A comparison of leading palm oil certification standards applied in Indonesia

The Roundtable on Sustainable Palm Oil (RSPO) is currently holding its annual meeting in Medan, Indonesia. Responding to the discussions on oil palm certification in the first day of the meeting, we are publishing this executive summary for a study of the same title, slated to be published and can be downloaded for free from this website in early 2014.

Indonesia’s regulatory framework governing palm oil is comprehensive in scope and complex in form. It reflects mandates of nearly a dozen Ministries and administrative bodies with authority over land use, business licensing and industry. Challenges to enforcement of this system prompted Indonesia’s Ministry of Agriculture to decree the mandatory Indonesian Sustainable Palm Oil (ISPO) standard in 2011. Under ISPO, producers are required to comply with the standards by 2014, or face penalties and risk of losing their license to operate. By design, ISPO criteria are strongly aligned with existing legal and regulatory requirements, and for this reason it is sometimes referred to as Indonesia’s “legality standard” for palm oil.

The emergence of ISPO to complement existing third-party certification schemes has reinvigorated discussions about “legality” in Indonesian palm oil. Such discussions are often contentious, due to a tendency for stakeholder groups to galvanize around competing sustainability standards at the expense of understanding the significant commonalities among them. More importantly, such debate also prevents collaboration to overcome shared challenges faced by all standards on the ground, including facets of Indonesia’s regulatory system that presents challenges to certification.

This report aims to address these challenges through broader understanding of the commonalities and differences among four popular sustainability standards pursued by palm oil companies in Indonesia:

• Roundtable on Sustainable Palm Oil (RSPO)
• Indonesian Sustainable Palm Oil (ISPO)
• International Standard for Carbon Certification (ISCC)
• Sustainable Agriculture Network (SAN) 

The review presents a structured, in-depth comparison of environmental and social requirements of each standard to highlight areas of commonality and difference among them. A secondary aim is to describe how provisions of these standards align with Indonesian regulatory requirements applicable to palm oil, drawing attention to where the framework supports or presents challenges to certification. Our aim is to support future efforts at shaping a consensus definition of legal palm oil, by providing context for benchmarking Indonesia’s regulatory framework against emerging best practice defined by certification initiatives. In this way, the report can be viewed as a background document to inform future multi-stakeholder discussions.

To make the comparison more accessible, a theme-based approach is used, in which criteria are organized around 15 themes (plus 18 sub-themes), reflecting priority issues inferred from discourse on oil palm in the media, academic press, international and national meetings, blogs, and other sources. The full report is divided into two parts: main body and appendices. The main body of the report provides (a) background of each standard, (b) in-depth comparisons by theme, and (c) a scoring system to rank the strength and clarity of requirements as a quick-view comparison across standards. Throughout the text, tables are also provided under theme headings that summarize the principles, criteria, indicators, guidance, and instructions relevant to each theme in the standards. This is taken directly from the text of the standards, and where tables are extensive, they have been placed in hyperlinked appendices (with abridged summaries retained in the main text).

We found that all four standards cover a similar range of topics, but the depth, breadth, and level of detail in which they address issues vary widely. The standards also show wide divergences in the specificity and severity of restrictions imposed on different criteria, partly reflecting the background initiatives driving how each standard was developed. For example, RSPO sets strong, ambitious, well-defined requirements across a far-ranging set of issues, but shows its greatest compromise around the controversial topics of deforestation, peat land development and GHG emissions—areas where compromise was necessary to bridge among different groups within the RSPO. ISCC by contrast puts forth very strict provisions on deforestation and peat, reflecting the intent for ISCC certified plantations to comply with requirements of the EU Renewable Energy Directive. SAN also has very strict rules on clearance of natural areas and extensive social provisions, both reflecting a rural small-farm focus driving formation of this standard. Viewed in comparison to the other standards, ISPO emerges as a more straightforward, streamlined, and practical standard, reflecting its intention of applying to all companies and ties to legal compliance, but provides less detailed guidance that might present challenges for consistent application across Indonesia’s diverse geographies.

Another key difference among standards concerns minimum requirements for compliance to achieve certification. RSPO and ISPO require full compliance with all criteria in order to be certified, or an approved time-bound plan for addressing minor non-compliances. Under SAN and ISCC, only a subset of specified criteria must be met for certification. SAN requires compliance with 50% of criteria within each principle, and 80% of total applicable criteria, except for ‘critical’ criteria, which must be fulfilled. ISCC divides its criteria into ‘major’ and ‘minor’ musts, where all major and at least 60% of minor musts must be fulfilled to achieve certification. These differences complicate drawing conclusions about the relative strength of one standard compared to others, when not all provisions are mandatory under all schemes.

While ISPO is mandatory and thus holds greatest potential to reach industry as a whole, the comparison suggests ISPO imposes less stringent requirements for many of the environmental issues reviewed, whereas RSPO and especially ISCC and SAN consistently impose stronger, more restrictive requirements on topics such as deforestation, peatland development and biodiversity conservation. In regards to social themes, ISPO provides shorter, less detailed requirements and guidance across many key areas. ISCC and SAN also impose weaker requirements in regard to community benefits and community consent for land acquisition, especially in contrast to the RSPO's very strong provisions on these topics. Under employment themes, SAN is weaker compared to other standards, which provide more detailed requirements on human rights, child access to education, women, and indigenous people. Offsetting this, SAN was strongest in its treatment of human welfare issues.

A quick-view summary ranking of the standards is offered in the study, capturing general features of how the standards compare. In reality treatment of most themes by most standards is nuanced and requires reading the fuller comparison to understand how issues are addressed in each standard. Main summary points from the comparison include the following:

• Overall, RSPO has the most clearly explained and strongly worded principles, criteria, indicators, guidance and requirements for compliance with environmental provisions; two weaknesses concern flexibility in RSPO's treatment of deforestation and peat land development.
• ISCC and SAN are very strong in their treatment of environmental concerns, whereas ISPO is comparatively liberal or unclear.
• On social themes, RSPO again ranks most highly, reflecting broad consideration of social issues facing the industry and communities affected by it.
• ISCC and SAN were weaker than RSPO for a handful of social themes reviewed, but in general also gave robust treatment of social issues.
• ISPO had the least comprehensive treatment of social issues of the four standards, due both to absence of key issues (e.g., FPIC) and vaguely worded requirements for compliance.