Building Sustainability Benefiting All

Observing the achievement of RSPO where the sales of Certified Sustainable Palm Oil (CSPO) in 2025 only reach 16.2 million metric tons or about 20 percent of the total global palm oil supply, while the production capacity of RSPO members shows a potential that is almost double. This raises a question mark.

The discussion of palm oil sustainability certification has so far been more of an obligation for producers. Producers, whether they are smallholders, plantation companies, palm oil mills, or palm oil suppliers, are required to meet the requirements of legality, traceability, environmental protection, workers' rights, and deforestation prevention. However, one fundamental question is often overlooked: who pays for all these sustainability costs, and who enjoys the economic benefits?

Sustainability will not work solely with moral pressure. It must also be supported by economic feasibility.

Smallholders and plantation companies that follow sustainability certification must bear the costs of mapping, training, documentation, changes in cultivation practices, institutional formation, certification, and annual monitoring/audit. Factories and traders also incur costs for product segregation, traceability, administration, and supply chain control. And all of that is not cheap. Meanwhile, the greatest benefits may be enjoyed by downstream companies through access to global markets, environmental reputation, fulfillment of ESG (Environmental, Social, and Governance) targets, brand protection, and even green financing.

This imbalance risks making sustainability certification a win-lose system. Downstream actors gain reputation and market access benefits, etc., while compliance costs are concentrated on upstream actors. In the long term, this model is difficult to sustain. Smallholders will be reluctant to follow certification, plantation companies will only meet minimum requirements, and the expansion of certification will continue to rely on government subsidies, donors, or corporate projects.

Therefore, the responsibility of direct buyers and downstream companies should not stop at purchasing certified products. They also need to ensure that a portion of the economic value obtained from market access, sustainability claims, reputation, and other commercial benefits is measurably transmitted to upstream actors who bear the costs of certification and compliance.

The principle is simple: every actor along the supply chain must obtain a positive net benefit. Premiums, productivity improvements, purchase certainty, financing access, and market benefits must be greater than the certification and compliance costs incurred by each actor.

Premiums do not always have to be in the form of additional price per ton. Premiums can be realized through long-term purchase contracts, low-cost financing, technical assistance, certification cost coverage, institutional support, or revenue sharing from certification credits. The important thing is that these benefits can be measured, verified, and truly reach smallholders and upstream suppliers.

This obligation must apply not only in European and United States markets. Multinational companies with factories in India, China, Indonesia, or other regions should implement globally consistent procurement standards. Sustainability commitments should not be strong in markets where consumers are sensitive to environmental issues but weak in markets that are more price-sensitive.

However, premium obligations must also be carefully designed. Premiums set administratively without considering productivity, quality, supply chain models, and market conditions can create new distortions. What is needed is not a uniform additional price, but a transparent mechanism for sharing costs and benefits to build true sustainability.

On the other hand, upstream actors currently face overlapping standards: RSPO, ISPO, MSPO, deforestation-free requirements, and various traceability policies. Many of the substances are similar, but the audits, documents, data systems, and proofs are different. As a result, one sustainability goal results in repeated compliance costs.

Therefore, integration between national and global certifications must be a main agenda. The principle of "one audit for many recognitions" needs to be developed through the alignment of indicators, data interoperability, and recognition of equivalence based on substance. In Indonesia, ISPO and RSPO do not have to be identical, but procedural differences should not eliminate recognition of achievements that are substantially equivalent.

The world also needs policy consistency. Upstream cannot be continuously asked to adapt to rapidly changing new standards with unsustainable standards, while plantation investments last for decades. Environmental sustainability must be accompanied by regulatory sustainability.

The same principle should also be applied to all vegetable oils. Palm oil should not be treated more harshly just because its certification system is more transparent. Soybean, rapeseed, sunflower, and other vegetable oils should be assessed with equivalent measures: land use, emissions, biodiversity, workers' rights, traceability, and social and environmental costs.

Certification will only thrive if it creates a win-win situation. Buyers obtain credible supply, consumers receive sustainability assurance, and producers receive fair compensation. Without fair benefit sharing, certification will become merely a market entry ticket. With transparent value sharing, certification can become a transformative instrument to achieve true sustainability.

True sustainability is not only about sustainable commodities but also about a certification system that is economically, socially, environmentally, and institutionally sustainable.