Objectives:
In Indonesia and globally, palm oil expansion has emerged as a key driver of deforestation and degradation. At the same time, the sector underpins domestic growth, economic development and rural livelihoods, as well as providing key business investment opportunities for a range of business actors with different profiles (including national small–medium enterprises, state-owned enterprises and large multinational corporations). Unilever has shown global leadership in its efforts to transform the palm oil sector, with the goal of eliminating deforestation from its supply chain by 2020.
In the absence of meaningful demand for carbon credits and limited willingness of consumers to pay green premiums, businesses seeking to transform their palm oil supply chains to meet sustainability goals face a variety of costs and risks.
This cluster session provided an overview of the ‘business case for change’ in the context of these new risks and costs. What options exist to deliver growth that is sustainable, while also being affordable and socially inclusive? What are the benefits of economies of scale that can be achieved through taking a landscape management approach, and how can business contribute to this?
The session highlighted emerging alliances in the context of Indonesia, as it strives for increased productivity and sustainability of palm oil. For immediate outcomes, the session sought investors’ feedback on current models and plans.
To support decision-making in a dynamic and growing sector, UNEP-FI presented a bottom-up methodology that helps assess the value of risk associated with deforestation to larger scale growers of palm oil in Indonesia and the offsetting net value regained from pursuing alternative ‘no deforestation’ methods of production.
Background reading:
- Opportunities for Increasing Productivity & Profitability of Oil Palm Smallholder Farmers in Central Kalimantan (CPI, 2015)
- Achieving a high-productivity, sustainable palm oil sector in Indonesia: a landscape management approach (CPI, 2015)
- Improving Agricultural Productivity in Brazil: The Unmet potential of Price Risk (CPI, 2015)
- Stranded Assets in Agriculture: Protecting Value from Environment-Related Risk (Smith School of Enterprise and the Environment, University of Oxford; 2015)
- Innovation Brief – Indonesian Palm oil: Aligning investment opportunities with Indonesia’s corporate commitments to sustainable palm oil (Earth Innovation Group, 2015)
- Financing Strategies for Integrated Landscape investments (EcoAgriculture Partners, Earth Security Initiative, Lexeme Consulting; 2014)
