EIA response to Palm Oil Monitor article ‘Indonesia picks up allies in WTO palm fight’

An article on Palm Oil Monitor last week made false allegations against the Environmental Investigation Agency (EIA), claiming we are being funded by UK AID to help further a fictitious European Union policy seeking to undermine Indonesian farmers by stopping them from exporting palm oil to the EU.

It also stated that we are advocating a Western voluntary certification system such as that of the Roundtable on Sustainable Palm Oil (RSPO).

Both allegations are false and we are requesting Palm Oil Monitor to publish this rebuttal statement in full.

EIA has never advocated for palm oil to be banned, nor for the EU or the UK to do so. We recognise, and always have, that palm oil is integral to Indonesia’s economy and the livelihoods of its people.

However, we have always stressed that palm oil, as well as any other commodity,  needs to be produced without the destruction of forests, peatlands and other natural ecosystems, without land-grabbing and with respect for the rights of local communities and indigenous peoples.

EIA also believes that reform within the production of forest risk commodities needs to also take place through our consumption via corporations based in Europe. To allege that EIA is working for the UK and EU governments to undermine marginal farmers is nonsensical.

Indonesian Sustainable Palm Oil (ISPO)

EIA has been following and actively engaged in the ISPO reform process since it began in 2016.

Forest cleared for palm oil, Indonesia (c) EIAimage

The reform of ISPO was initiated due to the success of the Indonesian Timber Legality Assurance System (SVLK) agreed by Indonesia and the EU to support Indonesia’s legal supply of timber and wood products. The system is recognised by the EU as compliant with the European Union Timber Regulation (EUTR), which supports enforcement within Europe to stop illegally sourced timber and wood products from entering EU markets. The Government of Indonesia formally requested that the EU also ensure legal compliance to support Indonesia’s reform in the sector.

It had been hoped that the ISPO reform process would be similar, in that it would be an inclusive, multi-stakeholder consultative process resulting in an agreed standard among stakeholders which can be accepted by international markets.

However, the ISPO reform process has been far less consultative and has not resulted in a deliberative multi-stakeholder process to revise the certification standard. Given that the purpose of revising the ISPO has long been to increase the competitiveness of palm oil in foreign markets, as reiterated in the ISPO Presidential Regulation issued this year (Perpres 44/2020), the process has been disappointing in this regard.

EIA believes that solutions from both producer and consuming countries can be found through a process of consultation and we are committed to support any initiatives from the Government of Indonesia to achieve that.

As EIA has long reported, we do not consider the RSPO to be sufficiently effective. It is voluntary, does not provide the assurances mechanisms needed and companies can simply stop being members or flout the rules with limited repercussions. The ISPO is a mandatory legality scheme and so has a lot more promise.

We contend that it is not unrealistic for the ISPO to include provisions on human rights, the protection of natural forests, High Conservation Value areas and independent monitoring. These elements are not new – they were outlined in a position paper on ISPO from Indonesian civil society back in 2017, long before the UK was considering any due diligence regulation. As the ISPO is a legality standard, such provisions need to be put into law where they do not currently exist and Indonesia has already started on the path to many of them.

Indonesia tabled an Indigenous People’s Rights Bill following a landmark ruling in 2013 which includes recognition of the customary and collective rights of indigenous people over land and resources, but this has still not been passed. It is much needed, given that Indonesia is home to 50-70 million indigenous people.

Oil palm plantation in Indonesia (c) EIAimage

Similarly, Indonesia has yet to legally adopt Free, Prior and Informed Consent (FPIC) across all its regulations, despite signing the UN Declaration of the Rights of Indigenous Peoples (UNDRIP). FPIC is normally the domain of governments and companies, not smallholders. In fact, UNDRIP expressly recognises it is the duty of States to obtain FPIC (Articles 19 and 32).

It is noted that, partly due to the failure of states to enact FPIC, the RSPO is developing a simplified FPIC standard for smallholders. As others have pointed out, there is much concern about smallholders being able to comply with many aspects of the ISPO standard, let alone FPIC if it were to be part of it. These issues can be addressed through open consultations so that smallholders are not left with the burden which should and must be carried by large companies.

With regard to Palm Oil Monitor’s assertions that the EU wishes to exclude palm oil from EU supply chains, this is not the case and has been largely down to incorrect reporting that palm oil-based biofuels are going to be banned in the EU. The recast of the EU’s Renewable Energy Directive (RED II) only sets out that palm oil biofuels are no longer counted towards renewable energy targets in the EU from 2021 (although smallholders with less than two hectares of land are exempted from this). Palm oil would still be able to be imported into the EU as a biofuel and for any other use.

Currently, only palm oil is set to be phased out as being regarded as a renewable energy, based on the available data on its association with indirect land use change and deforestation. The European Commission is due to undertake a review of the data used under EU RED II in 2021, which EIA welcomes.

EIA is by no means the only party concerned about the ISPO scheme and Indonesia’s forthcoming Omnibus Bill; various demonstrations against the Omnibus Bill have been staged by environmental and labour groups alike in Indonesia. We would be concerned at any country seeking to weaken environmental protections, given that the world continues to lose forests and biodiversity at an alarming rate,.

Proposed regulations in the UK and EU

There is increasing concern from UK and EU consumers that the products they buy cause forest destruction and that they are unwittingly driving demand for forest risk commodities.

Clearing forest for palm oil, Indonesia (c) EIAimage

The EU, UK and other countries are considering what measures, including regulatory measures such as a due diligence approach, can be put in place to limit global deforestation and ensure, via a more transparent supply chain and information as to the origin of the commodity, that products placed on the market have not caused deforestation.

It is not unreasonable for any country to wish to have products in their markets which do not drive deforestation, so long as it is done fairly and in line with World Trade Organization (WTO) rules. This would include ensuring that products produced in their own jurisdictions do not come from deforestation.

In the same way that consumers do not want to buy goods produced using child labour or human trafficking, consumers do not want products which cause deforestation and contribute to the extinction of wildlife. In 2015, the UK introduced the Modern Slavery Act, requiring businesses to take steps to ensure slavery and human trafficking are not taking place in their supply chains. Deforestation should be treated with the same seriousness.

EIA has not advocated that the ISPO scheme or any other certification scheme should be excluded from such regulations, only that these should not be relied on alone. This is not to say the ISPO cannot be a part of the solution and provide assurances of legality, but to suggest that the ISPO in its current form would ensure ‘no deforestation’, as internationally understood, would be disingenuous.

We believe the UK and Indonesia have many of the same goals – a willingness to tackle climate change and stimulate a green economic recovery and a desire to show  global leadership. Neither the palm oil industry nor forests need to be sacrificed in order to achieve those goals.

A note on funding

Funds granted to EIA by the UK Government’s Department for International Development (DFID) cover a myriad of countries and issues, all related to forest governance and forest crime. Work relating to the ISPO is just one component.

Our finances and funding are public and openly available via our annual reports and the DFID website.