The business benefits gained from adopting sustainable palm principles outweigh the costs of implementation – meaning the sustainable route may be an opportunity for better for revenues – finds a WWF report.
The report – titled ‘Profitability and Sustainability in Palm Oil Production’ – aimed to produce “a clear guide that aids companies and financiers in decision making and planning vis-à-vis RSPO certification.” The WWF paper – found in full here – is a first-time study that 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 analysis found the economic benefits outweigh the financial costs of pursuing sustainable palm oil operations.
The research report found that although potential market premiums served as an initial attraction to certification, each major category of benefits was, in and of itself, potentially capable of outweighing RSPO implementation costs.
“In summary, business benefits gained from adopting the RSPO Principles and Criteria typically outweigh the costs of implementation—in many cases significantly—yet often through unexpected and indirect channels,” said the report
Joshua Levin, who authored the report, said the research found many firms who switched to producing sustainable palm oil reaped significant return on their investments.
“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,” he said.
The research noted that palm oil is the world’s highest yielding oil crop – with an output 5–10 times greater per hectare than other leading vegetable oils.
“Combined with historically low prices, relative shelf stability, and reported nutritional benefits, palm oil leverages natural advantages that position it as a likely long-term staple of the global diet,” it noted.
However, as the palm oil industry has expanded, so has its public profile – resulting in strong scrutiny from consumers, activist groups, and the media. In response to such pressures, the RSPO was founded in 2004.
Certified Sustainable Palm Oil (CSPO) now represents over 10% of the global palm oil market, with many large producers in Europe and North America – such as Unilever, Nestle, and Walmart – taking the lead in committing to and purchasing only CSPO.
The WWF report, which was produced in collaboration with UK finance institution CDC, and Dutch development bank FMO, shows that such businesses benefited from achieving RSPO certification, noting that in many cases the costs of implementation were significantly outweighed by the business benefits.
Adam Harrison, WWF’s representative on the Executive Board of the RSPO said the study shows that achieving RSPO certification “makes good business sense as well as good environmental and social sense for growers.”
“WWF hopes that the findings will persuade all producers to join the RSPO and to start getting certified ... But the responsibility for making the industry sustainable also lies with those companies that buy and use palm oil,” he added.
Harrison urged industry to ‘immediately commit’ to increased purchases of certified sustainable palm oil, “and to ensure that 100% of their palm oil use is certified by 2015.”