Towards more sustainable production – perspectives, challenges and opportunities along palm oil commodity chains

This case study by the Stockholm Environment Institute (SEI) examines the challenges of implementing sustainable palm oil production along a commodity chain stretching from Riau Province, Indonesia, to the European Union. Based on 20 semi-structured interviews and 3 focus group discussions, the study evaluates why voluntary private-sector initiatives, such as 'No Deforestation, No Peat, No Exploitation' (NDPE) policies, have seen limited success in improving sustainability or increasing the market share of sustainable commodities.

• Private sector-led sustainability initiatives and certification schemes for palm oil face several systemic barriers, including a lack of consumer demand, poor coordination within the supply base, and issues regarding pricing structures and monetary compensation for sustainable production. Additionally, conflicting regulations and unresolved land rights in producer countries act as significant obstacles.
• There is a limited ability for processors and larger growers to enforce sustainability standards on independent smallholders, who produce nearly 40% of Indonesia's total crude palm oil. This challenges the assumption that a small number of traders can act as 'choke points' to transform the market, a situation further complicated by 'shadow holdings' with opaque and shifting ownership.
• Perspectives on European Union regulation of the palm oil market are divided. Some stakeholders view EU sustainability concerns as a cover for protectionism and fear negative impacts on Indonesian economic development and smallholders. Conversely, some companies support increased EU regulation to create a 'level playing field' for implementing sustainability policies.
• The study suggests that because private-sector collective action is insufficient against the political economy of supply chains, producer countries and importing regions must support the private sector. 'Hybrid governance'—jointly led by public-sector, private-sector, and civil society actors—is proposed as a potential solution, provided there is institutional reform and a rebalancing of responsibilities.

APA

Stockholm Environment Institute (2019). Towards more sustainable production – perspectives, challenges and opportunities along palm oil commodity chains. https://www.sei.org/wp-content/uploads/2019/03/sei-2019-p2cs-palm-oil-chain-perspectives.pdf

Chicago

Stockholm Environment Institute. Towards more sustainable production – perspectives, challenges and opportunities along palm oil commodity chains. 2019. https://www.sei.org/wp-content/uploads/2019/03/sei-2019-p2cs-palm-oil-chain-perspectives.pdf.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Towards more sustainable production – perspectives, challenges and opportunities along palm oil commodity chains |date=March 2019 |url=https://www.sei.org/wp-content/uploads/2019/03/sei-2019-p2cs-palm-oil-chain-perspectives.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2019towards, author = {{Stockholm Environment Institute}}, title = {{Towards more sustainable production – perspectives, challenges and opportunities along palm oil commodity chains}}, institution = {Stockholm Environment Institute}, year = {2019}, month = mar, url = {https://www.sei.org/wp-content/uploads/2019/03/sei-2019-p2cs-palm-oil-chain-perspectives.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }