RSPO Annual Roundtable Conference on Sustainable Palm Oil (RT16)

'Rewarding brands who do good': Tapping on supply chains and consumer engagement to transform the palm oil sector

By Pearly Neo

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A complete overhaul at redesigning effective supply chains and consumer engagement approaches is the key to transforming the entire palm oil industry. ©Getty Images
A complete overhaul at redesigning effective supply chains and consumer engagement approaches is the key to transforming the entire palm oil industry. ©Getty Images

Related tags Palm oil sustainable Rspo

A complete overhaul at redesigning effective supply chains and consumer engagement approaches is the key to transforming the entire palm oil industry, said a sustainability expert to Roundtable for Sustainable Palm Oil (RSPO) members.

Presenting the keynote speech at the Annual Roundtable Conference on Sustainable Palm Oil (RT16), sustainability scientist Professor Kai Chan from the University of British Columbia’s Institute for Resources, Environment and Sustainability spoke on his research in sustainable sector transformation.

“[Transforming] supply chains is inherently central to […] sustainable pathways, and that it’s going to take a continued evolution and integration of several different approaches to achieve that,”​ said Prof Chan.

The danger of incentive programmes and the alternative

He added that most current systems are incentive-based and focus heavily on a Payment for Ecosystems Services (PES) concept, where in essence companies and manufacturers are being paid for ‘not polluting’ the environment.

These PES programmes place the burden and responsibility of payment on end-users, based on the idea that ‘you should pay for what you receive’ and that companies that stop degrading should be paid for it, instead of the burden being equally spread.

“What this basically means is the beneficiaries (or end-users, many of whom are the world’s poor) are the people paying, not the polluters,”​ added Prof Chan.

“[This is a case of] misplaced rights and responsibilities. [We see] lots of cases in which we benefit from nature and are not accustomed to paying, and lots of poor folks who couldn’t afford to pay.

“[Worse yet], the programmes have a normalising effect, and perverse incentives, encouraging folks to take actions that pollute rich folks’ land and water so as to get paid.”

“[Also inherent is the message that] if you are already stewarding Ecosystems Services, you forego the opportunity to benefit from such programmes.”

Prof Chan suggested a complete redesign of current palm oil supply chains in order to avoid these outcomes.

“Mainstream PES models generally exclude the supply chain, including consumers, retailers, distributors and so on. This reimagined PES model gets the supply chain involved at both company and individual level,” ​he explained.

“Also, mainstream models mostly avoid paying those who are already taking positive actions, but the reimagined model would reward them, [avoiding] sending signals that positive actions are worthless.

“It’s basically a way of rewarding brands who do good.

“Everyone is involved, everyone bears the costs, [and there is overall] shared responsibility].”

He added that such a model would also reduce the need for the traditional high monitoring costs, as this would be naturally replaced by peer monitoring.

The importance of consumer inclusion

Prof Chan added that many certification efforts tend to stay away from consumers in fear of ‘scaring them away’ – but this may not be the best idea.

“Engaging consumers is the only way to grow demand and pull change in the supply chain from the end. [There is] no other way to grow demand substantially,”​ he said.

“The problem for palm oil is that so far, most of the consumer engagement has been done via negative NGO campaigns. [That may have] helped to stir up some demand for RSPO, but it has also caused problems for RSPO.”

Another common mistake that he emphasised on was the assumption that consumers will ‘never pay more’ for sustainable efforts.

“People don’t think that consumers will pay more, but [research has shown that] they do—when several things are aligned [and] the choice is clear: unambiguous, simple, and clearly a good thing on many fronts,”​ he explained.

“[To make real change], you don’t need everyone to pay much more. Just enough, in the right kind of way to transform the sector so that the better way is the way.”

He added that evidence has also been found that ‘strong values of environmental concern’​ are very common across different populations, spurring the idea that an effective approach could very well be a global one.

“I’ve already been told [several times] that consumers won’t pay more for palm oil. I believe that most won’t, if they’re being asked to go out of their way to forgo their favourite brands for a less-favoured brand, which generally costs much more and is harder to get,”​ said Prof Chan.

“But that’s not what matters. What matters is whether they will happily pay a little more for their favourite brands if everyone else does too, reward brands for taking a principled stand, and/or take other kinds of action (e.g. demanding change) when mobilised.”

He suggested harvesting the power of consumers by building in costs at that level, quoting a ‘Beef Stewardship Fee’ in British Columbia which is looking at bundling in payments to protect waterways and soil together with beef prices at the retail level.

[You actually] don’t even need [that many consumers] to intentionally [buy sustainable] palm oil in order to have a good amount of funding to leverage change, as they also buy processed, palm oil-containing goods,”​ he added.

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