The TBL Potential of the Palm Oil Industry: A Closer Look at RSPO

What is RSPO?

The potential applications for corporate social responsibility (CSR) in the palm oil industry are immense. The industry currently has numerous negative social and environmental impacts that it could work to nullify through CSR and the triple bottom line (TBL). The industry also has a massive global presence and seemingly infinite longevity which allows for the potential for firms to improve conditions rather than just mitigating its own detrimental side effects.

People:

Palm oil production firms have the capacity to greatly improve the lives of the inhabitants where the production takes place, primarily in rural Malaysia and Indonesia. This can be achieved by providing numerous employment opportunities, fair wages and benefits, an empowering work culture and safe working conditions. “Most oil palm jobs are in remote rural areas, where alternative employment is scarce, thus helping to promote rural development and alleviate poverty” (Russell, 2018). As examined in the Sept 29th Blog, “Working Conditions for Palm Oil Employees”, this type of employment is often not being offered. Working conditions can be extremely dangerous and employee abuse is not uncommon. It is with the focus of bettering the socio-economic well-being of the residents of these areas that a palm oil production firm could reframe its business structure by way of social venture philanthropy. With this approach social measures in addition to financial measures would be considered in determining the success of the firm.

What RSPO is doing:

While RSPO’s business structure is not centered solely around improving the socio-economic conditions of the residents and employees that surround production, it is built into their mission. RSPO’s “Theory of Change” outlines that improving and protecting rural livelihoods while respecting and protecting human rights is of utmost importance. The organization has created a “Human Rights Working Group” to oversee the implementation and monitor the status of working conditions such as minimum wage, equality and OH&S (RSPO, 2020).

Planet:

Unfortunately, it is extremely unlikely for the environment to be better off in any way as a result of palm oil production. The necessary production methods are by nature damaging to the environment that surrounds it. That being said, significant measures can be made to reduce the harmful impacts of palm oil production and fix past damage made to the environment. The main detriment caused by production is deforestation. Clearing rainforests to make room for palm plantations threatens biodiversity and endangered species. This process also contributes to a significant increase in CO2 emissions through peatland drainage and forest fires as well as a significant decrease in CO2 absorption through a comparatively smaller amount of above-ground biomass (Russell, 2018). As a result, palm oil producers could be taking corporate responsibility by prioritizing a more sustainable initiative. This could be achieved through partnerships, donations and volunteerism with nature and wildlife conservation organizations or governments and policy-makers to help create more sustainable legislature surrounding production.

What RSPO is doing:

RSPO’s, “Theory of Change” makes commitments to protecting and repairing ecosystems along with the monitorization and reduction of green house gas emissions. Achieving RSPO certification requires strict adherence to environmental guidelines through each stage of the production process. This adherence is continuously enforced and open to audit and inspection by specially trained professionals (RSPO,2020). RSPO notes its commitment to sustainable practices and its partnership with conservation organizations however no such commitment is made to volunteerism or donations.

Photo by David Riau00f1o Cortu00e9s on Pexels.com

Profit:

In order to better understand the “profit” portion of the TBL, Jeroen Kraaijenbrink’s article, What The 3Ps Of The Triple Bottom Line Really Mean is worth consideration. In short, Kraaijenbrink argues that “prosperity” should replace “profit” in the context of the TBL as it more accurately represents the concepts purpose. He explains that, “it is through economic impacts such as the creation of employment, innovation and paying taxes that prosperity is realized” (Kraaijenbrink, 2019). It is through this approach that the “profit” portion of the TBL should be applied to the palm oil industry.

As noted in the analysis of the “people” segment of the TBL, palm oil plantations are a significant source of employment for the inhabitants of the surrounding area. In fact, the palm oil industry is a significant source of employment at each step of its production and indirectly helps to create employment through the products that require palm oil. Assuming that the employment that is created is fair and beneficial to its employees, it is capable of fulfilling this consideration of “prosperity”.

Again, like creating employment, the aspect of paying taxes as a means of improving the prosperity component of the TBL is easily attainable within the palm oil industry. Assuming that firms conquer the temptation to hide funds in order to avoid taxation and pay the appropriate taxes in full, this component has been achieved. In fact, firms have the potential to take this a step further and manage their reputation by making the appropriate financial statements proving payment of taxes available to the public, effectively increasing their transparency.

Innovation is really where there is room for improvement as it pertains to the palm oil industry’s TBL. Investing resources into the research of more sustainable methods of production or better yet, finding a sustainable alternative to palm oil are innovative ways that would greatly improve the industries’ prosperity. While these ideas may seem as though they threaten profits and the industry as a whole, they in fact have the potential to financially benefit the industry. Selling patents or charging licensing fees to technology that offers sustainable production solutions for instance, becomes increasingly lucrative as the demand for environmentally conscious products rises. It is in the analysis of innovation as a segment of “prosperity” that a key difference between “profit” and “prosperity” comes to light. As Kraaijenbrink highlights, the key difference is that “prosperity” treats financial profit as a means of achieving the three P’s and not as a goal in and of itself (Kraaijenbrink, 2019).

What RSPO is doing:

Within their “Theory of Change” model RSPO does in fact substitute “profit” for “prosperity” when outlining their TBL. This indicates that RSPO prioritizes other measures of prosperity in addition to profit growth. Besides profit growth, RSPO’s conditions of prosperity also includes economic innovation and beneficial livelihoods (RSPO, 2020). While RSPO does not list palm oil alternatives as a current pursuit, and understandably so, it does note sustainable research and innovation as a priority.

After looking at the corporate social responsibility potential of the palm oil industry through the TBL it becomes evident that the room to improve is immense. With social and environmental sustainability built into its conception and proven results to backup their commitment, the RSPO is a step in the right direction. While, environmentally speaking, it would be better if this industry did not exist, the act of making the industry more sustainable and repairing previous damage done is something to be commended. Socially, RSPO, is improving the lives of multiple populations by providing employment while also benefitting the global economy. To further pursue their corporate social responsibility RSPO should prioritize the search for an environmentally-friendly alternative to palm oil.

For further information on RSPO check out their webpage here.

For a counter-argument to sustainable palm oil check out this article here.

Citations:

Kraaijenbrink, J. (2019, Dec 10). What The 3Ps Of The Triple Bottom Line Really Mean. Forbes. https://www.forbes.com/sites/jeroenkraaijenbrink/2019/12/10/what-the-3ps-of-the-triple-bottom-line-really-mean/#709ee56c5143

RSPO. (2020). RSPO Certification. https://rspo.org/certification

RSPO. (2020). Theory of Change. https://rspo.org/certification

RSPO ROUNDTABLE. (2017, Dec 25). Theory of Change – RSPO’s Roadmap Towards Sustainable Palm Oil. YouTube. https://youtu.be/nPMLpEHhHTU

Russell, M. (2018, February 19). Palm Oil: Economic And Environmental Impacts. Member’s Research Service. https://epthinktank.eu/2018/02/19/palm-oil-economic-and-environmental-impacts/

WWF International. (2017, Oct 15). How can palm oil be more sustainable? The Roundtable on Sustainable Palm Oil and WWF’s role in it. YouTube. https://youtu.be/0Lev1mnonUM

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