The Indonesian palm oil industry is undergoing a fundamental transformation in business practices  towards viewing sustainability as a source of innovation and brand value rather than additional cost.  Accelerating the pace and extent of this shift requires certain barriers and bottlenecks to be overcome.

National and international campaigns have created unprecedented demand for upstream producers to  mitigate social and environmental impacts that often create conflict between companies, communities  and the public. Producers are responding, with growing numbers treating impact mitigation as core to their  investment strategy and operational planning. Some of these innovations were highlighted in a recent study  by Daemeter Consulting entitled Best Management Practices in the Indonesian Palm Oil Industry: Case  Studies and the topic will be discussed at Forests Asia Summit 2014 on 5-6 May in Shangri-La Hotel,  Jakarta.

Still, there are major barriers to overcome in scaling up these practices throughout the industry.

The first is barriers to information flow concerning innovative practices in the sector, which has created a  wide knowledge gap between those with resources to innovate and their peers. Competitiveness between  companies and corporate reluctance to advertise success for fear of becoming a target of other  stakeholders are some reasons behind this barrier. Structured learning networks are urgently needed to  bridge this gap by accelerating knowledge transfer between industry players at all levels.

A related challenge is the lack of human resources to implement new practices throughout operations, as  companies struggle to attract and retain skilled employees. Concerted effort is required to retrain staff and  educate new entrants in the labor force with social engagement and environmental management skills  required. Sustainability training centers, such as Cargill Tropical Palm Learning Academy in West  Kalimantan, are currently being developed and must be expanded with supports from all stakeholders.

Another barrier is that, in Indonesia, oil palm companies have wide latitude to define and pursue their own  vision of sustainability. This can be a challenge when top management treats only legal compliance as their  sustainability target, but it also creates opportunity to shape policies of large companies by influencing a  small number of powerful people. Convincing decision-makers that meeting stakeholder demands  sometimes requires going beyond legal compliance opens the door to nurture far-reaching, ambitious  sustainability goals. Concerned stakeholders must develop effective outreach programs to embolden  more corporate leaders to adopt sustainability as a core principle and make the operational changes  required to achieve it.

A third barrier relates to challenges faced by local government in balancing their role as regulators of  industry on the one hand and promoters of development and tax revenues on the other. Under these  conditions, bad actors may be tolerated because they deliver investment, while responsible actors face  difficulties meeting sustainability commitments seen to undermine development goals, such as setting  aside forests for conservation instead of plantation.

These local governance challenges must be addressed before innovative conservation policies can be  brought to scale. Emerging “jurisdictional approaches” to engage administrative regions instead of  individual companies holds potential to address this problem, but only if local authorities are given the  right incentives to support sustainability.

A final, leading barrier to industry wide transformation is conflicting regulations and spatial plans that  severely limit development of degraded and deforested land for oil palm. Such low-carbon land is  widespread in Indonesia, but much of it is off-limits to oil palm due to spatial planning. Current rules also  make it very difficult for companies to retain authority to manage unplanted areas within their plantations,  even when they are set aside for reasons of reduce deforestation and protecting key habitats. These  policies are widely recognized, even within government, as significant impediments to low impact oil palm  and should be top priorities for reform.

Gary Paoli is Director of Research and Project Development at Daemeter Consulting, a partner of  the Forests Asia Summit 2014 on 5-6 May in Jakarta.