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UK Passes Landmark Legality Standard for Due Diligence with Pathway for ISPO; Huge Win for Indonesia

The UK Government’s landmark legislation for Due Diligence for deforestation – the first of its kind by any major economy – has now passed its final Parliamentary hurdle.

The UK has decided that a legality standard is the best way to approach Due Diligence. The legality standard means that importers must have proof that local laws on environment, forests and sustainability were all met by the companies and farmers involved in the supply chain.

This is a huge win for Indonesia, and for developing countries like Indonesia, who are steadfastly committed to UN definition of sustainable economic development. This approach is also a huge win for the UN Sustainable Development Goals.

Importantly, the law does not introduce new discrimination or arbitrary criteria on commodity exports to the U.K. including palm oil from Indonesia

Engagement from the Indonesian Government and industry, including the palm oil community, were one of the earliest voices calling for the legality standard to be central to the UK approach.

Throughout the process, the UK Government received pressure from Green campaigners, many opposition MPs and others. This lobbying was designed to push the UK to adopt an arbitrary and draconian Due Diligence approach that would restrict commodity exports to the U.K., including palm oil from Indonesia.

UK Ministers rejected this approach.

Lord Goldsmith, the responsible Minister in the House of Lords, stated:

“Our legality-based approach allows us to lead the charge on tackling illegal deforestation, while working in partnership with producer country Governments and communities and respecting their laws.”

Pathway for ISPO Recognition

Similarly, the former UK Foreign Secretary Dominic Raab MP highlighted that the Due Diligence measure will also include a potential pathway to recognition for ISPO. This, again, is a first for Western markets: and it follows proactive and positive engagement from the Indonesian palm oil community to explain and promote ISPO certification.

A partnership approach – not an adversarial approach – is refreshing and positive. The UK legislation is sensible, proportionate and will only strengthen our bilateral relations.

This was underlined in President Jokowi’s recent speech in Glasgow at COP 26, where he stated:

“Certifications, methodologies, and standards should be based on multilaterally recognized parameters, not unilaterally imposed and capricious. Certification must be fair, so that it has an impact on welfare, especially small farmers. Certification must also take into account all aspects of the SDGs, so that forest management is in line with poverty alleviation and community empowerment.”

The UK may be the first, but other Western markets are also lining up Due Diligence proposals and restrictions. The EU will shortly publish a Due Diligence proposal that is expected to take a more restrictive approach than the UK. The EU’s track-record of discriminating against Indonesian palm oil, is clear, and so this legislation is a significant concern for 2022.

Eyes Turn to Brussels

London has now shown the way forward: all exporting countries can be pleased that the UK has chosen the legality standard. The next challenge, though, is the Due Diligence legislation that will emerge in Brussels in the coming months.

The best approach that Brussels could take, would be to follow the UK route of a legality standard, and cooperation – instead of conflict – with producing countries and developing countries more broadly. There is a well-established anti-palm oil network in Brussels, and an NGO lobby that has hundreds of millions of Euros in funding from the EU Commission. This will be a significant battleground for palm oil over the coming twelve months.

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