The non-state side of IR: Can multinational corporations turn palm oil sustainable?
“No, I don’t use that product because it contains palm oil, which is not environmentally friendly.” Most of us will have said or heard some variation of this sentence at least once in our lives. But do we now what stands behind it?
Much like the tropical rain forest that is being cut down to make room for palm oil plantations, the world of the palm oil supply chain is complex, intertwined, and challenging to navigate. But let us start with the reason for claiming that palm oil is unsustainable.
Oil palms (for the sake of clarity: The plant is the oil palm and the product is palm oil) only grow in tropical climates. Originating in Western Africa, it has been exported and introduced in Malaysia and Indonesia with great success. Indeed, the plants did so well that Malaysia and Indonesia combined account for 85% of the global palm oil production. Unfortunately, this is roughly where the good news end. The problem is that because oil palms only grow in the tropics, global demand has to be satisfied by this region. But just like everywhere else, there are spatial limitations in terms of the available amount of farmland. To increase the space available for oil palm plantations, massive amounts of tropical rain forest are cut down and peatlands are drained and burned. Two thirds of the greenhouse gases that Indonesia emits originate from such deforestation and land-use change. In total, Indonesia is responsible for around 5% of the global greenhouse gas emission while being home to only 3.5% of the global population. It takes no PhD in Mathematics to figure out that the amount of emission created by deforestation and land-use change to create oil palm plantations is significant.
The elephant in the room is the question of why one should use palm oil in the first place if it has such destructive consequences. The simple answer is that palm oil has an extremely high yield. Per hectare, it produces ten times more oil than any other crop. Thus, in terms of limiting land-use it seems like a viable solution. The problem is the afore-mentioned climate requirement of the oil palms, which prevent plantations anywhere else than in the tropics. Consequently, solutions have to be found to align global demand with local prerequisites. And this is where multinational corporations enter the stage.
While formerly being concerned with states only, multinational corporations increasingly become actors within the realms of International Relations. With their wide reach and impact, multinational corporations influence inter-state relationships, (inter)national policy debates, and globally interconnected markets. One of these well-known corporations is Unilever (which, interestingly enough, is fully British as of 30 November 2020. There is no longer a Dutch division). Being responsible for a vast range of different products and brands (think Knorr, PG Tips, Domestos, Axe and Ben & Jerry’s), the company has recognised the damaging effects of the great amounts of palm oil its products require. In an attempt to establish a certification scheme for sustainable palm oil, it has partnered with the WWF and numerous other stakeholders to establish the Roundtable on Sustainable Palm Oil (RSPO) in 2004. But so far, the RSPO has not lived up to its promises.
Among the requirements to gain RSPO certification is the demand that no forest shall be cut down for the unit of palm oil in question. However, “no deforestation” really means “no deforestation of high conservation value forests”. So, secondary forests can be cut down to make room for an oil palm plantation and the resulting product could still be certified. While this is an obvious ground for protest by environmental organisations, it also poses an issue for the many palm oil farmers that operate on a smaller scale and are unable to bring in experts to evaluate the forest they want to cut down to make room for another plantation. Additionally, traceability is still not a given in the palm oil supply chain and how do you guarantee sustainable farming if you don’t know where your product has been grown? And lastly, global demand for sustainable palm oil is far lower than the eco-aware European middle class would like to think. The EU and US markets only account for 13% of global palm oil consumption, while China, India, Malaysia, and Indonesia combined account for 45%. Since low prices are the convincing arguments in the latter markets (and to an extent also in the former), large quantities of RSPO-certified sustainable palm oil are sold as standard palm oil at the standard price because very few are prepared to pay the higher financial price of the sustainable product.
Essentially, sustainable palm oil remains little more than a marketing term. While companies show some initiative to improve the environmental performance of their products, the execution of these ideas leaves plenty of room for improvement.
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