Melanie Williams Consulting

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Banking on deforestation-free palm oil

The Bank of England’s dilemma about the feedstock for the oleochemical used in the production of its new £5 plastic notes highlights a paradox implicit in the circular economy ideal. Waste materials are more sustainable than virgin products but their origins won’t be to everyone’s liking.  Vegans and religious groups objected to the use of a waste animal product so now the Bank is hedging its bets by considering palm oil, which has its own problems.

Palm oil is a driver for deforestation so the Bank commissioned a report [1] which advised that sustainably certified palm oil is the solution. Consumer brands that use vegetable oils also worry about de-forestation. They have been issuing de-forestation free pledges to avoid the bad publicity that has hit biofuels derived from the same oils. The Bank’s report examined a range of food and biofuel sustainability schemes and recommended RSPO (Roundtable on Sustainable Palm Oil), the majority of whose members are in the food sector.

In fact, biofuels sustainability standards are often stricter on no-deforestation than food ones.

Sustainability schemes set up for biofuels, which have expanded into food, biomaterials and energy, like ISCC (International Sustainability & Carbon Certification) and RSB (Roundtable on Sustainable Biomaterials), do not allow production on any land which was forest on 1st January 2008. This is unambiguous, so consumers purchasing products certified by these Schemes can be confident that no deforestation has occurred since 2008, without having to read the small print. There are 200 palm oil mills that have ISCC certification, together with their associated plantations, so the Bank and consumer brands have a ready-made deforestation-free solution. Strict rules on traceability, underpinned by the EU Renewable Energy Directive (RED), mean that de-forestation free palm oil from ISCC can be traced back to a certified plantation on a mass-balance basis.

RSPO, which started out in the food sector,  has more than one Standard, and the one for food and chemicals is less strict than the biofuels one. In their main Principles and Criteria, RSPO requires the preservation of high conservation values  (HCV) land, which includes forests, since 2005.  RSPO then acknowledges that some certificate holders have not respected this rule and it allows compensation as outlined in the document “Compensation mechanism for land clearance without HCV assessment” [2]. RSPO indicates that this is not strict enough for biofuels in Europe, by saying that “New plantings after January 2008 can currently not be certified under RSPO-RED requirements”[3]. So customers aren’t clear what deforestation safeguards, if any, apply to the RSPO certified palm oil product they are buying. Brands are aware of this problem and have recently pushed RSPO into introducing stricter rules (RSPO Next), which may be taken up in the future, but which adds to the potential for confusion.

So the Bank of England should set an example and opt for unambiguous de-forestation free palm oil if it decides to drop animal fat.

In the future more waste and recycled materials will be used for everyday non-food items as we move to a circular economy. We will have to accept that these materials have had previous lives or are associated with industries we may not like. We can’t keep using the earth’s virgin resources or one day they will run out and there will be no overdraft facility to fall back on.

The Bank is consulting on what course of action it should take.

Published: 5 April 17

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