Although Agriculture Ministry Regulation No. 19 concerning Indonesian Sustainable Palm Oil (ISPO) was issued in March 2011, many oil palm stakeholders and observers still have questions about its national effect, how it will be interpreted in the field, and how indeed it will be rolled out in the years ahead.
Before the regulation was issued, many stakeholders in the palm oil industry were already familiar with a similar sustainability scheme from the international Roundtable on Sustainable Palm Oil (RSPO), which just concluded its 10th annual meeting in Singapore.
Whilst the RSPO is a scheme borne out of an open discussion among players within the international oil palm supply chain, ISPO is a more straightforward clarification and rearticulation of existing national Indonesian oil palm legislation. Because of its national reach, ISPO offers the potential of improving the entire plantation industry.
Both standards have as their nadir a set of Principles and Criteria (P&C) which clarify what is defined as sustainable palm oil production. The RSPO P&C was published in 2005 as the generic global standard with the national interpretation for Indonesia finalized in 2007.
There are thus two main sustainability certification schemes for oil palm plantations in Indonesia, with an additional International Sustainability & Carbon Certification (ISCC) certification for a small niche of plantations and players involved in the biofuel market in Europe.
The main difference of the ISPO scheme compared to the RSPO certification is in its legality. ISPO is a government certification scheme issued through a ministerial regulation and as such is legally binding, with all oil palm producers in Indonesia obliged to follow it. The content of ISPO P&C is in essence a compilation of all government regulations applied to oil palm plantations.
Each principle and criteria is a legally binding regulation with a clear reference to precedential law and sanctions applied for violations. This is the main point of difference with the RSPO standard, which is a voluntary certification process with the P&C developed based on the consensus of stakeholders.
While indeed RSPO is voluntary however, its P&C states that companies have to also abide by national laws and requirements, so in essence RSPO certification can also not be achieved if national laws are not complied with.
As with any certification system, credibility and accountability are critically important for both ISPO and RSPO. As it develops further, ISPO may face challenges of credibility due to the general low level of trust felt by Indonesians towards the national government’s perceived inability to provide independent and effective blanket oversight.
To assist in this challenge, both ISPO and RSPO use independent third parties as certification bodies to conduct audits at the company plantation and mill for those entities who are applying for certification.
In terms of normative content of the respective list of P&C, both standards are quite similar. When compared, there are several elements within ISPO that are more detailed, but there are also other criteria that aren’t covered which are outlined in the RSPO P&C.
For example, the need for best practice on production and long term viability of the planting organization is more detailed in ISPO, but with regards to conservation and protection of rare, threatened and endangered species, ISPO relies very much on the national environmental assessment platform (AMDAL) and several other government regulations.
In the RSPO P&C, there are several additional criteria that required companies to go beyond what national law currently requires. For example, an important element in the RSPO P&C is the prohibition to develop any new plantation development after November 2005 by replacing natural forest or areas required to maintain or enhance high conservation value. This is controversially known within the plantation industry by the term “cut-off-date”.
Another element that is not explicitly articulated in ISPO as it is in RSPO is the phraseology “free, prior, informed consent” (FPIC). Theoretically at least, the FPIC principle aims to promote a philosophy whereby “consent” for plantation development or local community land use change is obtained in a “free, prior and informed” way with affected individuals and communities.
In the ISPO P&C there is no explicit reference to applying FPIC standards during a plantation land acquisition process although there is an explanation regarding land conflict settlement and compensation; the criteria explaining that plantations shall ensure that their land is free from conflict with the local community and district smallholders. Yet many plantations have struggled to grasp to what extent they need to go to to ensure either FPIC standards or general community awareness raising, as it is often erroneously and euphemistically known at a plantation, is appropriate.
From the national systems point of view, ISPO as a mandatory certification process for all plantations has several advantages when compared to the voluntary system of the RSPO in Indonesia. As a mandatory certification process, it reaches a far wider audience.
Furthermore, ISPO can force companies that do not apply best practices and focus less attention on sustainability concerns to move towards more sustainable practices. As a voluntary certification, the RSPO will only reach companies who are already inherently aware of the importance of sustainability in their own practices, branding and marketing.
As a government regulation, ISPO also has more “clout” in being able to enforce without fear or favor, and without having the burden of satisfying all its stakeholders as often prevails in the consensus philosophy approach of the RSPO. It is worth noting however that the RSPO does have a structured grievance process in place to handle non-compliance and possible violations.
However, despite the advantages of being a mandatory certification that gives ISPO the potential to drive improved sustainable practices in Indonesian oil palm more widely, some concerns also exist.
With such a legally binding foundation, ISPO is not as flexible as the RSPO in terms of its ability to invoke changes to its P&C. With its status as appendix of a minister regulation in an official state document, the content of ISPO cannot be easily changed.
Some uncertainty may also exist in the future in the event that new updated plantation legislation is promulgated that supersedes or updates legislations that is currently explicitly referred to in the P&C.
In the current P&C document, there are some criteria that could be potentially confusing for plantations seeking to operate in frontier areas.
An example of this is the criterion regarding “High Conservation Value” (HCV) in ISPO, which does not have a precise regulation reference point. HCV is a concept with certain definition developed in the framework of sustainable forest management certification of the Forest Stewardship Council, and has been adopted by the RSPO.
In ISPO, the term appears with reference to Presidential Decree no. 32/1990, which itself does not have a matching definition or coherence with the current HCV definition. Aside from the potential confusion on the P&C content in this way, the national government must also take seriously the importance of credibility in the international market and carefully plan for the implementation and acceptance of the ISPO standard in the international supply chain and market.
These are some of the ISPO issues that need to be addressed before the mandatory requirement for all Indonesian plantations to have been ISPO tested by 2014.
At the end of the day, regardless of whether a company chooses to follow both ISPO and RSPO guidelines, it is worth remembering that the end goal of both of these initiatives is an increase in sustainability within the Indonesian oil palm industry.
The writers work at Daemeter Consulting, which supports Solidaridad network with smallholder oil palm training projects in the Asia Pacific