Switch to sustainable palm oil saves money

PALM OIL producers that switch to sustainable production have “reaped significant return on their investment”, according to a new report by WWF.


‘Profitably and Sustainability in Palm Oil Production’ is a first-time study that comprehensively examines the financial costs and benefits of producing sustainable palm oil under the guidelines set out by the Roundtable on Sustainable Palm Oil (RSPO). The report found that economic benefits outweigh the financial costs of pursuing sustainable palm oil operations.


WWF is hoping the research will lead to more firms switching to production under the RSPO guidelines, which could have knock-on effects further up the supply chain.


“Our research found that many firms who switched to producing sustainable palm oil – which is good for people and the environment – reaped significant return on their investments,” said WWF’s Joshua Levin, the report’s lead author. “In some cases, switching to sustainable production was economically transformative for the business. Producers, buyers, and investors should see sustainable palm oil as a serious business opportunity.”


Adam Harrison WWF’s representative on the Executive Board of the RSPO said the findings were good news for producers, but there was still a responsibility for the food industry to commit to buying sustainable palm oil. The versatile oil is used in a number of food products, from margerine to ice-cream, as well as non-food products such as lipstick.


Last year, WWF produced its second ‘palm oil scorecard’ assessing a number of the largest palm oil buyers. While progress was being made in terms of commitments, WWF found that this was not being translated quickly enough into purchases.


The growing demand for palm oil is adding to the already severe pressure on remaining rainforest areas of the world, and is threatening the survival of species such as the orang-utan, the Sumatran tiger, rhino and elephant. Forest loss and the draining of peatlands for palm oil plantations is also contributing to climate change and displacing local people who rely on the forest for food and shelter.


Produced in collaboration with CDC, the UK’s development finance institution, and FMO, the Dutch development bank, the report shows that the business benefits gained from achieving RSPO certification “typically outweigh the costs of implementation—in many cases significantly—yet often through unexpected and indirect channels.”


For example, while many firms were initially attracted to RSPO for the price premiums commanded by certified sustainable palm oil, the larger financial gain often turned out to be resulting improvements in operations, documentation systems, labour relations, and other internal factors.  In fact, each major category of benefits was capable of outweighing RSPO implementation costs, according to the report.