The rapid expansion of agriculture and forestry threatens our environment, the livelihoods of indigenous people and the future of endangered animals and ecosystems. Through its Market Transformation Initiative, WWF is working with major companies to increase the demand for responsibly produced global commodities.
Shampoo, ice cream, margarine, and lipstick – those are just a few examples of products that contain palm oil. Palm oil is one of the most cost-effective vegetable oil crops and one hectare of palm trees produces five to ten times more oil than other edible oil crops. That is one of the main reasons why the consumption of palm oil is skyrocketing. Experts predict that the global demand will double between 2000 and 2020.
But the expansion of palm oil plantations in Indonesia and Malaysia is one of the leading causes of deforestation in Southeast Asia, and now production in Africa is on the increase. As tropical forests are converted into plantations the biodiversity is radically reduced and the habitats of several endangered animal species are destroyed. Local people who are dependent on these areas for their livelihoods are at risk of displacement, suffering the consequences of water pollution, declining fish stocks and dried out wells.
According to WWF, the problem with palm oil is where and how it is produced.
“We should not forget that palm oil is also important for economic development and has lifted many people out of poverty. But if we don’t do anything, the expansion will continue to cause deforestation and greenhouse gas emissions. There are also large groups of indigenous people that live in these forests that may be forced into slums," says Lena Tham, manager for Market Transformation at WWF Sweden.
Palm oil is only one example of a commodity whose production is linked to many environmental and social problems. Other examples include cotton, timber, tuna and soy.
“The rapid expansion of agriculture and forestry is one of the major threats to those areas in the world that need protection due to the value they have for us both today and in the future," says Lena Tham.
In order to reduce this negative impact, WWF is working with different stakeholders to develop standards for a more sustainable production, while also influencing the biggest producers and buyers of each commodity to certify their production and to buy certified products. WWF also keeps a dialogue with the finance sector to ensure more sustainable investments in commodities.
This Sida-supported programme is called the Market Transformation Initiative (MTI), since the idea is that when large numbers of buyers start demanding better methods of production in their supply chains, the whole global market for that commodity will shift to a more sustainable production. Lena Tham notes that this strategy is much more efficient than trying to persuade consumers to change their habits or engaging directly with the primary producers.
“There are seven billion consumers and millions of producers. But there are a fairly limited number of companies that control most of the trade in these products. If we work with them to bring about change there can be great impact,” says Lena Tham.
Among these companies are for example retailers, investors, brands and manufacturers. One of them is the Swedish food retailer ICA that uses palm oil as a key ingredient in the production of many of its products.
“Palm oil is essential when producing trans-free fats. It has a high quality and good functional properties. Palm oil also provides income and employment in the countries where it is produced. We take our responsibility by supporting development of responsible production methods,” says Maria Smith, Environment and Social Responsibility Manager at ICA.
Through its owner Ahold, ICA is a member of the Roundtable on Sustainable Palm Oil (RSPO), an association where stakeholders from the entire palm oil value chain, including environmental and social NGOs, have developed a standard for more sustainable palm oil production. ICA has made the commitment that by 2015 all palm oil used in ICA’s private label should be certified by RSPO. Until then ICA buys certificates that support plantations that are certified.
The RSPO criteria prohibit new plantings that replace primary forests or plantings on indigenous and rural people’s land without their consent. The certification was introduced in 2008 and today (2012) 14 percent of the global production is certified. The goal is for 50 percent to be certified by 2020.
Some organisations call for a complete boycott of products containing palm oil while others promote organic palm oil, which in some aspects meets higher standards than RSPO-certified products. But WWF doesn’t agree to a bycott .
“By engaging with the actors instead of boycotting, we can have a dialogue and a real influence and bring about change. And we also believe that it is better to influence 14 percent – or potentially half of the global production – than to expand organic farming that only represents a few tenths of a percent of the market,” says Lena Tham.
According to WWF, the improved farming methods included in the palm oil certification have led to a healthier workforce and less social conflicts, reduced the use of chemicals and made it possible for smallholder farmers, which make up 40 percent of the Indonesian production, to increase their productivity. Challenges include monitoring the production and influencing land use planning in the producer countries.
Also included in the Market Transformation Initiative are cotton, soy, tuna, timber, whitefish, beef, dairy, sugarcane, pulp and paper, bio energy crops, farmed salmon, farmed shrimp, wild-caught forage fish and wild-caught shrimp. They are all globally traded and have a rapidly expanding production.
Facts about Market Transformation Initiative (MTI)
Sida support: 31.2 million SEK for the period January 2011 to June 2013. The partnership includes core support for MTI as well as a specific focus on more sustainable production of palm oil, cotton, timber, pulp and paper, and tuna, as well as engaging with the finance sector to increase the sustainability of their investments.
Objectives: 1. 25 per cent of global purchase of WWF’s 15 priority commodities meets acceptable standards. 2. 75 per cent of global purchase of WWF’s 15 priority commodities sourced from priority places of high ecosystems value meet acceptable standards.
Results: Case studies show that improved farming methods included in e.g. the palm oil certification have led to a healthier workforce and less social conflicts, reduced the use of chemicals and made it possible for smallholder farmers to increase their productivity.