ESG, sustainability compliance in palm oil industry

Heightened efforts have been put in place to address environmental and social concerns through the Malaysian Sustainable Palm Oil (MSPO) and Roundtable Sustainable Palm Oil (RSPO) certification schemes.

KUALA LUMPUR: As the world’s appetite for palm oil is seen rising along with global population, edible oil (pic) will continue to be under watchful eyes especially in the area of environmental, social and governance (ESG) to ensure that the industry remains sustainable and attractive to investors.

In particular, compliance with the International Labour Organisation’s 11 indicators with respect to employment of migrant workers – their living conditions, access to healthcare during the pandemic, failure to reimburse all recruitment fees by the employer and other failings – will be under scrutiny.

Besides this, the industry and its stakeholders have been constantly pressured with issues on how the crop is negatively impacting the environment.

However, heightened efforts have been put in place to address environmental and social concerns through the Malaysian Sustainable Palm Oil (MSPO) and Roundtable Sustainable Palm Oil (RSPO) certification schemes.

Ahead of meeting the United Nation’s 2030 Agenda for Sustainable Development, big and small companies and smallholders are enhancing their sustainability compliances.

The government has also made significant commitments to climate change mitigation at the recent 2021 UN Climate Change Conference when it joined world leaders to commit to halt and reverse forest loss and land degradation by 2030.

It also announced incorporating initiatives leading to a low-carbon, climate-resilient economy based on clean, green and resilient development via its five-year 12th Malaysia Plan in September this year.

Senior lecturer and fellow at the Monash-Industry Palm Oil Education and Research Qua Kiat Seng believed that the industry is making an effort towards approaching net-zero carbon emissions.

“It is imperative to measure data for improvement. The soon-to-be-available MSPO greenhouse gas (GHG) calculator will serve us well in this respect.

“Consequently, we can see where we stand with 96% of plantations and 89% of mills certified to MSPO. Bear in mind, only 20% are certified to RSPO,” he told Bernama.

Qua noted that palm oil has fortunately started its sustainability journey early and has a 15-year headstart.

He added that sustainable palm oil has an average emission of 0.45 tonnes of carbon dioxide-equivalent-per tonne oil compared with 2.89 tonnes for soy, 2.47 tonnes for rapeseed and 1.18 tonnes for sunflower.

Among the big companies, Kuala Lumpur Kepong Bhd (KLK) published its Sustainability Rating Report on Oct 21, with RAM Sustainability reaffirming its sustainability rating at Gold (G2).

As a member of the RSPO, KLK has committed to no deforestation, no peat and no exploitation (NDPE) and used the RSPO GHG calculator to measure its GHG emissions.

Meanwhile, KPMG Malaysia’s inaugural Net Zero Readiness Index revealed that the country was ranked 21st among 32 countries.

The index compared the progress of selected countries in reducing greenhouse gas emissions that cause climate change while assessing the country’s preparedness and ability to achieve net zero by 2050. — Bernama

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