The Jakarta-based Institute for Development of Economics and Finance (INDEF) has published a new policy brief that looks at the Indonesia Sustainable Palm Oil (ISPO) certification standard and provides a series of recommendations for the Indonesian Government.
The INDEF analysis examines recent updates of ISPO by the Indonesian Government and provides recommendations to the Indonesian Government and palm oil community how ISPO could secure recognition from importing countries.
This policy brief comes as the United Kingdom and the European Union are considering regulations that would regulate the importation of commodities such as palm oil (known as ‘Due Diligence’ measures). In recent weeks, a number of questionable reports by non-Indonesian groups have been released that seek to tarnish ISPO.

These reports are doubly counter-productive given the important role of ISPO in achieving the UN Sustainable Development Goals (UN SDGs). The updated ISPO standard includes specific elements to reduce GHG emissions (UN SDG Goal 13), empower local communities (Goal 11), and provide economic support to small farmers (Goal 1). Through ISPO, the Indonesian government has a strong platform to achieve these goals in the palm oil sector.

The INDEF paper provides a welcome dose of factual and well-informed analysis to this debate.
Key Findings of the INDEF Policy Brief –

  • A comprehensive but straightforward analysis of ISPO against other palm oil certification systems demonstrates that the scope of ISPO in terms of its principles, criteria, and indicators is nearly identical to other existed systems. The ISPO also clearly has more significant levels of institutional support for smallholders. Importantly, the ISPO has specific provisions on labour that are unique and suit the Indonesian context.”
  • The EU can potentially recognise ISPO through a bilateral trade agreement currently under negotiation with Indonesia. It can also recognise ISPO under its various sustainability measures within the Green Deal. This includes proposed due diligence regulation on preventing “imported deforestation”.

Key Recommendations –

  1. Along with the regional government, palm oil communities, and other stakeholders related, the government of Indonesia should continue developing the ISPO system to bond its position as a global leader in sustainability standards.
  2. The government of Indonesia should engage with Indonesia’s trading partners and development assistance partners to examine synergies between ISPO and development assistance programs relating to poverty reduction, agricultural productivity, and the environment/ climate issues.
  3. Encourage Indonesia’s trading partners and donor partners to consider opportunities to incorporate ISPO and related sustainability initiatives as part of the current and prospective collaboration mechanism.
  4. Indonesia’s existing Free Trade Agreement (FTA) partners with specific sustainability requirements (for instance, European Free Trade Association) are suggested to undertake precise engagement with the government of Indonesia on pathways to recognizing ISPO.
  5. Prospective FTA partners should recognize the ISPO and other national sustainability standards, also clearly understood and engaged throughout the negotiation process.
  6. Specific sustainability regulations in consumer countries (for instance, the European Union Due Diligence regulations) should consider national certifications, particularly the ISPO.
  7. Any Due Diligence regulations – and other similar efforts – should not consciously exclude the legality standards and national certification schemes. This would be a hostile act targeted to producing countries, in turn, to establish a form of regulatory imperialism from the west, which attempts to force Indonesian companies to give (for instance) the European Union regulations supremacy over Indonesia’s laws.

Click here to download the INDEF policy brief.