Can multi-stakeholder initiatives help smallholders in palm oil industry?

CSR Asia launches new report as part of the CSR Asia/Oxfam Inclusive Business Series. As palm oil comes under increased scrutiny for its environmental and social impact, CSR Asia’s new report explores the lessons from palm oil.

In particular the substantial, but often overlooked role that smallholders play in the palm oil industry, and the opportunity and benefit to expanding their inclusion.

Over the last 15 years public debate has been growing around the impact of the palm oil industry. Environmental issues highlighted include extensive deforestation, habitat loss for threatened and endangered species, poor air quality from burning forests and peatlands, as well as greenhouse gas emissions. On the social side, the greatest concerns revolve around land rights of communities, as well as labour conditions in plantations.

“Despite these challenges, the Roundtable on Sustainable Palm Oil is one of the most successful multi-stakeholder initiatives, bringing together voices from a range of interested parties to work on the sustainable development of the industry” says Richard Welford, the chairman of CSR Asia.

This report looks at the role and opportunity provided by smallholders - through the work of the Roundtable on Sustainable Oil (RSPO). The critical role smallholders play in palm oil is often ignored. In fact, in the large palm-producing countries, smallholders make up over 40% of planted hectares. In emerging palm growing markets, such as Thailand, smallholders make up almost 80% of production area.

Key findings of the report include:

  • Robust land governance is a prerequisite for sustained success of smallholder and community programmes and avoidance of conflict.
  • Private sector companies are best placed to drive inclusive business opportunities for smallholders and enhance productivity, but may need support for funding and capacity building
  • The most important role of government is to provide clarity on legal land titles and enable civil resolution of conflict without interference.
  • Intergovernmental and Non-Governmental Organisations play critical roles as watchdogs, facilitators and advocates for communities and smallholders.
  • Multi-stakeholder initiatives have the potential to create sector-wide, systemic change, focussing on joint solutions, resulting in better informed, better supported and more sustainable policy and practice changes.
  • As pressures on companies to reduce carbon emissions and protect forests are mounting, specific consideration and participatory frameworks must be developed to ensure that land set-asides do not prevent communities from access to development and basic needs.
  • Reliance on retailers and brand support is unlikely to drive inclusive agriculture models, as there is scant willingness to pay a premium. Instead focus on traceable and low-risk supply chains can be leveraged as a strategic advantage.

“This new report demonstrates how an inclusive business approach to the palm oil industry can provide benefits for smallholders who are often under-represented in the complex value chains that we see in the agricultural industry” says Richard Welford.

The paper argues that multi-stakeholder initiatives (MSIs) are seen as potentially powerful institutions filling the governance gap that exists around complex sustainability issues. They have the potential to create sector-wide, systemic change, focussing on joint solutions, resulting in better informed, better supported and more sustainable policy and practice changes.

The full report is available at

The paper, written by CSR Asia is part of a partnership with Oxfam on inclusive business value chains.

CSR Asia is a leading provider of advisory, research and training services on sustainable business practices in Asia. For more information visit:

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Asia Plantation Capital
Diamond Energy
City Developments Ltd