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Palm Oil Industry: Transitioning from Environmental Concerns to Sustainability


Palm oil is a versatile and widely used vegetable oil found in a range of products, from food to cosmetics to personal care products. However, it has come under increasing scrutiny in recent years, being seen as both unsustainable and unhealthy. Yet, when farmed sustainably and consumed in moderation as part of a balanced diet, palm oil has both environmentally and health benefits. 

History and Uses

Oil palm trees have a centuries-long history of cultivation and consumption, originating in West Africa. Today, they’re grown in tropical and subtropical regions across the world. Palm oil, which is extracted from oil palm fruit, is refined before being used in a wide array of consumer and industrial products: 

  • Food: Palm oil is used in a wide range of food products, including cooking oils, margarines, spreads, shortenings, fried foods, baked goods, snacks, and processed foods. It is also used in dairy products, such as ice cream and cheese, and in confectionery products, such as chocolate and candy.
  • Non-food: Palm oil is used in a variety of non-food products, including cosmetics, soaps, detergents, personal care products, candles, biodiesel, lubricants, and cleaning products. It is also used in animal feed and in the production of industrial products, such as paper and rubber.

Palm oil is a popular choice for many products because it is relatively inexpensive, has a long shelf life, and is stable at high temperatures. It is also an antioxidant and is a good source of vitamins and minerals.

Environmental Challenges

In the past, palm oil’s reputation suffered due to its association with deforestation and environmental issues. However, in recent years both the industry and countries have taken significant steps to remedy this and palm is now remedied.

Research released by Global Forest Watch in June 2023 said Brazil was dominating the destruction of forests through increased soy and cattle farming. However, there was a sharp reduction in forest loss in Malaysia and Indonesia, showing that reversing this trend is achievable.

In both Malaysia and Indonesia, oil palm corporations appear to be taking action with some 83% of palm oil refining capacity now operating under a ‘No Deforestation, Peat and Exploitation (NDPE)’ commitment. 

Global Forest Watch reported previously that primary forest loss in Malaysia decreased by almost 70% between 2014 and 2020 and, according to the WRI,2020 was the fourth straight year that palm oil deforestation has been trending down.

Our World In Data has a breakdown of emissions per kg of various food products and assigns a footprint for palm oil of 7.32 kg CO2e/kg.

Global palm oil production in 2020 was about 75.9 million MT, so this would contribute between 405.3 – 555.6 million tons CO2e in 2020 (depending on which emissions footprint you use). With annual global emissions pegged at about 50 billion tons CO2, that would palm oil’s contribution to global emissions at between 1.11 – 0.81%, which is way behind the production of soy, pulp and paper and beef farming.

Sustainable Palm Oil

In response to these concerns, the concept of sustainable palm oil has emerged, emphasizing practices that minimize environmental and social impacts. The Roundtable on Sustainable Palm Oil (RSPO) stands as a global organization setting strict standards for sustainable palm oil production. RSPO certification signifies adherence to rigorous environmental and social criteria, including the prohibition of plantations on previously primary forested land.

The demand for sustainable palm oil is on the rise, with a growing number of companies committing to sourcing only certified palm oil. This shift is poised to reduce the environmental footprint associated with palm oil production. The World Wildlife Fund (WWF) has acknowledged that palm oil can contribute to sustainability if it’s managed properly.

Defining Sustainable Palm Oil

Sustainable palm oil adheres to specific principles:

  • Avoiding clearing primary forests for palm oil production.
  • Protecting biodiversity and wildlife.
  • Reducing greenhouse gas emissions.
  • Conserving water resources.
  • Ensuring fair labour practices.

Certification Schemes: RSPO and MSPO

The primary certification schemes for sustainable palm oil are the Roundtable on Sustainable Palm Oil (RSPO) and the Malaysian Sustainable Palm Oil (MSPO) certification schemes. RSPO certification ensures compliance with strict environmental and social criteria, while the MSPO, a Malaysian government initiative, mandates sustainable practices for all palm oil plantations in Malaysia. 

The MSPO is more inclusive than the RSPO as it aims to bring in smallholder farmers and make them more accountable for their actions and farming practices, and while the MSPO has the same aims as the RSPO, it is much cheaper for smallholders to participate in. 

The MSPO works more closely with state governments to resolve land issues, in particular in relation to smallholders to improve the MSPO traceability system for the whole supply chain. 

As such, around 96% of Malaysian palm oil plantations—many of them run by 300,000 smallholder farmers—are now MSPO-certified under the Malaysia Sustainable Palm Oil scheme. This was a new nationally mandated sustainability standard enforceable by the law, and the first of its kind around the world. 

Reforestation Initiatives

Malaysia and Indonesia, the world’s top palm oil producers, have implemented reforestation programs to counter the environmental impact of palm oil production. Malaysia’s National Landscape Restoration Initiative aims to restore 500,000 hectares of degraded land by 2025, while Indonesia’s One Billion Indonesian Trees Movement strives to plant one billion trees by 2024.

World deforestation from palm oil has fallen to a four-year low: Deforestation in Indonesia, Malaysia, and Papua New Guinea attributed to the development of oil palm plantations has fallen to its lowest level since 2017, according to satellite analysis published from risk analysis group Chain Reaction Research (CRR).

More recently, non-profit organization Global Forest Watch announced in June 2023 a sharp reduction in forest loss in Malaysia, which shows that oil palm corporations are taking action with some 83% of palm oil refining capacity now operating under a ‘No Deforestation, Peat and Exploitation (NDPE)’ commitment.

Positive government action has continued in more recent years, with a plantation area cap established in 2019 through 2023, and new forestry laws enacted in 2022 to stiffen penalties for illegal logging.

According to Forest 500 analysis by non-profit research group Global Canopy, palm oil supply chains were singled out as doing a better job than others in providing deforestation commitments. Among all the commodities that are linked to deforestation, commitments are more common in palm oil supply chains (72% of companies have made a deforestation commitment) than other commodities including pulp and paper (49%), soy (40%), beef (30%) and leather (28%). 

Prominent Advocates

Many organizations champion sustainable palm oil, including:

  • The Roundtable on Sustainable Palm Oil (RSPO)
  • The World Wildlife Fund (WWF)
  • The Orangutan Land Trust
  • Rainforest Action Network

According to WWF, palm oil can be found in almost half of all packaged products sold in supermarkets. This is why it is so important that the following manufacturers prioritize the use of sustainable palm oil:

  • Unilever
  • Nestlé
  • Procter & Gamble
  • Ferrero
  • Colgate-Palmolive
  • Reckitt Benckiser
  • PepsiCo
  • Mars
  • Mondelez International
  • General Mills
  • Kellogg’s
  • Hershey

These companies have all made public commitments to sourcing 100% sustainable palm oil by a certain date, and many of them have already achieved this goal. They are also working to support sustainable palm oil production through initiatives such as the Roundtable on Sustainable Palm Oil (RSPO).

Consumers can help to support sustainable palm oil by choosing products that are certified by the RSPO. The RSPO is a global organization that sets standards for sustainable palm oil production. RSPO-certified palm oil is produced using methods that minimize environmental and social impacts.

The Future of Sustainable Palm Oil

The growing demand for sustainable palm oil, coupled with increasing corporate commitments to sustainability certification, bodes well for the industry. Nonetheless, challenges persist, such as the need to expand the supply of sustainable palm oil to meet growing demand and improve the enforcement of sustainable palm oil standards.