Industry association Roundtable for Sustainable Palm Oil (RSPO) certifies palm oil grown in a socially and environmentally responsible manner, but unethical and incompetent auditors are undermining trust in this global label, a new report shows.
The Environmental Investigation Agency (EIA), a UK and Washington DC-based non-profit, on Monday released a report titled Who Watches the Watchmen, which outlines how some auditors tasked with ensuring that growers meet RSPO’s certification requirements failed to spot violations or even helped companies cover them up.
The report presented nine instances of malpractice by auditors, suggesting that RSPO-certified products on supermarket shelves could be “tainted with human trafficking, rights abuses and the destruction of biodiversity,” said Tomasz Johnson, an EIA forest campaigner.
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The report, produced in partnership with Malaysian non-profit Grassroots, was published just a day before the RSPO’s 13th annual roundtable conference began in Kuala Lumpur (KL), Malaysia.
At a press briefing at the event on Wednesday, Darrel Webber, secretary-general of the RSPO, responded to the report: “We are grateful that people can find these flaws, and it is only because we are uniquely transparent.”
Emphasising that audit reports, minutes of RSPO meetings, and complaint details are publicly available online, Webber said it has been challenging for RSPO to grow its network of competent and trustworthy auditors fast enough to keep pace with rising global demand.
To address this, the organisation is working with the University Putra Malaysia and another institution in Bogor, Indonesia, to develop training courses for auditors, he added.
Headquartered in KL, RSPO issues a stamp of approval to palm oil grown in accordance with its rules on environmental, social, and economic best practices. It was formed in 2004 as a response to the deforestation, violation of indigenous rights, and labour abuses rife in the industry.
While RSPO has been criticised for not doing enough to protect secondary forests, peatlands, local land rights, and labour laws among other things, industry members say that it is still “uniquely positioned” to support a wider shift to sustainable practices.
The organisation relies on auditors to check that growers meet their certification criteria, and since 2012, these certification bodies are regulated by Accreditation Services International (ASI), a German firm.
Johnson said in a statement that “the RSPO stands or falls on the credibility of its auditing process, but in far too many instances, auditors are greenwashing unsustainable practices and even environmental crimes.”
Many of these take place in the ‘New Planting Procedure’ (NPP) phase of company operations. This is when companies notify RSPO of their plans to convert undeveloped forest to plantations and submit audit reports confirming that the land has passed assessments for social and environmental impacts, and high conservation value.
One case study showed how in East Kalimantan, Indonesia, PT Borneo Surya Mining Jaya (PT BSMJ), a subsidiary of Singapore-listed RSPO member First Resources, had failed to obtain free, prior, and informed consent from residents of a village, Muara Tae, before starting to clear their land for new plantings.
Auditors from the Bogor Agricultural Institute left this detail out of the pre-planting report, and instead claimed that all local people’s land had been acquired with their full agreement.
Certification body TUV NORD Indonesia verified these assessments as compliant with RSPO rules without carrying out site visits and incorrectly said that state law negated the village’s customary land rights, the report said.
It was only when EIA lodged a complaint to RSPO through its complaints mechanism that PT BMSJ was ordered to stop clearing land.
But despite the ongoing complaint, the report noted that First Resources’ head of sustainability was allowed to become a member of RSPO’s Complaints Panel, a group of 11 representatives from companies, green groups, and financial institutions who discuss and decide how to deal with reports against RSPO members.
The RSPO stands or falls on the credibility of its auditing process, but in far too many instances, auditors are greenwashing unsustainable practices and even environmental crimes.
Tomasz Johnson, forest campaigner, Environmental Investigation Agency
The NPP phase is “the earliest and highest risk stage of plantation development,” Johnson told Eco-Business. “If growers get away with these things at this stage, they likely won’t be picked up three or more years later when they go for full certification.”
Another case study showed how an investigation by ASI in July found that PT Mutagung Lestari and Control Union Malaysia - the auditors which had assessed FELDA mills for RSPO certification - had not spotted FELDA’s failure to comply with rules on worker’s rights, social impact assessment, and the use of pesticides, among other things.
Malaysia’s Federal Land Development Agency (FELDA) is one of the world’s largest palm oil companies.
Given the “glaring systemic loopholes” and bad behaviour identified by EIA, “we can’t actually assume that any RSPO certified palm oil is free of these kinds of problems,” Johnson said.
Checking the checkers
EIA said that in light of the findings, palm oil buyers, traders, and financiers should do their own thorough research independent of the RSPO to ensure that practices in the plantations are sustainable and ethical.
The agency also urged RSPO members to vote for a resolution that will require RSPO to develop guidelines on the minimum acceptable quality of assessments and monitor the quality and performance of auditors. This resolution will be tabled at the general assembly on Thursday.
RSPO should also suspend or terminate substandard certification bodies, and ASI must publish annual assessments of auditor organisations, EIA suggested.
Stefano Savi, global outreach and engagements director, RSPO, told Eco-Business that the Roundtable had already taken action on four of the nine cases highlighted in the report before it was published.
TUV NORD Indonesia, for example, is no longer an accepted certification body, and RSPO is also investigating the complaints against FELDA, he said. The organisation will also review the rest of the cases in the report, he added.
RSPO is working with ASI to perform a thorough assessment of all auditors, due to be complete by the end of 2016, said Savi.
He noted that the report fails to take into account existing efforts by the complaints panel to avoid conflicts of interest.
If anyone on the complaints panel has a vested interest in the subject of an inquiry - whether they are staff of the company or its subsidiaries, consultants to the firm, or financial institutions with a direct stake in the accused - they are removed from the discussion.
“Of course, we take this matter seriously and every breach is important,” said Savi. “But it’s reassuring to see the number of successful certifications in relation to the number of complaints that have been filed.
RSPO has received 55 complaints to date, of which 13 cases remain open today.
It has also certified 57 growers and 299 palm oil mills so far. About 20 per cent of the world’s total palm oil supply is RSPO certified - that’s about 12.1 million tonnes of the commodity, found in everything from packaged foods to cosmetics.
Nevertheless, report authors urged RSPO to address these “structural, systemic flaws”.
Every major corporate scandal of the past two decades has featured “dodgy auditors,” said EIA’s Johnson.
“The lesson from those scandals, including the global financial crisis, is that auditors themselves need to be rigorously policed.”
“It is incumbent on the RSPO to heed the lesson of history, as well as the evidence in our report, and crack down on this,” he added.