Development of the World Bank Group’s Framework for

Engagement in the Palm Oil Sector

3rd International Palm Oil Trade Fair and Seminar 2010 (POTS) 3-5 October 2010, The Royal Chulan, Kuala Lumpur, Malaysia

By TEOH Cheng Hai

NGO Campaigns on Palm Oil

Possible Responses to NGO Campaigns on Palm Oil

•  Inactive approach – do nothing and hope the problem/complaint fades away

• Reactive approach – Refuting allegations and defending the position of the industry

•  Proactive approach – Engagement with the stakeholders

The Global Palm Oil Debate

Forests? Oil Palm?

Forests and Oil Palm?

OR

NGO & Media Campaigns

Greenpeace – Nestle Campaign

Key Areas of Contention

• Deforestation • Biodiversity Loss •  Land Conflicts and Social

Issues • Climate Change

Producers’ Response •  To the producers, palm oil is already sustainable since its beginnings •  Best Management Practices (BMPs) for production and processing in place •  Compliance to national laws (eg EIAs) •  Expansion largely from replanting •  Most sustainable among the vegetable oil crops

Industry’s Best Management Practices (BMPs)

Supply Chain Response •  Commitment to procurement and use of CSPO •  Action against ‘non-compliant' producers

The Multi-stakeholder Response

•  Business initiative by WWF, Aarhus, Golden Hope, MPOA, Migros, Sainsbury, Unilever

•  Registered on 8 April 2004 as a not-for-profit Association under Article 60 of the Swiss Civil Code

“To promote the growth and use of sustainable palm oil through co-operation within the supply chain and open dialogue with its stakeholders”

BUT RSPO is also under attack….

Drivers for Sustainable Development

1980s 1990s 2000s Future

Government Solution Catalyst Problem Partner

Civil Society Monitor Solution Catalyst Partner

Business Problem Problem Solution Partner

After Najam, 2009

Why a WBG Framework for Palm Oil? •  A 2009 Audit of IFC performance by the Compliance

Advisor/Ombudsman (CAO) with respect to investments made in the mid-2000’s in an Indonesian palm oil producing and trading company which found that, among other things, IFC did not meet the intent or requirements of its Environmental and Social Performance Standards.

•  As a result of the CAO audit and associated NGO concerns expressed about IFC engagement in palm oil, World Bank Group management decided to stop all new investments in the sector pending development of a Global Palm Oil Strategy

•  A consultation-driven strategy development process was designed to fully identify issues, challenges and opportunities which can inform and guide future World Bank Group engagement in palm oil.

Process for Development for the WBG Framework for Palm Oil

1. Analytical and Preparatory Work Phase

• WBG’s strategy development team consults with external experts to help design a credible. open and participatory process to develop the strategy

• Review of lessons learned from consultative processes across the WBG and elsewhere

2. Discussion Paper •  Introduction •  Overview of the Palm Oil

Sector •  World Bank Group Experience

in the Palm Oil Sector •  Context: The Global Palm Oil

Debate – Palm Oil Development and Sustainability

•  Challenges and Opportunities for the Palm Oil Sector

•  Questions to be Addressed in the Stakeholders Consultations

•  Concluding Remarks The Discussion Paper is available in English, Bahasa Indonesia, Chinese , French and Spanish from www.ifc.org/palmoilstrategy/keydocuments

Questions to be Addressed in the Stakeholder Consultations

1.  What are 5 most important aspects that must be included in WBG’s strategy?

2.  Should WBG continue to invest in palm oil sector? Pre-conditions?

3.  How can WBG’s policy framework improve supply chain performance?

4.  What role could WBG play in sustainable expansion of palm oil in new regions?

5.  What are important accompanying activities to address the challenges of the sector?

Facilitation Approaches

Value Chain Analysis The World Cafe

Rich Pictures Ritual Dissent

Summary of Issues Identified in Stakeholder Consultations- Mind Map Ver 1

Key Messages from WBG Consultations

•  Genuine and serious social and environmental issues must be addressed

•  Need for development of the smallholder sector •  Governance •  Spatial planning is critical •  Role of RSPO - certification and monitoring •  Image and creditability of the sector •  Role of the World Bank Group

4. Preparation of Draft Strategic Framework on Palm Oil

•  Draft framework took into consideration outputs from all consultations and feedback

•  Framework outlines priority areas and options for action

•  Four key themes will frame the future of WBG

5. Consultations on the Draft Framework

•  E-consultation –  Conducted by independent

consultant from 9-20 August, 2010

–  Invitations to more than 3400 persons/groups around the world

–  282 participants from 51 countries

–  9 lead discussants •  Stakeholder consultation in

Frankfurt on 31 August and 1 September

6. Presentation of Final Framework

Concluding Remarks

Possible Responses to NGO Campaigns on Palm Oil

•  Inactive approach – do nothing and hope the problem/complaint fades away

• Reactive approach – Refuting allegations and defending the position of the industry

•  Proactive approach – Engagement with the stakeholders

Acknowledgement

•  The speaker would like to thank the World Bank Group for permission to use information obtained from the development of the strategy for engagement in the palm oil sector.