Mr Viral
Joseph D’Cruz has led the Roundtable for Sustainable Palm Oil (RSPO) for just over three years, yet in this time, he has already grappled with a swathe of changes.
The organisation inaugurated a new set of standards at its roundtable in Thailand last year, updating the parameters which palm oil must meet to be considered sustainable.
Regulations such as the European Union Deforestation Regulation (EUDR) and the Corporate Sustainability Due Diligence Directive (CSDDD) may also change the world of agricultural commodities, demanding stringent proof of sustainable practices.
D’Cruz is leveraging his many years of experiences to to grapple with these challenges. He became RSPO CEO in 2022 after a long career working in sustainability in both private and non-profitsectors. During this time he worked for the United Nations for more than two decades, where he focused on sustainable development and biodiversity conservation.
A demand for transparency The meaning of the word “sustainability” is changing, D’Cruz suggests. Even for a single commodity, palm oil, the word now covers a wide range of factors, from environment and climate change to social issues and labour rights.
“Our sense is that the conversation around what sustainability means is going to evolve over time.”
Various stakeholders, including regulators and consumers themselves, are increasingly looking for a more in-depth understanding of the intricacies behind what “sustainability” means in the context of palm oil. Regulations are being introduced not only by governments but banks, stock exchanges and other key actors to keep a handle on how commodities are produced.
Consumer demand for more transparency in the food products they buy is growing, he explains, not just in Europe but in Asia and Africa as well.
Thus, rather than just a certificate providing assurance that a given batch of palm oil is sustainable, stakeholders want to understand what responsible sourcing means within the supply chain.
“The expectation that consumers, regulators, [and] policymakers will simply accept a certificate as proof of sustainability is probably going away.”
Joseph D’Cruz (RSPO)This plays to the strengths of certification standards such as the RSPO, which has extensive data collected already, D’Cruz explains. “By its nature, our certification scheme generates a lot of data.”
The organisation has thus updated its traceability system to leverage this data, which until now has not been utilised to its full potential.
The new system generates and transmits traceability data, D’Cruz explains, in a way RSPO members can use. This data can be utilised in areas such as EUDR compliance.
However, D’Cruz envisions the data will go beyond simply complying with regulations.
People will want data on things such as the embedded carbon emissions in a given tonne of palm oil, so that they can compare producers. They will want to compare the same tonne of palm oil with other factors, such as water footprint, nitrogen and fertiliser inputs, and even the working conditions of growers.
“People want to know the story behind the litre of palm product they buy.”
How will regulation change sustainability?When the RSPO was founded in 2004, the role of monitoring commodity sustainability was not filled by regulators. However, this is changing fast, with regulations – not only the EUDR and CSDDD but many beyond Europe as well – looking to have industry-wide implications for affected commodities.
This means that certification standards, rather than working alone, must take regulation into account. This has been true, for example, in drawing up the RSPO’s recent standards.
“The expectation that consumers, regulators, [and] policymakers will simply accept a certificate as proof of sustainability is probably going away.”
Joseph D’Cruz“In the sustainability space we work in now, we are no longer just developing our standard as our own industry-specific idea of what sustainability is, but we have to also design it in a way that reflects and recognises the increasing role of regulation in our space,” explains D’Cruz.
Nevertheless, he suggests that the impact of the EUDR on palm oil may be “relatively limited” compared to other commodities. This is because the vast majority of palm products imported into the EU, with the exception of those used for biofuels, are already RSPO-certified. In fact, according to the RSPO, in 2021 93% of palm imports into Europe were RSPO-certified.
Because the RSPO and EUDR are aligned on many areas, according to D’Cruz, it is arguably more likely that palm exported to Europe will be EUDR-compliant.
The challenge lies in where the EUDR and RSPO differ. The EUDR requires commodities to be fully traceable back to their source, and this, says D’Cruz, is a challenge for smaller growers who don’t always have access to mills and producers that are RSPO-certified. Despite this, according to D’Cruz, smallholder production at the farm level is often sustainable.
EU regulations, as well as regulations in producer countries such as Malaysia and Indonesia, “lift the floor” for those not currently following responsible practices.
Also read → How governments in producer countries are grappling with palm oilCould palm alternatives change the market?In the food tech space, the search for alternatives to major food commodities has spawned multiple start-ups and a wide range of research. In palm oil, alternatives have already been developed from black soldier fly larvae and using various kinds of fermentation.
Palm alternatives have the potential to ease the growing demand for palm in the future, D’Cruz suggests. While the demand will grow substantially in the coming years, it is unlikely in the short term that the sector itself will increase as significantly in output, as palm is no longer expanding by converting large tracts of land. Alternatives could bridge this gap.
“The best in class way of producing vegetable oil at scale that exists today is certified sustainable palm oil.”
Joseph D’CruzNevertheless, because they would be pushing up against this drastically increasing demand, it is unlikely that alternatives could reduce current levels of production.
“Those that end up being able to produce economically at scale will fill niches in the supply chain that will be very beneficial.”
The palm tree yields a range of products, and many of the substitutes currently being produced are aiming to replace the “higher value” fractions of the tree, D’Cruz explains. Cost-effective ways of producing alternatives to these do exist, he says, and could be viable.
However, “the best in class way of producing vegetable oil at scale that exists today is actually certified sustainable palm oil.”
Furthermore, he is sceptical about the sustainability of some alternatives currently being produced. For example, a focus on alternatives with low land use is, in his view, the wrong approach, as “deforestation is not a major issue in the palm space” anymore. A consensus has been reached, he says, not to open up new production through deforestation.
If deforestation is an overwhelming focus, other factors such as energy and water usage and chemical and waste input will be sidelined. To be viable alternatives, palm substitutes must be looked at from a “holistic point of view.”
