The company must also commit to a moratorium on any land clearing or land preparation until the process has been completed.

In addition to the statement, the HCSA released its new Communications and Claims Guide. The guide outlines the different ways HCSA members and non-members can claim to be HCSA compliant. The rules differ according to whether the assessment is standalone or combined, the level of compliance to HCSA and HCV RN procedures, and the stage of the process in which the company is. Crucially, there are rules about what companies cannot claim. These include:

  • Companies have used the HCSA Toolkit if the assessment has not been registered with the HCSA Quality Review Process and completed either the HCSA Quality Review process, or the HCVN ALS Quality Assurance Process;
  • Companies have used the HCSA Toolkit, or the HCS Approach has been followed if the assessment has not completed the HCSA Quality Review Process (including the registration step) or the HCVN ALS Quality Assurance Process;
  • The operations of the company have been certified by the HCSA or have undergone HCSA certification as the HCSA is not a certification system;
  • Using the HCSA or HCVN quality review processes means that any of the operations of the company have been verified by a third party as being in compliance with a no-deforestation policy. The HCSA does not provide a service for third party-verified compliance with a no-deforestation policy;
  • An HCSA Assessment was “deemed satisfactory” by the HCSA Quality Review Process, as the HCSA Quality Review Process does not provide a “pass” or “fail” determination. Nor does it verify that any recommendations made by the Peer Review Panel were implemented in full.

Along with a new grievance procedure, which allows complaints against HCSA members for allegations of breaches of the HCSA Steering Group Code of Conduct or the application of the HCSA methodology, these clarifications should help prevent companies from incorrectly claiming HCSA compliance.

In December 2020, CRR covered controversy surrounding the palm oil trader Wilmar and its engagement with the oil palm plantation developer PT Medco Papua Hijau Selaras (MPHS). Wilmar’s grievance list says it began engaging PT MPHS about deforestation detected on its plantation in Papua. During the engagement, PT MPHS clarified that a registered assessor conducted both HCV and HCSA assessments in 2019. PT MPHS was therefore using the HCV/HCSA map to guide its land development activities. However, these assessments have not been made available on the websites of the HCS Approach or the HCV Network, nor have they been made available by Wilmar. As assessments are not publicly available, following the Communications and Claims Guide, PT MPHS could not claim that it is compliant with the HCSA Toolkit if there is no evidence that the assessment has been registered with the HCSA Quality Review Process and that the company completed either the HCSA Quality Review process or the HCV RN ALS Quality Assurance Process.

CRR also referenced the Indonesian grower First Resources, which claims on its website: “A total of 15 HCS assessments covering all 110,000 hectares of our development bank have been carried out since the introduction of our Policy on Sustainable Palm Oil in 2015.” However, only one assessment, related to First Resources’ subsidiary PT Swadaya Mukti Prakarsa, is available on the HCSA website. The Communications and Claims Guide makes it clear that while First Resources may have carried out HCSA assessments, First Resources’ statement is not proof of compliance, as the company is not registered and there is no evidence of HCSA Quality Review compliance.

HCSA methodology in industry NDPE policies makes it critical part in transforming palm sector

The inclusion of HCSA methodology in industry NDPE policies makes it a key part of efforts to transform the palm oil sector. Important to its success is for the methodology that governs HCSA assessments to be clear, understood, and not open to abuse. Increased transparency over the methodology and attempts to clarify how and when companies can claim to be HCSA compliant would be welcomed by the industry and investors.

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