The Palm Scribe

Studies show real benefits of RSPO certification for Companies

Dr. Sarah Lake addressing the panel on RT17 in Bangkok

BANGKOK- Two separate recent studies are showing that membership in the Roundtable on Sustainable Palm Oil (RSPO) and its sustainability certification carries actual benefits, including better environmental and financial performances

A three-year crowd-funded study on “Comparative life cycle assessment: RSPO-Certified vs Non-Certified,” initiated by 2.0 LCA Consultant revealed during the RT17, showed that the benefits for certified companies included lower Green Houses Gases emissions, better water management in peatland, higher productivity and extraction rates, better biogas capture and lower biodiversity impacts.

Another study, conducted by Climate Advisers top see whether there was a business case for palm oil sustainability, showed certified companies significantly outperformed non-certified ones, with better and rising premiums, and equity.

Jannick Schmidt, Chief Executive Officer of 2.0 LCA Consultant, said that the finding showed better productivity, including where oil palm is cultivated in peatland, and also better water management.

“We saw that Greenhouse Gas Emission was 36 percent lower for certified palm oil, quite a high difference. Secondly, looking at biodiversity impact, we saw there was a 20 percent lower impact for certified palm oil,” he said.

Sarah Lake, Managing Director of Supply Chains, Climate Advisers, told the RT17 that her organization looked into whether RSPO companies were performing better financially than their non-RSPO counterparts. She said the study looked at 90 companies, specifically at 18 RSPO large producer companies, over the 2012-2019 period.

“Our findings were remarkable and very encouraging. We found that the RSPO companies we looked at, outperformed the non-RSPO companies over 24 percent. Twenty-five percent better in terms of their equity returns in the seven-year period,” Lake said.

She said that the study showed a really distinct premium for these companies based on their RSPO membership, and the premium outperformed the average company by five percent and non-RSPO companies by around double that. There was also uptake in the premium, rising by 300 percent in seven years, and it continued to grow so that the RSPO companies receive higher equity returns.

The study also showed that RSPO certification brought greater attention to the behavior of members and therefore could lead to significant financial consequences when they face a problem in RSPO standard compliance. Discharge from RSPO also carried huge financial losses in dropping profits, revenues and share prices, as well as market value as a consequence of the greater public attention.

Lake said that RSPO companies are receiving more than 25 percent in premium increase compared to their peers who are non-members and added that “for these companies to continue to invest in sustainability we’d like this premium to be even larger.”

Schmidt said that the conclusion that could be made from the results of his organization’s study was that “Now, the impact of certification can be measured,”, adding that now RSPO can set measurable targets for reduction in Green House Gas emissions and biodiversity impacts.

He also said that companies can now include the benefits of committing to certified oil in their environmental accounts.

A separate study, focusing on whether palm oil certification led to improved wellbeing for the local population produced by the Durrell Institute of Conservation and Ecology of the University of Kent, showed that it would very much depend on the initial baseline conditions.

Matthew Struebig from the institute said that the study showed that oil palm certification led to better wellbeing in Sumatra and Kalimantan, but less so in the latter region.

“Mainly this is because, in Kalimantan, these are coastal peatland, and also areas where subsistence-based livelihoods dominated before plantations were established,” Struebig said.

He said that the study also looked into Papua, the last frontier for palm oil cultivation, but said that although it was still too early to come to a conclusion there, palm oil plantations were likely to follow the positive outcome in Sumatra in the short term.

“In conclusion, there is indeed a business case not only in theory but also in practice. The RSPO membership simply helps companies financially perform,” Lake said.

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