Government support vital for ESG in palm oil industry

GOVERNMENT support in terms of strong policy and allocation of funds will help to further improve palm oil sustainability practices and requirements for the Malaysian Sustainable Palm Oil (MSPO) certification.

The promotion of Malaysian palm oil globally will also lead to higher acceptability and better market access.

Support from the government is needed to cover the costs of MPSO certification in terms of, among other things, audit maintenance cost, training, supply of personal protective equipment and chemical storage racks for smallholders.

It is important to ensure continuity and compliance with environmental, social and governance (ESG) criteria through the MPSO certification.

Success in ESG and sustainability requires financial support and assistance for implementation, training, education, knowledge sharing, capacity building and gap analysis for a better framework, said Malaysian Palm Oil Board (MPOB) director-general Datuk D. Ahmad Parveez Ghulam Kadir.

Funding and grants are also needed for fundamental and applied research.

Additional funds for the Countering Anti Palm Oil Campaigns (Capoc) are sought so that more ESG projects can be undertaken.

The government should also use the Capoc platform more effectively as the negotiating body for international acceptance of palm oil, acting as one solid voice for the industry regardless of the country of origin, said the Malaysian Palm Oil Council (MPOC).

Funds collected under the windfall tax from the palm oil industry should be used for more advocacy programmes on palm oil as this is becoming challenging and costly, added the MPOC.

Cess funding for operational activities, which is a fee levied by the government at RM16 per tonne, should be increased.

The government can help to improve Malaysia’s standing with important trading partners, such as the European Union and the United States, by profiling sustainable palm oil with its best-in-class ESG standards.

The government’s role and efforts to improve Malaysia’s standing in the area of human rights is also crucial.

With climate change being the major global concern, there should be more policies and regulations that set tangible and measurable results, said Sime Darby Plantation Bhd (SDP) chief sustainability officer Rashyid Redza Anwarudin.

This will further incentivise and strengthen the commitment from our local industries to align with the targets under the Paris Agreement to limit global temperature rises to 1.5 degrees Celcius.

Closer cooperation

The Roundtable on Sustainable Palm Oil (RSPO) would like to work more closely with national agencies such as MPOB and schemes such as the MSPO standard so as to align with what RSPO itself does.

National certification standards are mandatory while RSPO is voluntary.

Standards such as the MSPO set the baseline for sustainability in the particular country; RSPO brings in added value by providing certification all the way down to end buyers in other countries.

As RSPO is voluntary and driven by stakeholders, it can be more flexible, push boundaries and test new standards.

Malaysian companies and stakeholders are welcomed to take an active role at RSPO as it initiates the review of its standards for growers, said the RSPO secretariat.

There is a need for better collaboration and cooperation between ministries and state governments as well as a seamless sharing of data that has an impact on their sustainable growth.

More synergy is sought on land matters between state and federal governments.

It is important for the government to educate the nation on the concept of ESG and sustainable development goals to encourage business and industry entities to adhere to associated guidelines and proposed actions.

In this way, they can improve their environmental and social credentials as well as ensure market penetration and their attractiveness to investors, added Ahmad Parveez.

Experts in ESG from universities and agencies should be identified and encouraged to collaborate; agencies and expert groups from universities, research institutions and stakeholders should work together to promote sustainable and shared interests.

In terms of progress, the unravelling of the oil palm genome at SDP has led to the development of its most high-yielding oil palm seeds to date – the GenomeSelect – which will nearly double crop yields by 2050 on existing plantations, thus reducing the need to clear more land.

SDP had undertaken a sweeping review of its entire Malaysian operations following the findings by the US Customs and Border Protection of the presence of forced labour in its operations.

New measures include the reimbursement to all of SDP’s current and eligible former workers who may have previously paid agents or sub-agents to secure employment with SDP.

Debt bondage

Under SDP’s enhanced Responsible Recruitment Procedure, the controls put in place will eliminate the issue of debt bondage among migrant workers.

The improvement in existing internal channels at SDP has resulted in an increase in the number of grievances or concerns raised.

An ESG scorecard and a new social welfare and services department have been set up at SDP to oversee the implementation of policies and procedures related to the well-being and safety of workers.

Malaysia’s policies on ESG included capping the total oil palm cultivated to 6.5 million ha; no more new planting of oil palm in peatland areas; banning the conversion of forest reserved areas for oil palm cultivation or other agricultural activities and to make available oil palm plantation maps for public access.

As of 2019, Malaysia still has 55.6% of forested area; it had pledged at the Rio Earth Summit in 1992 to keep at least 50% of its forests intact.

Ongoing efforts relate to the leveraging of genomic tools and oil palm’s vast genetic resource, in developing new varieties that are able to adapt to the changing environment.

DNA-tested planting materials are already in production to ensure that quality seeds are planted to maximise land use and agricultural inputs.

MPOB is looking into revising seed production standards while ensuring the effective use of fertilisation as well as monitoring palm health and disease control through various technologies.

Ensuring sustainability

The amalgamation of all these technologies will eventually contribute to the overall sustainability of the industry as well as boost the livelihood of oil palm smallholders.

MPOB is also involved in developing guidelines, particularly related to land use on peat.

Meanwhile, the National Action Plan on Forced Labour (2021-2025) focuses on awareness, enforcement, labour migration as well as access to remedy and support services to eliminate forced labour in Malaysia over the next few years.

MPOB has commercialised 50 palm-based formulas in China; Chinese producers have been converted into using palm-based, among others, special oils for quick frozen food and frozen dough, fragrant sauce, sheet margarine for hand-peeled bread, lard replacer, hot pot seasoning, liquid shortening for mooncakes and hairy crab feed.

Serious efforts have been placed on laying a strong foundation for ESG and sustainability in the palm oil industry.

Further support from the government on all fronts will help to back up the industry’s fight to stamp a positive perception on Malaysia’s golden crop.

Yap Leng Kuen is a former StarBiz editor. The views expressed here are the writer’s own.

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ESG , Palm Oil , MSPO , Capoc , RSPO


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