Indonesia’s government is set to extend the country’s sustainable palm oil certification (ISPO – Indonesia Sustainable Palm Oil) to cover downstream products.
The change is significant for the Indonesian export industry. Up until this point, the ISPO legislation and its implementing regulation had only been able to certify plantations and associated operations. However, the scope of the ISPO certification hasn’t included downstream.
This means that operations that are further downstream, including third party refineries and mills, will be certified to the ISPO standard.
The Coordinating Ministry of Economic Affairs has asked the office of the President to change the existing laws on ISPO to improve coverage of the system across a range of Indonesia products, with three objectives.
In addition to including downstream products, the Ministry has recommended an improvement and institutional restructuring of ISPO for greater credibility in the international market, as well as reformulation of financing for certification efforts, giving greater clarity to farmers.
Changes to the Presidential decree will be overseen by an interministerial committee that will review results of a public consultation process, which took place in Jakarta earlier this month. Any changes to the standard itself will be undertaken by a Ministerial decree.
There are several studies currently being undertaken that examine the compatibility of the ISPO standard with the EU Deforestation Regulation.
The results are surprisingly positive, despite ongoing negativity towards the ISPO standard from European stakeholders and NGOs.
Initial results from the studies indicate that the ISPO standard will meet many of the due diligence requirements for European importers when it comes to labour requirements and land requirements, among other things. These fall under the broader legality requirements of the standard.
The standard – through its audit processes – may also be able to fulfill geolocation information requirements for both smallholders and large companies.
Indonesia civil society groups have called on the standard to be revised more in line with the international consensus on sustainability, i.e. the Sustainable Development Goals (SDGs).
However, smallholders have also pointed out that there are significant hurdles to greater number of smallholders being certified, particularly resources for audits and obtaining correct documentation.
At a meeting in Jakarta earlier this week, a major palm oil exporter referred to the EUDR as an “effective ban” on smallholders from the EU because of the complexity of palm oil supply chains.
Despite an angry response to the regulation from developing countries, the EU is yet to clearly outline how it will support small farmers across the globe that face mounting trade barriers to Europe. This is a clear opportunity for Europe to mend its relationships across Southeast Asia and elsewhere in the world. The question is whether Brussels is more interested in equitable development or protecting its own farmers.