New Constellations of Social Power: States and Transnational Private Governance of Palm Oil Sustainability in Southeast Asia

ABSTRACT

This article considers whether private sustainability standards can lead to lasting change in corporate and state agricultural practices implicated in the environmental damage and social conflicts caused by oil palm cultivation in Indonesia and Malaysia by examining in detail the social processes through which non-state actors engage in governance. Sceptics of private regulation point to the powerful state–business patronage networks in these countries as structural impediments to reforming this sector. Drawing on the literature on global production networks, I show how producers deeply embedded within such supportive local political economies nevertheless choose to comply with stringent global private standards to reduce risks to their global operations. It was the renewed emphasis on supply chain “traceability” to demonstrate responsible corporate behaviour to investors, buyers and consumers that served to embed globally-oriented palm oil plantation firms and their upstream suppliers into emerging ethical supply chains. Embedding occurs through three social processes – surveillance, normalising judgement and knowledge transfer. The private regulatory developments analysed in this article, though relatively recent, are supported by a diverse transnational coalition of principled and instrumental interests and have created significant openings for a new, or at least, parallel, and more progressive, private regulatory order in Malaysia and Indonesia.

KEY WORDS:

• Roundtable on Sustainable Palm Oil
• palm oil
• No-Deforestation
• transnational governance
• social embeddedness

Acknowledgement

An early version of this article was first presented at a workshop on “Transnational Private Regulation and Multi-level Governance in Southeast Asia: Investigating the Possibilities and Limitations for Progressive Governance” convened at Monash University Malaysia in December 2014. Funding from the Monash-Warwick Strategic Alliance is gratefully acknowledged.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1. Useful literature surveys of private governance are found in Abbott and Snidal (2009) and Avant, Finnemore, and Sell (2010).

2. Constellations of practice involve more spatially dispersed groups of actors compared to communities of practice.

3. The ISCC scheme, which applies to various agro-commodities, focuses on greenhouse gas emissions and is compliant with the EU’s Renewable Energy Directive. While RSPO and ISCC cover environmental and social standards, RSPO is regarded by palm oil industry players and influential external audiences as the primary certification regime for palm oil.

4. Detailed listing of RSPO members is available from the RSPO website. Accessed June 15. 2017. http://www.rspo.org/members.

5. For membership details see the ISEAL website. Accessed November 15, 2015. http://www.isealalliance.org/our-members/full-members.

6. IPOP was signed in September 2014 by four of these corporations. Musim Mas signed up in March 2015.

7. Sime Darby’s Open Palm online dashboard is at: http://www.simedarbyplantation.com/Open_Palm.aspx. See also http://www.simedarbyplantation.com/Sime_Darby_Plantation_Launches_Traceability_Dashboard.aspx#. The Wilmar dashboard is at: http://www.wilmar-international.com/sustainability/dashboard/. All accessed July 26, 2016.

8. Musim Mas’s traceability programme is at http://www.proforest.net/en/news/proforest-and-partners-to-verify-musim-mas-palm-oil-supply-chain. Accessed July 26, 2016.

9. However, China offers more promise as a green market with its larger use of palm oil in manufacturing compared to India where palm oil is used mostly in households as cooking oil (Personal communication, palm oil finance consultant, Singapore, April 6, 2017).

10. Data on supply chain certification is available at http://www.rspo.org/certification/supply-chain-certificate-holders/. Accessed June 15, 2013.

11. This information is drawn from the statement by Erik Wakker from the NGO Aidenvironment, reported in Michail (2016).

12. Author’s analysis of corporate responses to sustainability violations reported in Friends of the Earth Europe (2015) and Greenpeace (2015).

13. RSPO grower members operating in Indonesia publicly raised these concerns during proceedings at the 2014 and 2015 annual RSPO conferences at which the author participated.

Additional information

Funding

This work was supported by the Monash-Warwick Strategic Alliance;