1. Land and Poverty Conference WB
Corporate commitments and state regulations shaping the palm oil governance system
Pablo Pacheco
Layout: Title Slide
Variation: none
Land and Poverty Conference WB
Washington DC, March 2017

2. BACKGROUND
We have entered an era of commitments from public and private actors
Governments are committing to reduce their GHG emissions and LEDS
Companies are committing to delink deforestation from their supply chains
Landholders are increasingly prompted to adjust to these commitments
Still no consensus on definitions, targets to be achieved and timeframes
More complex institutional architectures and arrangements are emerging
Anticipated risks related to smallholder exclusion and market segmentation
Potential of jurisdictional approaches to enhance effectiveness and manage risks

3. OIL PALM: A POLEMIC CROP
Oil palm has expanded rapidly with contradictory impacts
Positive impacts on local growth and poverty alleviation
BUT plantations development also creates social conflict
AND often expands in detriment of forests and peatlands
THAT expansion leads to biodiversity loss and GHG emissions
Three critical performance issues are visible in the sector
Land conflicts between companies and local populations + immigrants
Differences in yields between smallholders and industrial plantations
Large carbon debt resulting from oil palm expansion in forestlands and peatlands

4. OIL PALM IN INDONESIA 10.5 27.8 42% 3.5 53% 25 ~850 2.1 3.0
Million hectares cultivated
27.8
Million tons CPO
Farmers
2.1
Million households
3.5
Tons CPO/ha/yr
53%
global CPO supply
Indonesia
Labor
3.0
Million people
Smallholders
42%
of total cultivated area 25
corporate groups control most of the supply
~850
Palm oil mills

5. THE PLEDGES AS THEY STAND
About 266 companies along the value chain made commitments to support sustainable palm oil supply – 112 on ‘zero deforestation’
Pledges are individual and collective
Prominent pledges on ‘zero deforestation’, including main consumer goods companies (CGC), producers, processors and traders of palm oil are:
Consumer Goods Forum (2010) on zero net deforestation
Sustainable Palm Oil Manifesto, SPOM (July 2014)
The New York declaration on forests (Sep. 2014)
Indonesian Palm oil Pledge, IPOP (Sep. 2014)
Pledges on ‘zero deforestation’ have been embraced by the largest corporate groups (producers, processors and traders) but have not yet reached to their third-party suppliers, particularly mid-size companies
Based on accessed on March 21, 2017

6. THE POLITICS OF IMPLEMENTATION
Most activity taking place at the international arena (consumer countries, corporate groups)
Different definitions and methods (HCSA and HCS+), yet efforts to harmonize them
The Government of Indonesia (GoI) has strongly opposed the ‘zero deforestation’ movement
YET, some provincial government devised regulations that backed up private initiatives
The GoI initiated a process to strengthening ISPO under a multistakeholder working group
ALSO, issued regulations to restore peatlands and halt oil palm expansion on these lands
Different company initiatives (e.g. FFA) to fire prevention linked to oil palm expansion
Major corporate groups piloting projects to support smallholder oil palm suppliers

7. AN EVOLVING INSTITUTIONAL ARCHITECTURE
Disparate views on sustainability: clean, sustainable and legal
Multiple public and private arrangements and at different levels
Persistence on informal economies and social arrangements
Different tensions disconnects, and complementarities
Pacheco et al. (under review)

8. BUT PERSISTENCE AMIDST CHANGE
Land speculation and encroachment of state forests [land mafias]
Growth of independent mills fostering uncontrolled oil palm expansion
Enough informal finance driving oil palm plantations expansion
Many (illegal) smallholders not entitled to receive state support
Incentives for plantation expansion due to growing biodiesel targets
STILL some open questions are:
What will happen to the land banks hold by companies?
How extended is the process of market segmentation?
What are the likely indirect effects of the commitments?

9. WHAT IS HAPPENING ON THE GROUND?
ATLAS OF DEFORESTATION AND INDUSTRIAL PLANTATIONS IN BORNEO
ATLAS OF DEFORESTATION AND INDUSTRIAL PLANTATIONS IN BORNEO
Capture the history of deforestation and plantations expansion
1973 to 2016 over Borneo island (annual since 2000)
Helps companies and banks track their deforestation footprints

10. EMERGENCE OF JURISDICTIONAL APPROACHES
Preferential sourcing from specific jurisdictions
[Unilever and Marks & Spencer, Produce and Protect]
Monitor and rewards for improvements in performance
Technical assistance with flexible technological packages
Extend palm oil certification to the whole jurisdiction
[Central Kalimantan, Indonesia and Sabah, Malaysia]
Watershed approach to certification / reduce adoption costs
Improve uptake of improved practices across producers
Project-based interventions with a territorial focus
[South Sumatra, Sustainable Landscapes Project]
Spatial planning with attention to peatlands
Good practices with traceability and affordable finance

11. CONCLUSIONS Palm oil value chain is more complex over time
The institutional architecture is also growing in complexity
Different views of palm oil sustainability co-exist
Tensions persist but complementarities are emerging
Public policy and government responses are contradictory
Different views between corporate players and national producers
Still disputes on ‘what’ and ‘whose’ rules to follow
Potential on jurisdictional approaches, but also limited

12. Layout: Closing Slide
Variation: none