Certified Sustainable Palm Oil

What and How Stakeholder Perceptions Offer the Debate

for Sustainability Practices

Halima Begum and A. S. A. Ferdous Alam

Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Sustainability Challenges, Issues of Oil Palm Industry, and Importance of Certifications . . . 5
3 Stakeholders’ Ongoing Debates Towards Palm Oil Sustainability Practices
and Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Environmental Nongovernment Organizations (ENGOs) and NGOs Debates . . . . . . . 9
3.2 Debates Against Growers/Smallholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Debates Against Palm Oil Producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Debates Against Top Management Certification Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Ongoing Debates by Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4 The Investors’ Main Perception About Certifications and Their Practices to Overcome
These Debates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Abstract
Due to rapid regional, national, and local legislation, regulatory hurdles, and
management processes, the Roundtable on Sustainable Palm Oil (RSPO) policies
for palm oil certification did not measure the actual picture of environmental
conservation, economic emancipation, and social growth. Nevertheless, the
industry is undeniably still in a debate with stakeholders. Crude palm oil makes
a huge difference in a country’s economy, culture, environment, ecosystem work,
and employee outcomes. In addition, stakeholder policies and management
practices are often associated with sustainable development and go green from
upstream to downstream industries, implying that the environment, communities,

H. Begum (*)
School of Economics, Finance & Banking, Universiti Utara Malaysia, Sintok, Malaysia
e-mail: [email protected]
A. S. A. F. Alam
School of International Studies, Universiti Utara Malaysia, Sintok, Malaysia
e-mail: [email protected]

© Springer Nature Switzerland AG 2022 1

W. Leal Filho et al. (eds.), Handbook of Sustainability Science in the Future,
https://doi.org/10.1007/978-3-030-68074-9_37-1
2 H. Begum and A. S. A. F. Alam

economy, and sustainable production are more susceptible to bad management

practices. By reviewing the certification policies of the sustainable development
goals (SDG’s) benchmarks, this chapter offers a critical overview of stakeholders’
views and debates for sustainability activities in the Malaysian oil palm industry,
including smallholders, millers, top management, ENGOs, consumers, etc. Ana-
lyzing existing sustainable certification strategies, stakeholder concerns, and
debates on practice metrics used to assess sustainable palm oil production and
identifying what and how needs to be changed to produce a predictable outcome
of potential sustainability problems is a vital need. According to the findings, a
new flexible strategy with lower fees at the regional, global, and local levels, in
combination with social safeguards and growth, economic expansion, environ-
mental conservation, and sustainable production, is needed to achieve more
certified sustainable palm oil by 2030 to meet the UN Sustainable Development
Agenda.

Keywords
Oil palm development · Palm oil sustainability in Malaysia · Certified palm oil
sustainability principles · Palm oil management practices · Stakeholders’
perceptions and debates

1 Introduction

Palm oil is a widely traded agricultural product made from the pulp of oil palm fruits,
which were originally native to Africa but are now grown in Latin America, West
Africa, and Southeast Asia (USDA 2017; Choong and Mckay 2014). Furthermore,
over the last decade, global demand for crude palm oil (CPO) has increased by
128%, reaching 58 million metric tonnes per year (Oil World Annual 2020; Begum
et al. 2019a; FAO 2018; Alam et al. 2015, 2016). Indonesia and Malaysia exported
about 42.9 million tonnes of oil together in 2020, and its use is increasingly
expanding across the world, with China and India being the primary consuming
countries, alongside the EU (USDA 2016; MPOB 2012). Malaysia, on the other
hand, is the world’s second-largest producer of crude palm oil (CPO) after Indonesia
(USDA 2012) and one of the country’s most significant economic contributors (EPU
2017). Despite this, vast plantations dominate the market, with nearly 62% of
manufacturing mills owned by government-linked firms and private investors
(MPOB 2017a). According to the Malaysian Palm Oil Board (MPOB), the country
has 447 fresh fruit bunch (FFB) mills, 44 palm kernel (PK) crushers, 52 refineries,
and 19 oleochemical plants (MPOB 2016). The industry has transformed into
Malaysia’s main socioeconomic engine, eradicating poverty, and providing direct
jobs to over 610,000 people, including over 1,77,000 smallholders (ETP 2012;
MPOB 2012). Nonetheless, consolidated and independent smallholders controlled
roughly a quarter of the upstream market, accounting for 24% and 14% of total
territory, respectively (MPOB 2014), with the remainder accounted for by the palm
Certified Sustainable Palm Oil 3

oil refining and downstream sectors. However, the 11th Malaysian Plan (2016–2020)
and the Malaysian palm oil industry (POI) have made it a priority to maintain
production growth in line with the Sustainable Development Goals (SDGs) of
2030 to meet increased global demand for oils and fats (EPU 2017).
As a result, sustainability and the palm oil industry have always been inextricably
linked. Palm oil sustainability necessitates a new generation of environmental,
social, and economic growth policies, which will inevitably take time to establish
(Begum et al. 2018, 2019a, b). As a result, the Malaysian palm oil board (MPOB)
became an active member of the Roundtable on Sustainable Palm Oil (RSPO) in
2004 and Malaysian Sustainable Palm Oil (MSPO) in 2014, pursuing sustainability
for the 3P (people, planet, and profit) that combines with the triple bottom line (TBL)
by adhering to the principle and certifications (P&C) for equitable sharing of
environmental costs, social development, and economic development benefits
(RSPO 2005; Hansmann et al. 2012). According to Begum et al. (2019c), palm oil
sustainability cannot be determined without considering the impact of the three Ps.
Furthermore, high-profile registered accredited sustainability criteria under Swiss
law were introduced at the general assembly, fostering sustainability in more than
40 countries, and involving stakeholders in the global palm oil industry. The RSPO
has approved 39 criteria and 8 global principles in 2007 to promote the compliant
sustainable palm oil industry, which could be socially beneficial management and
operations, environmentally appropriate, and economically viable (Krishna et al.
2017; Bessou et al. 2017; Djama et al. 2011). Thus, to be certified as sustainable
palm oil, those eight principles associated with transparency and compliance with
laws and regulations, good manufacturing practices, the rights of employees and
communities, environmental conservation and the protection of high conservation
value areas, and social protection must be followed by palm oil companies (RSPO
2007). Along with the launch of the MPOB sustainability standard, the Malaysian
Sustainable Palm Oil (MSPO) and Indonesian Sustainable Palm Oil (ISPO) also held
general assemblies in accordance with the RSPO Principles and Criteria (P&C)
(MSPO 2014; ISPO 2013). However, environmental nongovernmental organiza-
tions (ENGOs), social NGOs, plantation companies, and palm oil product manufac-
turers were the members and participants of RSPO (RSPO 2012).
The Malaysian Palm Oil Association (MPOA 2009) stated in the report that the
Malaysian government allocated a budget of US $15.4 million (MYR50 million) in
2009 for RSPO palm oil certification through the Ministry of Plantation Industries
and Commodities (MPIC) to support environmental and social activities in both the
public and private sectors as the economy grew. Meanwhile, in September 2010,
RSPO applied for two certifications under the voluntary P&C system to the
European Commission (EU), such as one application for recognition of RSPO
voluntary systems and another one scheme for renewable energy directive (RSPO-
RED) (which company is producing the biofuel) under EU Renewable Energy
Directive (EU-RED) requirements (RSPO 2010). Hence, there were 53 Malaysian
palm oil mills that became certified by RSPO in March 2011 and produced RSPO
certified palm oil of slightly more than two million metric tonnes. The EU commis-
sion and the World Bank (WB) approved RSPO’s P&C as a voluntary standard for
4 H. Begum and A. S. A. F. Alam

producing sustainable biofuel (Colchester et al. 2011) and providing assurance to

consumers (Melling and Henson 2011).
Alongside, the RSPO added a mainstreaming of certified palm oil into global
markets during the general assembly of the RSPO in March 2012, as transnational
companies and organizations can be part of the general membership of the RSPO
(Pye 2019; RSPO 2013). However, Malaysian certified sustainable palm oil (CSPO)
products with a green trademark are widely accepted rather than Indonesian CSPO
products as multi-stakeholder groups. The RSPO, based in Kuala Lumpur,
announced that 14 Malaysian plantation companies with 105 palm oil mills are
RSPO members from around the world, i.e., CSPO certified, with nearly 1.1 million
tonnes of certified sustainable palm kernel (CSPK) produced and roughly 4.3 million
tonnes of CSPO in 2013 (FAO 2015; RSPO 2014). Nonetheless, Malaysia’s palm oil
industry is one of the best CSPO certified (Okereke and Stacewicz 2018; Oosterveer
et al. 2014), though the EU keeps campaigning against anti-palm oil products
(Begum et al. 2019a).
In addition, for protecting the environment, employees, and social protections and
maintaining competitive advantages in the international market, the Malaysian
government under MPOC and MPOB imposed some voluntary schemes to be
certified by the Standard and Industrial Research Institute of Malaysia (SIRIM
2005, 2013), Environmental Management Systems (EMS, ISO14001) certification
scheme, Environment and Quality Act, 1974 (EQA 1974), Department of Environ-
ment (DOE 1987, 1991, 1998, 2002, 2003a, b, c) Act, Department of Safety and
Health (DOSH) 2011 and 2013 Act, policies, International Standard for Carbon
Certification (ISCC 2011), etc. MPOB has decided to launch their certification such
as MSPO in 2014 with their P&C due to the RSPO’s rigid policies and bureaucratic
complexities (MSPO 2014) to liaise with RSPO P&C. Nonetheless, RSPO certifi-
cation policies are widely used by global palm oil growers rather than MSPO and
ISPO certifiers’ standards (Abdul Majid et al. 2021). Laurance et al. (2010) observed
that the certification bodies are engaged in continuous debates by palm-oil stake-
holders, and to mitigate the debates, it is significantly recommended to structure the
stringent policies and certification charges by giving more weight and priority to
multi-stakeholders for voluntary decision-making.
Thus, the Malaysian palm oil industry (MPOI) is currently making a visible effort
to meet existing and new challenges in sustainability, and this drive needs to be
guided to ensure that outcomes match the expectations of buyers, consumers, and
stakeholders alike. Nevertheless, there is admittedly a risk that these producers act in
isolation and address sustainability issues through their own set of ad hoc prescrip-
tive “actions.” Consumers and other stakeholders in society may object to these
actions (MPOB 2010). MPOB developed the Codes of Practices (CoP) for the entire
sustainable palm oil supply chain to maintain sustainable production and consumers’
food safety (Balasundram 2012). The significance of ensuring that the world’s most
widely consumed edible oil is produced sustainably is marked as a high agenda for
all palm oil growers, producers, and exporters in the country for environmental,
economic, and social protection. However, those multi-stakeholder varieties of
debate could be amalgamated into natural resource management decision-making
Certified Sustainable Palm Oil 5

processes, voluntary standard policies, and sustainable palm oil production (Bennett
2017; Auld and Cashore 2012). A broad number of stakeholders play an increasingly
important political role as global rule-makers and are used by industry to reassure
consumers and investors of high environmental and social expectations, as well as to
achieve shared objectives (Schouten and Glasbergen 2011; Schouten et al. 2012).
Hence, the insight of the chapter tries to discuss that sustainability is practicing
properly through ongoing debates and perceptions of palm oil stakeholders for
increasing flexible national and local certification policies that combine social,
economic, and environmental aspects by the transformative effect of RSPO’s and
MSPO’s P&C. Therefore, the study also tries to find out the sustainability challenges
and issues of the industry through the adopted policies for the necessity of
certification.

2 Sustainability Challenges, Issues of Oil Palm Industry,

and Importance of Certifications

The three dimensions have been called the “three pillars of sustainability,” because
they are important aspects of oil palm sustainability. The foundations reflect the fact
that sustainable development must consider the planet, people, and profit (the 3Ps).
Lim et al. (2017) and Begum et al. (2016) asserted that the foundations’ effect in both
positive and negative ways they interact, with the association of positive synergies
serving as a key task in stakeholders’ long-term decision-making. McCarthy and Zen
(2010) support this by stating that economic needs often take precedence over
environmental concerns. This was also shown in the findings, which stated that the
credential agency was profit driven. However, the palm oil industry faces significant
sustainability challenges in adhering to the industry’s guidelines, which are included
in estate systems, although factories often seem to disregard them in favor of
expanding demand. Therefore, the research also tries to find out the sustainability
challenges and issues of the palm oil industry and the emergence of certifications and
analysis of the top management, growers/smallholders, millers/producers, and con-
sumers’ adopted policies and actions with their debates to come up with recent
policies.
Despite rapid development, this industry has faced a number of challenges
regarding the issue of sustainable production, which is associated with the economic,
financial, environmental, and social dimensions of the business (Pacheco et al. 2020;
Begum et al. 2018, 2019b; Moreno-Peñaranda et al. 2015). In 2004, Malaysia has
been an active member of the Roundtable on Sustainable Palm Oil (RSPO) to meet
the global demands that have been exposed by the international market (Jelsma et al.
2017; Hospes 2014). Despite being a step forward in enhancing the sustainability
efficiency of a sector that has come under criticism for past activities, the RSPO’s
overall credibility has been called into question (Begum et al. 2019b, c; Von Geibler
2013; Schouten et al. 2012). As a result, MPOB has launched their own Malaysian
Sustainable Palm Oil (MSPO) certification system since 2014, with their own
principles and certifications (P&C) and few charging costs to be certified by 2020
6 H. Begum and A. S. A. F. Alam

in order to overcome the barriers and difficulties and improve their market reputa-
tion. However, the imposed regulation of MSPO is almost similar to the RSPO P&C
for the palm oil industry in Malaysia, which contributes to environmental conserva-
tion, social protection, and economic emancipation.
Despite all necessary actions and impediments, the Malaysian palm oil industry
(MPOI) is first associated with environmental degradation, deforestation to produce
oil palm, because of habitat destruction, loss of biodiversity, and use of chemical
fertilizers and pesticides (Begum et al. 2015a, b; 2019a). Other causes of contami-
nation of air, water, and soil include the agricultural processing of palm oil in mills
and the shipping of goods (Begum et al. 2015b, 2019b; Tan et al. 2009) and, more
recently, due to food and income shortages, broken promises (Rietberg 2011), and
greenhouse gas (GHG) emissions, especially nitrous oxide (from fertilizer use) and
methane (mainly from palm oil mill effluent, POME), sustainable palm oil develop-
ment has caused social-political unrest at the community level (Meijide et al. 2020;
Harsono et al. 2014). Thus, palm oil sustainability faced challenges globally and
created conflicts among stakeholders due to all kinds of such problems. Admittedly,
the certification is mandatory to reduce conflict in the industry (Hinkes and
Christoph-Schulz 2020) as RSPO is reviewing and regularly updating their certifi-
cation systems by assessing the market, international buyers, consumers, etc., and
significantly conserving the environment, protecting social and employee outcomes,
and generating income (RSPO 2016, 2018a, b, 2019, 2020).
Another significant challenge is that the CPO no longer generates enormous
profits for investors (Chandran 2014) due to its slow production. The Malaysian
Palm Oil Association (MPOA) reported that palm oil production dropped about 12%
between September 1 and September 20, 2014, suggesting that output may have
slowed after surging 22% to 2.03 million tonnes in August (Raghu and Thukral
2014). Hence, the issue has led to the unsustainability of the sector and has
demotivated mainly the medium-scale growers and producers. Besides, the previous
study also added that conventional palm oil mills are considerable polluters which do
not follow the principles of environmental sustainability of the department of
environment (DOE), and, substantially, the Malaysian palm oil processing sector is
identified as one of the industries that produce the largest pollution load in the river
(Vairappan and Yen 2008). Furthermore, it pollutes the environment and operates
without green labelling or RSPO certification (Ostfeld et al. 2019; EC 2013; Mol
2007). As a result, European consumers boycotted palm oil due to the absence of
eco-labelling by RSPO certifications (Gassler et al. 2019; EC 2019), while Hinkes
and Christoph-Schulz (2020) revealed that consumers only prefer to buy RSPO-
certified palm oil with green certifications. Hence, all of the issues have negative
global impacts that hinder sustainable palm oil production and sustainable reporting.
On the contrary, though expanded palm plantations to produce fresh fruit bunch
(FFB) are to blame for the eviction of indigenous peoples from their ancestral lands
(Alam et al. 2015), the palm oil industry has significant contributions to rural
employment through several means (RSPO 2019). Moreover, there are low labor
costs; poverty, drought, and climate change are not science fiction threats to mankind
to measure sustainability (Begum et al. 2015, 2016; EC 2013). Moreover, the
Certified Sustainable Palm Oil 7

productivity issue of a laborer in the palm oil mill is one kind of current problem for
social sustainability as well as an impediment to environmental conservation and
economic sustainability (Abdullah et al. 2017). Though inadequate, the current labor
pool for POI was largely made up of foreign workers, which provided a labor market
vacuum that paved the way for the future recruiting of foreign laborers. There is a
recent issue created that shortages of labor exist continuously in the palm oil industry
due to low labor costs and stringent acts (Sime Darby Plantation Sustainability
Report 2019; Alam et al. 2015).
Thus, the Malaysian government initiated the “Economic Transformation Pro-
gram (ETP)“on September 21, 2010, a comprehensive initiative to help Malaysia
achieve its target of becoming a high-income country by 2020. The ETP listed many
manufacturing and commercial sectors as National Key Economic Areas (NKEA),
from which Malaysia will attain stability and economic development (ETP 2010).
However, one of those NKEAs is sustainable palm oil production. The ETP outlines
eight entry point initiatives (EPP) to develop industry practices and raise incomes
from palm oil cultivation and mills, in acknowledgment of the palm oil industry’s
important contribution to the Malaysian economy. These ventures will result in a
237% growth in the palm oil industry’s contribution to Malaysia’s GNI to RM
178 billion (USD 56.5 billion) by 2020. There is also a lot of room to boost average
yields of fresh fruit bunches (FFBs), with a goal of a 25% rise in average national
yields by 2020. The Malaysian Palm Oil Association (MPOA) reported that palm oil
production fell about 12% between September 1 and September 20, 2014, implying
that output may have plateaued after surging 22% to 2.03 million tonnes in August
(Anuradha 2014). Thus, MSPO has mandatorily imposed the laws on the palm oil
industry to be certified for increasing the global supply of Malaysian CSPO and
CSPK and to earn international recognition (MSPO 2014).
Nonetheless, it is asserted that the export is decreasing due to low production and
low prices of fresh fruit bunches (FFBs) but high prices of pests (MPOB 2012), as it
will be very difficult to maintain profitability for economic sustainability. Besides,
management is mostly responsible for air and water pollution, greenhouse gas
emissions, and environmental degradation because of inadequate awareness, knowl-
edge of environmental management systems (EMS), and unsustainable practices
(Begum et al. 2019a; Brandi et al. 2015). As a result, there has been a significant
issue created in recent eras in which the MPOI is partially unable to meet the CPO
market demand due to fewer productions from upstream to midstream sectors (Balu
et al. 2018; Reuters 2014). Malaysia is also following the UN 2030 Agenda, which
aims to promote sustainable development through the implementation of a universal
agenda with objectives and goals to be developed by the signatory countries (Leal
Filho et al. 2017), including Malaysia (Loveridge et al. 2020), and flourishing the
Malaysian palm oil industry, by safeguarding the environments, employees, and
communities. There are multiple challenges and issues ongoing in the sector, but all
of the issues may be overcome whenever all of the Malaysian palm oil industry is
either certified by the RSPO or the country’s own MSPO’s certification policy.
Set against this background, the critical literature of this study is to collect and
synthesize the perspectives of Malaysian palm oil investors regarding the palm oil
8 H. Begum and A. S. A. F. Alam

certification mapping process. Their perceptions of the motivations, impacts, and

obstacles are highly varied, and they have considered their roles and duties within
the certification procedures. It is obvious that the establishment of an oil palm
industry that integrates several variables to analyze the impact of certification
acceptance on stakeholder well-being and environmental quality is a necessary
attribute for economic growth. One of the most significant issues, as recognized in
recent research, is the shortage of accurate data. Numerous studies on certification
rules involving palm oil authorities’ standards and P&C have stated previously this
concern. Beyond the RSPO’s standards and guidelines for the palm oil business,
there are ongoing controversies because they disregard the origins and causes of the
industry’s financial constraints and weaknesses in maintaining certification policies.
As a result, there has been a constant controversy among oil palm producers since
the founding of P&C. To address these issues, the governments of Indonesia and
Malaysia took the initiative in 2008 and 2014, separately, by establishing their own
national palm oil sustainability standards, ISPO and MSPO.
Thus, this chapter attempts to explore the adopted certified sustainability prac-
tices, basic understanding, code of practices and analysis, benefits and challenges of
Malaysian palm oil on sustainability issues, and successful certified sustainable palm
oil policies and management practices in Malaysia. However, the mainstreaming and
pinpointing of what and how stakeholder perceptions offer the debate for certified
palm oil sustainability practices remains.

3 Stakeholders’ Ongoing Debates Towards Palm Oil

Sustainability Practices and Certifications

The RSPO’s sustainability standard and values apply to seven categories of partic-
ipants: oil palm farmers, palm oil processors and retailers, consumer product man-
ufacturers, merchants, banks and investors, environmental and biodiversity
conservation organizations, and social and development organizations (Veloo
2012; RSPO 2013). RSPO mentioned that the top management, NGOs, small-
holders/growers, processors/millers, suppliers, and consumers among those mem-
bers are known as stakeholders (RSPO 2005). However, Moreno-Peñaranda et al.
(2015) identified that the performance of the palm oil industry is measured by a rapid
appraisal of stakeholders’ perceptions and viewing of local communities to identify
the barriers and improving the policies of sustainability certifications. Our findings
indicate that RSPO stakeholders’ views on improving palm oil sustainability are
widely divergent. However, some RSPO stakeholders and local communities
seemed to express a common dream, indicating that acknowledging RSPO stake-
holders’ perspectives would enrich the current debate regarding sustainable palm oil
production and usage, which is usually driven by rigorous yet highly compartmen-
talized research. Understanding the perspectives of different stakeholder groups on
impacts would provide invaluable information about intervention effectiveness in
diverse sustainability problems through environmental/socioeconomic domains and
scales (Shackley and Deanwood 2002). Diverse environmental and socioeconomic
Certified Sustainable Palm Oil 9

factors converge across geographic and temporal scales in the agricultural sector,
taking stakeholder views into account when addressing sustainability concerns is
especially important (Pretty 1994). Thus, the palm oil stakeholders’ debates and
perceptions are scrutinized for future challenges and opportunities stated below.

3.1 Environmental Nongovernment Organizations (ENGOs)

and NGOs Debates

Some NGOs, ENGOs, and the European Union (EU) are lobbying to boycott palm
oil products as they have claimed that unsustainable palm oil production is an
ongoing process in Malaysia, Indonesia, and other South-East Asian countries’
palm oil producers, respectively. The EU suggested not buying palm oil or products
made from palm oil without a green trademark. It is also claimed that the Malaysian
palm oil industry is one of the greatest contributors to environmental degradation
(EU 2017). There is research evident that Malaysian palm oil is abiding by the
regulations of DOE (1991), EQA Act (1974), policies of EMS for environmental
conservation, and more significantly, the palm oil processing sector is continuously
inspected by the DOE and MPOB authorities (Begum et al. 2019a). Moreover,
Nature Alert (2010) mentioned that palm oil production has significant negative
environmental and social consequences. However, these debates are not only creat-
ing embargos and negative effects on the palm oil price and demand, but also
imposing green labeling. Hence, Germany and the EU declared that they would
accept all sustainable supplies. Alongside, NGOs and investors are gradually
demanding businesses and policymakers to offset the harmful consequences of
palm oil production, mentioned by Otto Hospes (2014) and Nature Alert (2010).
However, these discussions resulted in the introduction of sustainable policies and
strategies to direct palm oil producers toward long-term production and growth (Tan
et al. 2009). Palm oil growers and processors, on the other hand, are gradually
responding to the demands that major market players from Western markets are
exerting on them (Brandi et al. 2015). As a result, all parties engaged in palm oil
processing, from farmers to consumer product producers, should collaborate closely
to ensure sustainable production (Tan et al. 2009). However, several stakeholders’
perceptions and debates on adopted sustainability practices could help WWF and
Unilever to create ideas for initiating new policies and standards at the beginning of
2002 when it was necessary to increase sustainable production.

3.2 Debates Against Growers/Smallholders

There is an ongoing debate as smallholders’ involvement in environmental manage-

ment and diminishing ecosystem functioning by biodiversity loss and deforestation,
which lead to soil degradation, has gained attention associated with environmental
degradation (Begum et al. 2016; McCarthy and Zen 2010; Tan et al. 2009). How-
ever, sustainable palm oil production is an issue that creates social-political unrest at
10 H. Begum and A. S. A. F. Alam

the community level due to land conflicts (Oosterveer 2014), food and income
insecurity, and broken promises (Rietberg 2011). Besides, mill management keeps
complaining that smallholders are mostly responsible for biodiversity loss, air and
water pollution, environmental degradation, and greenhouse gas emissions because
of inadequate knowledge and education about environmental management systems
(EMS) and good agricultural practices (GAP) (Begum et al. 2019a; Brandi et al.
2015; Sara Nilson 2013). However, recently the quality of the fresh fruit bunches has
also degraded because of the smallholder’s lack of knowledge of the use of pesti-
cides, GAP, etc. To argue with, smallholders’ comprehensive training could solve the
recent issue of sustainable production.

3.3 Debates Against Palm Oil Producers

There is a debate, because palm oil mill management is primarily responsible for air
and water pollution, greenhouse gas emissions, and environmental degradation due
to a lack of understanding of the environmental management system (EMS) and
proper implementation of adopted practices (Begum et al. 2016, 2018; Lim et al.
2017; Oosterveer et al. 2014). As a result, there has been a significant issue in recent
years in which the MPOI has been unable to meet the demand of the CPO market due
to fewer production (Balu et al. 2018), while palm oil management practices are
influenced by customer recognition and regulatory pressure (El Tayeb et al. 2010).
Hence, the processing mill has failed to earn recognition due to unsustainable
management practices and managerial inefficiency (Abdullah et al. 2017). However,
the author mentioned that hiring an employee and generating ideas from the local
communities can also help to increase the system’s environmental impact. However,
debates exist among medium and small oil palm producers due to lack of techno-
logical advancement, training, inefficient manpower, production inefficiencies, and
most importantly, lack of finance (Izhar et al., 2020). Sustainable manufacturing
production techniques, technological development strategies, and operational poli-
cies could be the foundation for sustainable manufacturing production (Kamble et al.
2020).

3.4 Debates Against Top Management Certification Policies

The governments of Indonesia and Malaysia have taken the lead in implementing
their own national palm oil sustainability standards, such as ISPO in 2008 and
MSPO in 2014. Simultaneously, governments in Europe (such as the United King-
dom and the Netherlands) met with representatives from the palm oil industry to
negotiate on a sustained rapid increase in the processing and use of palm oil that has
been approved by the RSPO (Hospes 2014). Sustainability criteria and certification,
on the other hand, are seen as potentially promising tools for mitigating the negative
environmental impact of palm oil production, but, undeniably, the certification fee is
very high and expensive for the growers and producers (Brandi et al. 2015).
Certified Sustainable Palm Oil 11

Nonetheless, stakeholders such as management have questioned the relevance and

credibility of the RSPO standards with their stringent policies and have devised their
own higher standards (Chandran 2014). Alongside, despite several types of benefits
from certification, Moreno-Peñaranda et al. (2015) found that stakeholders’ percep-
tions about the RSPO certification fee were expensive to those of industry/certified
producers. However, Malaysian POI management should spur numerous initiatives
for the charges of standards and certification schemes to bring all POI under one
umbrella.
On the other hand, the palm oil industry aims to strike a holistic alignment
between a country’s social, cultural, and economic needs. It seems that the priorities
of good manufacturing and management practices and the recognition of certifica-
tions for environmental and social security are currently a challenge to all nations
with economic escalations. However, issues and debates among stakeholders existed
among medium and small oil palm producers due to a lack of technological
advancement, training, inefficient manpower, production inefficiencies, and, most
importantly, a lack of finance (Izhar et al. 2020), as production techniques, techno-
logical development strategies, and operational policies could be the foundations of
sustainable manufacturing (Izhar et al. 2020). Therefore, Begum et al. (2019a, b),
Lim et al. (2017), Abazue et al. (2015), and Nazim Baluch (2012) suggested that the
study of the palm oil industry in Malaysia with the existing adopted international,
national, state, and local policies for increasing sustainable production by the
approach of triple bottom line (TBL), operations management, institutional and
stakeholders’ perceptions may identify the recent debates and issues of growers,
processors, industry traders, green NGOs, top management, etc.

3.5 Ongoing Debates by Consumers

The palm oil consumer is also another preferred stakeholder for identifying the
debates against the use of crude palm oil and palm oil mix products in the interna-
tional market. Hence, several studies have come up with approaches and methods to
prove that German and European buyers are the greatest importers of crude palm oil
due to the cheapness of edible vegetable oil (IDH 2020). But recent studies have
found that most consumers prefer palm oil free-products (Lange and Coremans
2020; Vergura et al. 2019). In addition, Hinkes and Christoph-Schulz (2020) dis-
covered through focus group discussions that four out of five German consumers
prefer to buy palm oil-free products, and there are only 20% of RSPO-certified CPO
and CPK in the global market despite established sustainability standards (Vergura
et al. 2019). Lange and Coremans (2020) also identified that there is a rumor and lack
of knowledge among consumers against using palm oil, though CPO has multi-
benefits and is available at a cheap price. The recent ongoing trend is that consumers
are highly conscious about RSPO-certified and RSPO mix-certified palm oil due to
the debate against the health effects of palm oil (Aguiar et al. 2018; Gassler and
Spiller 2018; Hartmann et al. 2018). The consumer’s general perceptions have
grown not to use palm oil with such concerns (Aguiar et al. 2018) due to the absence
12 H. Begum and A. S. A. F. Alam

of healthy nutrients (Borrello et al. 2019). Nonetheless, Hartmann et al. (2018)

conclude that palm oil products are not unhealthy as claimed but are creating a
demand gap as not even half of the CSPO is taken to market. Meanwhile, it also
indicates that consumers debate about manufacturers and retailers using uncertified
palm oil in their products but labeled and advertised as certified palm oil in general
(Larsen et al. 2018; RSPO 2016).

4 The Investors’ Main Perception About Certifications

and Their Practices to Overcome These Debates

Throughout this exercise, the drivers, impacts, and challenges that Malaysia’s palm
oil investors about the palm oil certification perceive are quite diverse, and they have
reflected on their roles and responsibilities within the certification processes. As
Dompreh et al. (2021) highlighted in its institutional analysis, ENGOs experience
barriers across all main impact categories, presumably as a result of their function as
a “regulatory agency“in the sector, which appears to provide them a better under-
standing of the various implications of certification proliferation. However,
according to the investors, the certification polices are quite stringent, challenging,
as well as bureaucratic regulations obstruct perceptions that market forces drive
standard adoption and financial constraints obstruct their full deployment (Abdul
Majid et al. 2021). Nonetheless, large investors, in particular, are adhering to and
monitoring management with reliable and timely data, hiring dedicated skilled staff
to steer the in-house-certification process, and training existing staff to implement
certification standards, resulting in effective certification policy design, and strength-
ening the implementation of sustainable production development (Dompreh et al.
2021). The investors are increasingly using green-labeled products, strategies of
corporate social responsibility (CSR), and company-driven sustainability initiatives
to improve the environmental and socioeconomic performance of sustainable pro-
duction, processing, and trade as a response to the negative sustainability impacts of
palm oil products’ value chains. Malaysia’s oil palm industry has not yet reached a
tipping point in terms of environmental performance. Hence, national standards
bodies, such as MSPO, have developed appropriate ways for compulsory certifica-
tion of the entire industry.

5 Conclusion

The adopted sustainable policies among the oil palm industry are noticeable and
progressing via scheme standards though there is a continuous stakeholders’ debate
in the global markets. The proper selection of relevant sustainability policies within
the scope of a careful methodological approach and stakeholders’ participation both
are essential for the success of a more CSPO in Malaysia and other palm
oil-producing countries. Alongside, it is equally important for governments to
legislate sustainable practices with flexible standards, continuous institutional
Certified Sustainable Palm Oil 13

inspections, support funds, and training for all medium and large-scale industries
promptly. Multi-stakeholder decisions, opinions, and requirements should consider
implementing the standard by RSPO, ISCC, CSPO, ISPO, or MSPO. Participants,
and indeed the standard setters themselves in those organizations, must be prepared
to progress by addressing new issues of continuous improvement. The pressures are
enormous. As a result, producing countries must ensure that business operations are
carried out in line with the 2030 Sustainable Development Goals (SDGs) and
sustainability metrics (UN 2015a, b). As a result, when implementing legislation,
consider all available means to incorporate new manufacturing processes, increase
land use, reform national and local policies, and consider social and environmental
welfare. Further research can identify the best sustainable practices indicators to
measure the policies and standards for the national and local level by comparing their
adopted sustainability practices between sustainable and unsustainable in the certi-
fied palm oil industry in Malaysia.
The handbook of sustainability science seeks to bridge the gap between certifi-
cation policies and stakeholder concerns by understanding the basic relationships
between nature, industry, and community for sustainable development. Together
with academics and civil society, the industry must ensure a really communal project
to boost market-related factors that drive standard adoption that are currently
misunderstood and underdeveloped. Reinvention next might be the key sustainable
issue in order to build a transition network for a better industry and a decent future.

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