Deforestation-free palm oil: Improved governance needed

Indonesia’s business sector is waking up. Now is the time for the Indonesian government to do its part.


During the past few years, one palm oil company after the other has committed to produce zero-deforestation palm oil. Indonesia’s laws and policies governing palm oil are, however, comprehensive, and often confusing and contradictory regarding environmental management. They may, in fact, undermine progressive business-led efforts at self-regulation.

- Time is overdue for the Indonesian government to ensure that rules and regulations support zero-deforestation palm oil, says Lars Løvold, Director of Rainforest Foundation Norway.

RFN is now launching a report analyzing recent legal and policy changes in Indonesia in order to understand how they may impact on deforestation related to palm oil. The report, written by Daemeter Consulting, is meant to contribute towards a more sustainable palm oil industry in Indonesia.

The report describes the different roles of government, private sector, civil society and local communities within the palm oil sector.

- We believe stronger governance of the palm oil sector and improved dialogue between stakeholders will be essential parts of the solution, states Løvold.

The report identifies challenges and opportunities in the governance of Indonesia’s palm oil sector. One trend observed is the increase of actors involved in forest management, particularly at the local level. District governments remain central in issuing licensing and regulating palm oil plantations.

The study also highlights opportunities towards a more transparent licensing system, positive developments for customary land rights, and empowerment of villagers.

At the same time, conserving areas of high conservation value and areas with high carbon stock still represents a significant challenge for the companies.

The government’s ambitious goal to increase biofuel within the national energy mix is predicted to increase demand for palm oil. In the absence of strict criteria for sustainable palm oil, biofuel may cause significant deforestation.

The report recommends a range of actions to be taken by civil society, government, businesses and other stakeholders. A key message is the urgent need for aligning policies with the emerging sustainability norms. The report also emphasizes the need to create incentives for the industry and for local governments. Enforcement tools must be strengthened and have to play an essential role in protecting the rainforest.