Haze or Not, Fires Are Burning. It's Time for Business 'Unusual'.

Posted on 21 September 2020

A timely reminder that Southeast Asia still faces smouldering problems with palm oil.

Almost every year, a smoky haze blankets the Southeast Asian region, signalling the return of forest fires.

As if the world hasn’t reached rock bottom in 2020 yet, 2.5 million acres of forest or land have burned in California so far. This is yet another sinister reminder of how closely our lives and homes are linked to forests. Families have been forced out of their homes as local communities were engulfed in choking smoke and fires.

Unfortunately, this is an all too familiar occurrence here in Southeast Asia.

While this year’s dry season has so far been marked by wetter weather conditions which could limit its severity, haze’s root cause — human activity that converts tropical forests and natural ecosystems for the expansion and intensification of agriculture — remains an ongoing cause for concern. 

The transboundary haze is just one of the many controversial issues that has put the spotlight on palm oil, as global demand for forest-based commodities drives widespread unsustainable production practices across Southeast Asia.

In the past two decades, millions of hectares of forest in areas of immense biodiversity have been cleared to make way for palm plantations and other agricultural commodities.

In various parts of Southeast Asia, producers continue to rely on slash-and-burn agricultural practices to prepare land in an easy and cheap way, resulting in debilitating air pollution that spreads across the region.

But it doesn’t have to be this way: Palm oil can be produced in a responsible manner which benefits both people and nature; and companies producing and purchasing palm oil have a critical part to play.

The key role of Asian markets 

Fires that burn out of control in palm production landscapes have far-reaching consequences for the planet, pointing to the responsibility that the entire global economy bears in supporting a sustainable palm industry.

The conventional industry practice of using fires to clear land releases large quantities of carbon dioxide which, in turn, accelerates climate change. 

During the 2015 haze crisis, Indonesian fires released approximately 1.75 billion metric tons of carbon dioxide — an amount almost equal to Indonesia’s annual economy-wide emissions.

Along with markets in America, Europe and Australia, Asia has a major responsibility to support sustainable palm oil. 

Indonesia and Malaysia are responsible for 85% of the global palm oil production, and the cultivation of palm oil is a primary source of income for an estimated 4.5 million of people in both countries. Singapore is at the epicentre of the global trade in palm oil, with many of the world’s largest palm oil traders headquartered here. Consumers in Asia account for more than 60% of the world’s palm oil. 

But the environmental destruction brought about by conventional palm plantations has yet to spur widespread, meaningful sustainability action from companies operating in Asia — be it small and medium enterprises, regional companies, or multinational corporations. 

The latest edition of WWF’s Palm Oil Buyers Scorecard found that while a handful of companies in Asia are stepping up to the challenge — including Denis Asia Pacific (Ayam Brand) and Fraser and Neave — the majority has yet to make commitments to source sustainable palm oil.

While only 93 out of the 173 companies assessed in the scorecard apply their sustainability commitments globally, this highlights a need for more collective action across the industry. 

Unsustainable practices bring catastrophic consequences

Palm oil makes a substantial contribution to many local and national economies in Asia. The same countries stand to lose the most from unsustainable palm oil, with air pollution from fires directly impacting their economies and societies. 

Fires in 2015 caused US $16 billion worth of economic damage to Indonesia alone, and the estimated economic losses of a bad haze year on Singapore are valued at US $730 million. Research has also found that roughly 110,000 deaths in Southeast Asia each year can be attributed to particulate matter exposure from these fires, while thousands experience both short- and long-term health impacts that range from eye and skin irritation to serious respiratory and cardiovascular problems.

Prolonged exposure to the smog poses dangerous effects to their health, especially for those that are pregnant or have asthma. The start of the fire season typically brings a myriad of fears: the loss of homes, livelihoods and agriculture crops like rubber. 

Putting sustainable palm oil at the core of businesses 

Businesses operating in Asian markets have a unique economic incentive to tackle the root causes of haze because they bear the brunt of the disruption. Switching to sustainable palm oil not only helps mitigate losses; it is generally good for business. 

According to WWF research, firms that decide to source sustainable palm oil can reap significant return on their investments, and avoid a variety of regulatory, financial, operational and reputational risks. More broadly, the business case for nature is clear. According to a World Economic Forum report, more than half the world’s GDP – US$44 trillion – is highly or moderately dependent on nature and its services. 

The COVID-19 pandemic is making consumers more aware than ever before of the intimate links between the planet’s health and our wellbeing. Our broken relationship with nature comes at a cost. As economies across the region seek solutions to resume growth and ensure a more resilient future, companies serving Asian consumers should take the opportunity to play their part in building a just and green recovery.

As a first step, companies should adopt and implement deforestation and conversion-free policies that cover their entire operations, markets and palm products that they use. Companies should also join the RSPO, develop and implement public time bound plans for buying 100% RSPO-certified sustainable palm oil, and regularly report progress against meeting these targets.

It is worth noting that the ban on the use of fire as a way to prepare land for palm plantations is a key criteria of RSPO standards. Last year, fire hotspots in RSPO concessions represented only 0.5% of all hotspots detected in Malaysia and Indonesia.

Beyond RSPO membership, companies operating in Asian markets should also invest time and resources to support a responsible industry beyond their own supply chain. A good way to start is for companies to exert their influence to all their suppliers by only sourcing from those that adopt and implement a deforestation- and conversion-free policy. Companies can also support on-the-ground actions in palm producing landscapes that help protect and restore biodiversity affected by unsustainable palm oil, including supporting smallholders to improve production practices. 

Support systems for companies are readily available 

Although ethical consumerism in Asia is still in its infancy, solutions are readily available for companies operating in the region to take immediate action on irresponsible palm oil.

In addition to high quality tools such as the Accountability Framework, there are a number of platforms that companies operating in Asia can turn to for support. The Support Asia for Sustainable Palm Oil (SASPO) initiative was founded in 2016 by WWF-Singapore and five major companies as one of the first business initiatives in ASEAN focused on sustainable palm oil. As a voluntary industry-led platform championing sustainable palm oil in supply chains, SASPO aims to lower the barriers for businesses in Asia to adopt sustainable sourcing policies through capacity building, workshops and educational resources. 

Similar coalitions also exist in other countries across Asia. As the world’s two largest importers of palm oil, India and China have an important role to play in supporting a responsible, sustainable palm oil industry. Companies operating in these markets can engage with the India Sustainable Palm Oil Coalition (I-SPOC) and the China Sustainable Palm Oil Alliance (CSPOA).

Haze will continue to wreak havoc on societies and economies across the region if companies operating in Asia do not start taking urgent and tangible steps in support of a sustainable palm oil industry. If the Covid-19 pandemic has taught us anything, it’s that business as usual is no longer an option. When produced responsibly, palm oil can support sustainable development, benefiting people, nature, and business.

This blog post was written by WWF Global Palm Oil Lead Michael Guindon and originally posted on the WWF-SG Blog.

Orangutans in Sabah, Malaysia are facing habitat loss due to the increasing forest fragmentation from oil palm plantation activities.
© WWF-Malaysia / Elvin Joseph
The haze situation in August 2019. This picture was taken nearby the WWF Pekanbaru office where 2,000 local schools in Riau were shut. 50 WWF staff had to be relocated to a safer area in the city.
© WWF Indonesia
A tapir was stuck at a community plantation (located at our project area in Sumatra) while trying to escape the fires of 2019. Fires threaten the region’s iconic biodiversity such as tigers, rhinos, elephants and orangutans.
© WWF Indonesia
Our WWF colleagues in Sumatra had to wear masks in the office during the severe haze situation in 2019.
© WWF Indonesia
The ban on the use of fire as a way to prepare the land for palm plantations is a key criterion of RSPO standards. Last year, fire hotspots in RSPO concessions represented only 0.5% of all hotspots detected in Malaysia and Indonesia.
© Chris J Ratcliffe / WWF-UK