Presented by Pablo Pacheco, from the Center for International Forestry Research (CIFOR), at the XVI Biennial IASC Conference ‘Practicing the commons: self-governance, cooperation, and institutional change’, in Utrecht, the Netherlands, on July 12, 2017. --- This research is supported by USAID funding for CIFOR’s Governing Oil Palm Landscapes for Sustainability (GOLS) project, and this work is partly funded by the United Kingdom’s Department for International Development KNOWFOR Program Grant to CIFOR. This research is part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), which is funded by the CGIAR Fund Donors.

1. The politics and practice of sustainability
commitments: palm oil in Indonesia
Pablo Pacheco, Cecilia Luttrell and Heru Komarudin
IASC Conference
Utrecht, July 2017

2.  Oil palm has expanded rapidly with contradictory impacts
 Positive impacts on local growth and poverty alleviation
 BUT plantations development also creates social conflict
 AND often expands in detriment of forests and peatlands
 THAT expansion leads to biodiversity loss and GHG emissions
 Three critical performance issues are visible in the sector
• Land conflicts between companies and local populations + immigrants
• Differences in yields between smallholders and industrial plantations
• Large carbon debt resulting from oil palm expansion in forestlands and peatlands
OIL PALM: A POLEMIC CROP

3. 10.5
Million
hectares
cultivated
Labor
3.0
Million people
27.8
Million tons
CPO
Smallholders
42%
of total planted
area
~850
Palm oil mills
25
corporate
groups
control most
of supply
Indonesia
3.5
Tons
CPO/ha/yr
53%
global CPO
supply
Farmers
2.1
Million
households
OIL PALM IN INDONESIA

4. ACTION ARENAS: SUPPLY CHAINS AND TERRITORIES
Downstream
Upstream
National
Sub-national
Private
Public
Traders /
processors
Manufacturers
End-buyers
Supply-side policies
• Land use
• Tenure
• Finance
• Incentives
Demand-side policies
• Procurement
• Import duties
• Sustainable trade
Supply chain interventions
• Private standards
• Procurement policies
• Traceability systems
• Risk management
Compliance
[Efficiency, progression]
Enforcement
[Effectiveness, stickiness]
Sustainability and
equity gaps
• Zero deforestation
• Low-carbon / smart agriculture
• Sustainable intensification
• Equitable benefit sharing
• Policy formulation/agenda setting
• Rules setting and incentives
• Implementation/enforcement
• Oversight and monitoring
Stages of policy
implementation
Ultimate goals
Suppliers
Value chain
governance
Multi-level
governance
Interactive
governance
Landscape
governance
Transnational
governance
Questions
 Institutions/regulations: How
to be designed in a way that
acknowledges the lack of state’s
enforcement capacity and avoids
political interests?
 Incentives: How to align with
the needs of the market as well
as encouraging public sector
reform and demand for change?
 Political support/interest:
How to channel for public (rather
than individual) benefits in ways
that are distributed more
equitably at the local level?

5. THE POLITICS OF ZERO DEFORESTATION
 Most activity taking place at the international arena (consumer countries, corporate groups)
 Different definitions and methods (HCSA and HCS+), yet efforts to harmonize them
 The Government of Indonesia (GoI) has strongly opposed the ‘zero deforestation’ movement
 YET, some provincial government devised regulations that backed up private initiatives
 The GoI initiated a process to strengthening ISPO under a multistakeholder working group
 ALSO, issued regulations to restore peatlands and halt oil palm expansion on these lands
 Different company initiatives (e.g. FFA) to fire prevention linked to oil palm expansion
 Major corporate groups piloting projects to support smallholder oil palm suppliers

6. Finance
Trade
Production
Fiscal
Land
STATE REGULATIONS
[Mandatory enforcement]
Finance
regulations
Import
regulations
Production
regulations
Export tariffs
and levies
Land restoration
Land allocation
Spatial planning
‘Legal
supply’
Certification
systems
Principles for
responsible
investment
Zero defores-
tation pledges
EP
SCC
CGF
NYDF
‘Sustainable
supply’
‘Clean
supply’
Company
policies
Sectoral
standards
Codes of
conduct
Pledges and
commitments
PRIVATE STANDARDS
[Voluntary compliance]
Companies’
sustainability
policies
Five main categories of
solutions to enhance
sector’s governance:
 Better design of
standards
 New regulations to
enforce these
standards to provide
clearer frameworks
 Better implementation
and enforcement of
existing regulations
and standards uptake
 Incentives to
encourage adherence
to standards
 Better transparency
and accountability
over implementation
INFORMALFORMAL
Independent
mills
Company
mills
Corporations
[traders and
processors]
Consumer goods
manufacturers
Financial service
providers
Independent
farmers
Third-party
suppliers
Outgrower
farmers
Company
landholdings
RSPO
OJK
EU-RED
AMS Dec
ISPO
CPO Fund
CPOPC
ISCC
IPOP
SPOMMSPO
ESPO
‘Hybrid’ governance
Standard systems
Initiatives & mechanisms
Links in construction
Formalized links
Source: Pacheco et al. (2017)
THE GOVERNANCE COMPLEX

7. SOME INITIATIVES AT THE SUB-NATIONAL LEVEL
 Policy formulation and agenda setting: Jurisdictional Approaches
(Seruyan, MuBa), Landscape Approaches (Sumsel, Kalbar IDH), and
Green Growth strategies and development plans (Sumsel, Kalbar)
 Rule setting and government regulations: Regulations on
sustainability (Kalteng, Sumsel), and for HCV (Seruyan, Ketapang)
 Implementation/compliance/enforcement: addressing legality,
and registration of smallholders (INOBU), and I4PT land reform
 Incentives and finance: several more innovative schemes are
being putting in place in Kalteng and Sumsel (e.g. IFC, SNV)
 Oversight and monitoring/evaluation: Multi-stakeholder
processes mainly at the provincial level (Kalbar, Sumsel)
Our focus at the sub-national level has been in three provinces and five districts.
Kotawaringin Barat, Seruyan and Kapuas in Central Kalimantan (Kalteng); Ketapang
in West Kalimantan (Kalbar); and Musi Banyuasin (MuBa) in South Sumatra (Sumsel).

8. KEY LESSONS ON THE DESIGN AND PROCESS
 There are issues of legitimacy depending on ‘who’ sets up and implement the initiatives
 There are several directions of change in the interaction between public and private actors
 Many state functions are still fundamental for enabling the private commitments
 The importance of buy in and shared objectives, but something not easy to achieve
 The risk of facing a lower degree of integration into existing government systems
 The importance of intermediaries as ‘facilitators’, and the role of individual ’champions’

9.  Land speculation and encroachment of
state forests [land mafias]
 Growth of independent mills fostering
uncontrolled oil palm expansion
 Enough informal finance driving oil palm
plantations expansion
 Many (illegal) smallholders not entitled to
receive support from government
 Incentives for plantation expansion due to
growing biodiesel targets
 The expansion of oil palm outside of
granted concessions is growing over time
 Difficult to direct investments for
plantations onto occupied mineral soils
BUT PERSISTENCE AMIDST CHANGE
0
2,000
4,000
6,000
8,000
0
100
200
300
400
500
600
1995 1998 2001 2004 2007 2010 2013
Oilpalmplantedarea
(thousandha)
Forestloss
(thousandha)
Loss Kalimantan Loss Sumatra Loss Others
OP Kalimantan OP Sumatra OP Others
Source: Own elaboration based on ESA CCI land cover maps

10. SOME WAYS AHEAD
 Linking legal frameworks to private commitments
 Closing the gaps between sustainability standard [ISPO/RSPO]
 Supporting good performance with fiscal transfers and incentives
 Building monitoring systems than enhance transparency
 Innovating in setting up inclusive business and financing models
 Broadening the scope of interventions to broader jurisdictions
 Territorial approaches, through jurisdictional perspectives
• Potential in addressing risks associated with commitments
• Potential in helping upscale finance and risk management
• Potential in expanding more inclusive business models

11.  The institutional architecture is growing in complexity
 Different views of palm oil sustainability co-exist
 Public policy and government responses are contradictory
 Multiple initiatives emerging at the sub-national level
 Different views between corporate and national players
 Rivalry and cooperation co-exist at the multiple levels
 Potential on jurisdictional approaches, but also limited
CONCLUSIONS