Making a Market for Sustainability: The Commodification of Certified Palm Oil

Abstract

In the same way there are markets for carbon, there is now a market for sustainability. Ostensibly produced as a means of conserving land in South-East Asia, a commodity called ‘certified sustainable palm oil’ has been created by the Roundtable for Sustainable Palm Oil (RSPO) and exchanged on its own international trading platform completely independently of the flow of physical palm oil. In this way, sustainability has acquired a precise pecuniary value and can be bought by ‘socially responsible’ companies to offset their use of conventional and potentially environmentally destructive palm oil. This is yet another instance of the commodification of nature, but of a kind largely unexplored in the literature because it has emerged without formal governmental authority. What this case adds analytically to the study of capitalism and environmentalism is two-fold. First, what is commonly described as non-state, market-driven governance must now be seen as actively market-making. Second, rather than foreclosing politics by moving outside the state and within markets, the fragile authority of the RSPO has opened space for activists and other interest groups to challenge both the regulatory mechanisms and social purpose of primary commodity governance.

Keywords:

• certificate trading
• commodification
• palm oil
• sustainability
• market environmentalism

Acknowledgements

Earlier versions of this paper were presented at University Warwick workshops on ‘The Everyday Political Economy of Southeast Asia’ in July 2012, ‘Planetary Cancer’ in March 2013 and ‘International Law, Natural Resources, and Sustainable Development’ in September 2013. The author is grateful for comments received at these workshops, as well as to Alex Sutton, Matthew Watson and two anonymous reviewers for their helpful and insightful feedback.

Notes on contributor

Ben Richardson is an Assistant Professor in International Political Economy at the University of Warwick. His research relates to the international political economy of trade and development, with a focus on agriculture and sugarcane in particular. His last book was Sugar: Refined Power in a Global Regime (Basingstoke: Palgrave Macmillan, 2009).

Notes

1 This is especially so for smaller companies and/or those using derivatives of palm oil, which cannot easily trace the source of their raw material back through the supply chain and re-organise them accordingly.

2 The RSPO has tried to mitigate this by requiring members to commit to certifying all of their production units within a specific time-scale, not just their flagship mill, and to respect some of the basic criteria of its sustainability standard across the board (a protocol pushed for by NGO members Oxfam and Sawit Watch). However, the time-scales still provide scope for wrongdoing, the auditing of non-certified mills is not as thorough and, of course, these requirements only apply to those companies that are already members of the RSPO.

3 Palm oil price is for crude palm oil in nominal $ listed on the World Bank's Global Economic Monitor (GEM) Commodities database.

4 Nestlé claims to use 0.7 per cent of the world's supply of palm oil (BBC n.d.)

5 If the entire palm oil industry is certified, there will be no need to sell certificates and trace them through the supply chain since, by default, all end users will be sourcing sustainable palm oil. At this point, the market for sustainability will cease to exist.

6 The Indonesia Palm Oil Association withdrew ostensibly because of an NGO push to prohibit the use of peatland in the standard. Despite quitting, the Association allowed its members to maintain their ties with the RSPO but obliged them to follow the requirements of its alternative certification standard for Indonesian Sustainable Palm Oil.

7 The Forest Stewardship Council has also attempted to lower transaction costs, but through the launch of the Forest Stewardship Council (FSC) Marketplace, a ‘dating site’ which makes it easier for producers, traders and buyers of certified product to find another. There is no certificate trading, but there is some commercialism evident insofar as customers can pay for a ‘premium profile’ which provides a higher ranking on search results.

8 The state has not been excluded from planning. See for instance the agreement among the Association of Southeast Asian Nations to tackle cross-border air pollution caused primarily by seasonal burning of land to clear it for oil palm cultivation.