Palm Oil Producing Countries Dig In Amidst EU Confusion. Urges Calm
- Despite the threat of losing a major market for rubber, palm oil and cocoa in the European Union, palm oil producing countries Indonesia and Malaysia are digging in to have their say on what makes their commodities, sustainable.
- The European Union is introducing a series of rules and regulations to green up imports, which has been met with fierce resistance from producing countries
- In digging in, they have shown that they are not going to change their mind on what makes their exports sustainable,
Heated arguments have topped the news on palm oil since the European Union singled out palm oil, as unsuitable for the EU’s renewable energy mandate, RED ll.
The arguments have intensified since then, with the EU’s introduction of new regulations, the Corporate Sustainability Due Diligence Directive (CSDDD) and EU Deforestation Regulations (EUDR). The EU sees these regulations as necessary to prevent the import of commodities linked to deforestation, producing countries have regarded the same regulations as protectionist trade measures.
Despite the vocal protests of major palm oil producers, the EU has proceeded with what is perceived as discrimination against development as the EUDR looks only at forest canopy without consideration for the people that live under the canopy.
This can be seen in the Team Europe Initiative (TEI) on Deforestation-free Value Chains, which was rolled out by Commissioner Virginijus Sinkevičius at COP28 in pure political speak.
“This strategic initiative marks a significant step in the EU and Member States’ commitment to foster inclusive partnerships with producing countries.”
It’s a reasonable question to ask Commissioner Sinkevičius if producing countries were invited to form the TEI. It would be a safe bet to say that producing countries were not involved.
Sustainable development of producing countries includes some deforestation
The EU actions on controlling deforestation within its imports, is correctly labeled as “discriminatory” In light of the accepted notion of sustainable development, that no one should be left behind.
The thing with the palm oil industry, which developing countries like Indonesia and Malaysia have counted on the crop for revenue, is that their development is critically tied to the crop. Schools, healthcare facilities and entire towns with electricity and piped water, have been built around the industry.
These are the stories that need to be factored into supply chains instead of the current narrow focus on “deforestation and biodiversity loss.”
It might be an insult for palm oil producing countries to have to justify the loss of forests for the sake of not “leaving anyone behind”, yet it will be needed as the corporate sector starts to make claims on sustainable supply chains.
Take the talk behind the Supply Chain Data Partnership (SCDP) for example.
Earth Observation (EO) and Geospatial Analytic technologies can help companies manage and mitigate these material environmental risks. EO and Geospatial solutions can provide two critical tools for regulators and complying entities alike:
The big drawback of satellite monitoring for environmental change, is that it does not see the humans underneath the forest canopy nor recognises the socio-economic changes that might be taking place.
With global heavyweights in consumer goods company, Unilever and accountants Deloitte onboard, the SCDP looks like it may live up to its claim to transparent supply chains. Yet projects like SCDP whose “overall goal of the Supply Chain Data Partnership (SCDP) is to make production, logistics, transport, storage and retail stages of the purchasing journey more transparent than ever” fails to mention the socio-economic impact alongside the environmental impact of their supply partners.
Will this narrow approach to "sustainable consumer goods", carry any influence on what really happens to tropical forests?
EU Loss of Influence
As stakeholders in the EU continue to bicker and argue on the issues of CSDDD and EUDR, palm oil producing countries like Malaysia, are looking at friendlier markets like China, to offset any potential loss of demand.
DW was absolutely correct, to state that closer economic ties between Malaysia and China, is a defeat for the EU overall. There is much more than palm oil at stake in the relationship. As Nikkei Asia reported:
The two (China and Malaysia) have built joint industrial parks in both countries to boost ties. China has moved to increase trade with south-east Asia in the face of soaring tensions with the US and other developed economies.
Soaring tensions between China and the European Union and the US, is on a different level than that of Malaysia or Indonesia. The tensions between China and other developed economies is more geopolitical while the tensions between EU and Indonesia and Malaysia, is economical.
The writings of Trissia Wijaya, provide good insights into China’s rising influence on Indonesia.
Based on actual developments and investments, the “news” she delivers, should be noted with concern by the EU as these are concrete signs of the loss of influence of the European Union.
CPOPC Urges Calm
Meanwhile, in the EU:
As the EU struggles with the issues, the Secretary General of the Council of Palm Oil Producing Countries (CPOPC) Dr Rizal Affandi Lukman has advised member states to remain calm.
The CPOPC intends to focus on the big issues including recognition of the national certification schemes (Malaysian Sustainable Palm Oil and Indonesian Sustainable Palm Oil), the inclusion of smallholders in the supply chain, establishment of traceability tools, country benchmarking, and protection of privacy data.
Will the EU accept the MSPO and ISPO as credible authorities for the certification of sustainable palm oil? Stay tuned.
Published December 2023-CSPO Watch
The arguments have intensified since then, with the EU’s introduction of new regulations, the Corporate Sustainability Due Diligence Directive (CSDDD) and EU Deforestation Regulations (EUDR). The EU sees these regulations as necessary to prevent the import of commodities linked to deforestation, producing countries have regarded the same regulations as protectionist trade measures.
Despite the vocal protests of major palm oil producers, the EU has proceeded with what is perceived as discrimination against development as the EUDR looks only at forest canopy without consideration for the people that live under the canopy.
This can be seen in the Team Europe Initiative (TEI) on Deforestation-free Value Chains, which was rolled out by Commissioner Virginijus Sinkevičius at COP28 in pure political speak.
“This strategic initiative marks a significant step in the EU and Member States’ commitment to foster inclusive partnerships with producing countries.”
It’s a reasonable question to ask Commissioner Sinkevičius if producing countries were invited to form the TEI. It would be a safe bet to say that producing countries were not involved.
Sustainable development of producing countries includes some deforestation
The EU actions on controlling deforestation within its imports, is correctly labeled as “discriminatory” In light of the accepted notion of sustainable development, that no one should be left behind.
The thing with the palm oil industry, which developing countries like Indonesia and Malaysia have counted on the crop for revenue, is that their development is critically tied to the crop. Schools, healthcare facilities and entire towns with electricity and piped water, have been built around the industry.
These are the stories that need to be factored into supply chains instead of the current narrow focus on “deforestation and biodiversity loss.”
It might be an insult for palm oil producing countries to have to justify the loss of forests for the sake of not “leaving anyone behind”, yet it will be needed as the corporate sector starts to make claims on sustainable supply chains.
Take the talk behind the Supply Chain Data Partnership (SCDP) for example.
Earth Observation (EO) and Geospatial Analytic technologies can help companies manage and mitigate these material environmental risks. EO and Geospatial solutions can provide two critical tools for regulators and complying entities alike:
- Readily providing geospatial insights, like when and where forests are being converted to other land uses, and the environmental impacts of that conversion; and
- Locating and monitoring critical assets, like supplier mills or fields, to understand whose asset and/or supply is attributed to and/or impacted by that environmental change
The big drawback of satellite monitoring for environmental change, is that it does not see the humans underneath the forest canopy nor recognises the socio-economic changes that might be taking place.
With global heavyweights in consumer goods company, Unilever and accountants Deloitte onboard, the SCDP looks like it may live up to its claim to transparent supply chains. Yet projects like SCDP whose “overall goal of the Supply Chain Data Partnership (SCDP) is to make production, logistics, transport, storage and retail stages of the purchasing journey more transparent than ever” fails to mention the socio-economic impact alongside the environmental impact of their supply partners.
Will this narrow approach to "sustainable consumer goods", carry any influence on what really happens to tropical forests?
EU Loss of Influence
As stakeholders in the EU continue to bicker and argue on the issues of CSDDD and EUDR, palm oil producing countries like Malaysia, are looking at friendlier markets like China, to offset any potential loss of demand.
DW was absolutely correct, to state that closer economic ties between Malaysia and China, is a defeat for the EU overall. There is much more than palm oil at stake in the relationship. As Nikkei Asia reported:
The two (China and Malaysia) have built joint industrial parks in both countries to boost ties. China has moved to increase trade with south-east Asia in the face of soaring tensions with the US and other developed economies.
Soaring tensions between China and the European Union and the US, is on a different level than that of Malaysia or Indonesia. The tensions between China and other developed economies is more geopolitical while the tensions between EU and Indonesia and Malaysia, is economical.
The writings of Trissia Wijaya, provide good insights into China’s rising influence on Indonesia.
- Chinese financing dovetails with Indonesian developmentalism
- Chinese Capital’s Move into Upstream Oil Palm Plantations: Navigating Competing Sustainability Norms and Regulations in Indonesia
Based on actual developments and investments, the “news” she delivers, should be noted with concern by the EU as these are concrete signs of the loss of influence of the European Union.
CPOPC Urges Calm
Meanwhile, in the EU:
- Businesses, trade unions & NGOs jointly call on legislators to reach agreement on effective final CSDDD.
- Business Europe has opined that “EU due diligence could leave companies between a rock and a hard place”
- FEDIOL urged the Commission and Member States to provide legal clarity for companies and producers to be able to work out solutions that are in line with the EUDR requirements and avoid excessive disruptions in the functioning of commodity supply chains.
As the EU struggles with the issues, the Secretary General of the Council of Palm Oil Producing Countries (CPOPC) Dr Rizal Affandi Lukman has advised member states to remain calm.
The CPOPC intends to focus on the big issues including recognition of the national certification schemes (Malaysian Sustainable Palm Oil and Indonesian Sustainable Palm Oil), the inclusion of smallholders in the supply chain, establishment of traceability tools, country benchmarking, and protection of privacy data.
Will the EU accept the MSPO and ISPO as credible authorities for the certification of sustainable palm oil? Stay tuned.
Published December 2023-CSPO Watch
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