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

The document examines the failure of private-sector sustainability initiatives in the palm oil supply chain, highlighting barriers such as lack of consumer demand, poor coordination among smallholders, and conflicting regulations in producer countries. It suggests that 'hybrid governance' involving private, public, and civil society actors is necessary to improve sustainability performance.

• Private sector-led sustainability initiatives, including certification schemes and 'No Deforestation, No Peat, No Exploitation' (NDPE) policies, have seen limited success in improving sustainability or increasing the market share of sustainable commodities. These initiatives are hindered by a lack of consumer demand, poor coordination within the supply base, and issues regarding pricing structures and monetary compensation for sustainable production.
• Implementation of sustainability standards is complicated by the limited ability of large growers and processors to enforce rules on independent smallholders, who produce nearly 40% of Indonesia's crude palm oil. This challenges the assumption that a few large companies acting as 'choke points' can transform the market. Furthermore, 'shadow holdings' with opaque ownership structures create additional complications.
• Governance issues in producer countries, specifically unresolved land rights and conflicting regulations, act as significant obstacles to certification schemes and private sector action.
• Stakeholders hold conflicting views on European Union regulation of the palm oil market. Some argue that EU governments use sustainability as a cover for protectionism and risk harming Indonesian economic development and smallholders, while some companies believe EU regulation is necessary to 'level the playing field' for sustainability policies.
• The document proposes 'hybrid governance'—joint leadership by private-sector, public-sector, and civil society actors in both producer and consumer countries—as a potential solution, though this would require institutional reform and a new balance 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} }