1. Pablo Pacheco, Cecilia Luttrell and Heru Komarudin
Public-private governance arrangements for sustainable palm oil in Indonesia
Pablo Pacheco, Cecilia Luttrell and Heru Komarudin
Layout: Title Slide
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World Bank Conference
Washington, March 2018

2. OIL PALM IN INDONESIA 10.5 36.0 2.1 3.5 53% 25 3.0 42% ~850
Million hectares cultivated
36.0
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 planted area 25
corporate groups control most of supply
~850
Palm oil mills

3. THE PLEDGES AS THEY STAND
About 283 companies along the value chain made commitments to support sustainable palm oil supply – 113 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) / disbanded
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 January 25, 2018

4. CHALLENGES IN SUPPLY CHAIN GOVERNANCE
Efforts made to develop coherent zero deforestation rules and integrate into certification - upward convergence
Little apparent corporate interest in comprehensive co- regulation, yet some initiatives at sub-national level
Lack of commitment to smallholders, weak consideration to food security, and iLUC
Challenging to address zero deforestation through certification due to its supply chain orientation
While growing, still limited emphasis on territorial and landscape approaches to address spillovers
More prominent role of state institutions required (e.g. land use planning, tenure security, extension services)

5. MORE COMPLEX GOVERNANCE APPROACHES
Amsterdam
Declaration
Regulations: How to be designed in a way that acknowledges the lack of state’s enforcement capacity and avoids vested political interests?
Incentives: How to align with interests of economic growth while embracing environmental concerns?
Political support: How to channel for public (rather than individual) benefits while supporting more equitable distribution of benefits?
NY Declaration
PRAI
SPOM

6. INITIATIVES AT THE SUB-NATIONAL LEVEL
Policy formulation and agenda setting: Jurisdictional Approaches (Seruyan, MuBa), Landscape Approaches (Sumsel, Kalbar IDH), and Green Growth strategies and development plans (Sumsel, Kalbar)
Rule setting and government regulations: Regulations on sustainability (Kalteng, Sumsel), and for HCV (Seruyan, Ketapang)
Implementation/compliance/enforcement: addressing legality, and registration of smallholders (INOBU), and I4PT land reform
Incentives and finance: several more innovative schemes are being putting in place in Kalteng and Sumsel (e.g. IFC, SNV)
Oversight and monitoring/evaluation: Multi-stakeholder processes mainly at the provincial level (Kalbar, Sumsel)
Our focus at the sub-national level has been in three provinces and five districts. Kotawaringin Barat, Seruyan and Kapuas in Central Kalimantan (Kalteng); Ketapang in West Kalimantan (Kalbar); and Musi Banyuasin (MuBa) in South Sumatra (Sumsel).

7. COMPLEMENTARITIES, SUBSTITUTION AND ANTAGONISMS
A barrier in the implementation of private standards is the lack of integration into government systems, yet some complementarity is emerging
More antagonism at the implementation, enforcement and monitoring stages. Yet, non-state actors moving from antagonism to substitution
Some groups act as advocates maintaining pressure on the sector, and others as intermediary facilitators working with government and companies
Substitution since non-state actors’ initiatives are intended to replace state function and by definition are designed to by-pass government.
NGOs and other civil society organizations are positioning themselves in a middle ground between international standards and the state

8. KEY LESSONS ON THE DESIGN AND PROCESS
There are issues of legitimacy depending on ‘who’ sets up and implement the initiatives
There are several directions of change in the interaction between public and private actors
Many state functions are still fundamental for enabling the private commitments
The importance of buy in and shared objectives, but something not easy to achieve
The risk of facing a lower degree of integration into existing government systems
The importance of intermediaries as ‘facilitators’, and the role of individual ’champions’

9. THE WAY FORWARD
Source: Pacheco et al. 2017
Linking better regulatory frameworks and private voluntary standards
Closing the gaps between international and national sustainability criteria
Advancing agreements on collaborative partnerships, acknowledging local views
Supporting good performance with fiscal transfers and incentives
Innovating in setting up inclusive business and financing models
Platforms for knowledge exchange on innovations and best practices
Embracing jurisdictional/ territorial- based initiatives and interventions

10. Layout: Closing Slide
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