This document discusses action on zero deforestation pledges in the palm oil industry in Indonesia. It notes that while major palm oil groups have committed to halting deforestation, there are differences between public policies and private sustainability goals. Specifically, the national government opposes zero deforestation commitments due to issues of sovereignty and equity. However, some sub-national governments are embracing innovations to address land use planning, legal clarification, smallholder inclusion, and enforcement of sustainability practices. A key challenge is achieving zero deforestation while also promoting smallholder inclusion and sustained industry growth.

1. Action on zero deforestation pledges
The challenge of aligning public and private sustainability goals
Pablo Pacheco
Global Landscapes Forum
Paris, 2015

2. HIGHLIGHTS
 Oil palm is one of the most polemic commodity crops
 Governing oil palm constitutes a multifaceted puzzle
 Public policy and state’s responses are contradictory
 The private sector is playing a more prominent role
 Pledges to ‘zero deforestation’ entail opportunities and risks
 Still a major issue is ‘what’ and ‘whose’ rules to follow

3. BACKGROUND
 A rapid expansion of oil palm in Indonesia in
the last years, with contradictory impacts
 Palm oil sector contributes to generate fiscal
earnings and stimulates economic growth
 It has important spillover effects on local
development and people’s livelihoods
 Yet, plantations development also creates
social conflict, and benefit sharing is an issue
 Oil palm expansion has become one of the
major drivers of deforestation in Indonesia
 Leads to forest and peatland conversion -
biodiversity loss and GHG emissions

4. 10.5
Million
hectares
cultivated
Labor
3.0
Million people
27.8
Million tons
CPO
Smallholders
42%
of total
cultivated
area
~600
Palm oil mills
25
corporate
groups
control most
of the supply
Indonesia
3.5
Tons
CPO/ha/yr
53%
global CPO
supply
OIL PALM IN INDONESIA
Farmers
2.1
Million
households

5. THE POLICY CONTEXT
 Progress on standards for sustainable palm oil (RSPO), but limited adoption
 A system of mandatory public standards (ISPO) is also been implemented
 Major palm oil groups have made bold commitments to halt deforestation
 Commitments are driven by civil society advocacy and consumer pressure
 Frontrunners consider that adopting pledges work on their own interest
 Some national public and private actors position against the commitments
 The political arena is divided in terms of ‘what’ and ‘whose’ rules to follow

6. THE PLEDGES AS THEY STAND
Based on http://supply-change.org/commodity/palm#company-profiles
 About 188 companies made commitments to support
sustainable palm oil supply – 61 on ‘zero deforestation’
 Pledges are individual and collective
 Prominent pledges on ‘zero deforestation’, including main
CGC, producers, processors and traders of palm oil are:
 Consumer Goods Forum (2010) on ZND
 Sustainable Palm Oil Manifesto, SPOM (July 2014)
 Indonesian Palm oil Pledge, IPOP (Sep. 2014)
 The New York declaration on forests (Sep. 2014)
 Pledges on ‘zero deforestation’ embraced by most of the
processors and traders at the downstream stage of the
value chain, but have not yet reached to their suppliers

7. PROGRESS ON IMPLEMENTATION
 Capacity to incorporate social and environmental
criteria into operations is improving in some large
firms, which helps to inform the practices of others
 Traceability is being clarified, but most efforts only
comprise flows from refineries back to the mills
 Main challenge is the ability to trace third-party
sources of supply (from mills to growers)
 Company disclosure is improving, but some
companies are more transparent than others
 BUT independent evidence is lacking, and when it
does exist, is questionable – transparency is an issue
 AND questions still surround definitions of forests,
mainly with regards to HCV/HCS methods
 AND notions of sustainable oil palm tend to differ
between private actors and the government

8. THE PUBLIC SECTOR AGENDA
 Conflicting ambitions for the palm oil sector across public agencies –
some support expansion and others try to prevent negative impacts
 Confusing state policies relating to land use (expansion targets, food
security, moratorium, GHG reduction targets, peatland regulations)
 Opposition from national government to ‘zero deforestation’
movement – justified around issues on sovereignty and equity
 YET some governments at the sub national level are embracing
policy innovations. They see the potential and the need for:
– Land use planning and land tenure clarification
– Legal clarification (e.g. HCV in oil palm concessions)
– Smallholder inclusion and improved production practices (burning)
– Provincial regulations for enforcing sustainability practices
 AND a presidential instruction recently issued banning clearance
and exploitation of peatlands and new planting in burned areas

9. A THREE PART CHALLENGE
 Goals to be achieved simultaneously: Zero deforestation,
smallholder inclusion and sustained growth
 There are some unique opportunities
– Incentives to intensification / improve plantation management
with more efficient use of inputs
– Upgrading of smallholders’ production practices/systems
– More productive use of ‘degraded’ or ‘low-carbon’ lands
– Meeting national GHG reduction commitments
 But there are also some likely risks
– Exclusion of smallholders from deforestation-free supply
chains due to legality issues and capacity constraints
– Pressures on community and smallholder lands considered as
‘low-carbon’ lands may lead to people displacement
– Value chains fragmentation may lead to leakage effects
– Retarded economic development of underdeveloped regions

10. KEY QUESTIONS
• What are the differences between the sustainability goals of private
sector under ‘zero deforestation’ commitments and public policies?
• What are the potential consequences of differing private and public
definitions of sustainable oil palm in Indonesia?
• Is there scope for reconciliation in definitions, policies and practices?
And is there scope for public-private governance arrangements?
• Is it possible to address the likely social and environmental risks
associated with the ‘zero deforestation’ commitments?
• What business models can be more effective to upgrade the production
systems of smallholders and promote greater social inclusion?
• What safeguards need to be put in place to protect smallholders and
SMEs in the palm oil sector associated to ‘zero deforestation’?
• Will it be possible to transfer in equitable ways the rewards or share
the costs across stakeholders in the deforestation-free supply chains?