Will Iceland’s palm oil ban deliver a sustainable solution?

Helen Bellfield

Collecting the oil palm fruit in Indonesia, photo: CIFOR via flickr.com, creative commons licence

Iceland’s announcement that it is going to ban palm oil from all of its own products by the end of 2018 has shone a welcome spotlight on the problems with the sustainable production of this vegetable oil, which is found in roughly half of all supermarket products.

The ban was in response to the continuing devastating impact of palm oil production on rainforests across South East Asia and, in their view, the limited effectiveness of certified palm oil in stopping deforestation.

But will the ban help drive progress on sustainable production in the palm oil trade?

What impact will this have?

Iceland estimates the ban will reduce its use of palm oil by 500 tonnes a year — to put this in perspective recent research estimates that the UK consumes more than one million tonnes of palm oil each year. So while Iceland’s ban alone won’t have an impact on the demand for palm oil, should other companies be following suit?

The reality is that boycotts and blanket bans do not necessarily mean that problems with unsustainable production will be addressed. Palm oil is big business — and if one customer disappears, traders can just look for business elsewhere. And global demand for palm oil is growing — with the biggest market currently in India where demand for sustainable palm oil is currently very limited.

Furthermore, a drop in demand can hit small scale producers and local communities hard. In Indonesia, smallholder farmers are estimated to account for more than 40% of the land used to grow palm oil. Many smallholders face significant barriers in complying with sustainability standards. Without much-needed support, they face exclusion from those markets that are increasing their demand for sustainable palm oil.

There is also a question over the sustainability of replacement crops, particularly since palm oil is one of the most productive oil crops, with higher yields per hectare of land than other oil producing crops.

An alternative approach

It is bad news that Iceland could not find a guaranteed source of sustainable palm oil for its own-brand products given that the Roundtable on Sustainable Palm Oil (RSPO) has been working with suppliers to improve sustainability for decades now. But just because sustainable supplies are not yet without issues, it does not mean that companies should give up the fight and resort to banning palm oil altogether.

Buyers like Iceland, should be engaging with their suppliers and other companies in the sector to share these costs and invest in initiatives that can improve sustainable production in the regions they are sourcing from.

Transforming the sustainability of palm oil requires investment in training and capacity building, better market incentives and monitoring systems, and addressing complex governance challenges such as land rights. The costs of transforming production should not just fall to producers but be distributed across the supply chain.

Transparency at scale will be key

The complexity of supply chains remains a significant barrier for buyers to identify their highest risk sourcing areas and effectively engage suppliers where action is most needed.

However, recent innovations in mapping commodity supply chains, such as Trase, are helping to link distant companies back to production landscapes, and in turn to the environmental and social risks on the ground. This can help different companies to identify where they share common sourcing regions, and support the kind of partnerships with NGOs and government that can deliver more sustainable production.

By taking such a strong a stance, and encouraging consumers to sound an unsustainable palm oil ‘alarm’, Iceland is helping to create vital awareness on this issue. But what is really needed is market-wide investment to drive more sustainable production. Only then will the forests, wildlife and people benefit from this global trade.

Helen Bellfield is director of programmes at Global Canopy

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