Sustainability of Malaysian Palm Oil Industry 2013/2014

Transcription

1 Status Report Sustainability of Malaysian Palm Oil Industry 2013/2014 Presented by, Dr. Ahmad Ibrahim FASc Academy of Sciences Malaysia (ASM)

2 Society Environment Is Malaysian Palm Oil Industry Sustainable? Economy

3 Over the years, the palm oil industry had to deal with many sustainability challenges Economic Challenges Escala1ng cost of produc1on Untapped downstream poten1al Import barriers (tariff and non- tariff) Limited land bank Yield improvement measures to increase produc1vity GM palms Societal Challenges Food source for the growing world popula1on Dependence on manual and immigrant labour Social conflicts and human- rights abuses Health concerns Environmental Challenges Deforesta1on & destruc1on of biodiversity Wildlife conserva1on Wastes and residues management Peat swamp forests conversion Climate change Ø No easy definitive yes or no answer

4 Sustainability is a rising global concern Ø An initial response to industrialisation and excessive use of pesticides

5 Sustainable Development Timeline Silent Spring by Rachel Carson brought together research on toxicology, ecology and epidemiology to suggest that agricultural pes?cides were building to catastrophic levels, linked to damage to animal species and human health. Our Common Future (Brundtland Report) a report of the World Commission on Environment and Development, weaved together social, economic, cultural and environmental issues and global solu?ons. It popularised the term sustainable development. Earth Summit UN Conference on Environment and Development (UNCED) was held in Rio de Janeiro. Agreements were reached on the ac?on plan Agenda 21, the Rio Declara?on, and the non- binding Forest Principles World Summit on Sustainable Development was held in Johannesburg, marking 10 years since UNCED. In a climate of frustra?on at the lack of government progress, the summit promoted partnerships as a non- nego?ated approach to sustainability. Copenhagen Climate Nego1a1ons The Conference of the Par?es failed to reach an agreement on new GHG emissions reduc?ons commitments beyond 2012 (the end of the Kyoto Protocol?me frame). The interna?onal environmental community saw this as a watershed moment, with many arguing that the mul?lateral process was broken. Momentum began to shi] toward na?onal and regional efforts to reduce emissions UN Conference on the Human Environment and UNEP The Stockholm conference was rooted in the pollu?on and acid rain problems of northern Europe. It led to the establishment of many na?onal environmental protec?on agencies and the United Na?ons Environment Programme (UNEP) Intergovernmental Panel on Climate Change (IPCC) was established to assess the most up- to- date scien?fic, technical and socioeconomic research in the field UN Millennium Development Goals The largest- ever gathering of world leaders agreed to a set of?me- bound and measurable goals for comba?ng poverty, hunger, disease, illiteracy, environmental degrada?on and discrimina?on against women, to be achieved by Kyoto Protocol came into force, legally binding developed country par?es to goals for greenhouse gas emission reduc?ons. It established the Clean Development Mechanism for developing countries. Rio +20 Fi]y years a]er Silent Spring, 40 years a]er Stockholm and 20 years a]er the Earth Summit, the global community reconvened in an effort to secure agreement on greening world economies through a range of smart measures for clean energy, decent jobs and more sustainable and fair use of resources. Source: IISD, 2012

6 Current definition of sustainability is pro-rich Pro- Rich Defini1on of Sustainability PEOPLE PROFIT + DEVELOPMENT PLANET Ø Pro- Poor Defini1on of Sustainability Does not consider common-but-differentiated-responsibility principle

7 Palm oil expansion has been heavily criticised by NGOs for its alleged negative environmental and social impacts, or unsustainability Estimated global land use in 2011 Source: World Bank Data (2012) Ø Despite the fact that livestock remains the largest user of land

8 NGOS: No land conversion, Zero deforestation and Environment-first Ø Palm oil is subjected to the process of certification Ø Could be economically motivated, ideologically driven and politically consequential ( naked extortion or greenmail )

9 Despite the expansion of oil palm areas, the agricultural land areas have been relatively stable Trend in land uses as a percentage of total land area in Malaysia ( ) 100% 90% % of land area 80% 70% 60% 50% 40% 30% 20% 10% 0% Other land uses (urbanisation- industrial, housing, etc) Forest area Agricultural land Oil palm planted area Source: FAOSTAT (2013); Malaysian Palm Oil Board (2013); World Bank Data (2012) Ø Hence, the gradual decline of forest area in Malaysia could also be attributed to the process of urbanisation

10 Idle arable land and existing rubber, cocoa and coconut plantations have been rededicated for palm oil plantations Breakdown of agricultural area by arable, permanent crops and meadows and pastures land ( ) Source: Coconut Research InsGtute (2014); Department of Agriculture (2014); FAOSTAT (2013); Malaysian Cocoa Board (2014); Malaysian Palm Oil Board (2013); World Bank Data (2012) Ø instead of expansion at the expense of the forest area

11 It is a major feat developing countries (such as Brazil, Indonesia, Malaysia, and Russian Federation) had achieved in keeping the tropical forests while maintaining a rapid pace of economic growth Allocation of land areas in selected countries, 2011 Proposal Max 35% 30% Min 35% Source: World Bank Data (2012) despite the failure of the developed world to disburse the so-called green premium

12 A stronger Inclusive and Sustainable Development (3P+1D) model for developing and emerging countries Social Inclusiveness Environmental Balance Economic Leadership Quality of Living

13 Based on an aggregate/unified compliance approach, the Malaysian palm oil is fully RSPO-compliant Sustainable Development Economic Leadership Social Inclusiveness Environmental Balance Quality of Living Principle 3: Commitment to long-term economic and financial viability Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills Principle 4: Use of appropriate best practices by growers and millers Principle 5: Environmental responsibility and conservation of natural resources and biodiversity Principle 7: Responsible development of new plantings Principle 1: Commitment to transparency Principle 2: Compliance with applicable international laws, regulations and conventions Principle 8: Commitment to continual improvement in key areas of activity

14 Proposed integrated sustainability assessment framework for the palm oil industry in Malaysia Overall Macro Objective To ensure a sustainable Malaysian oil palm industry through economic, social and environmental developments for a better quality of life Pillar Objective Economic leadership Social inclusion Environmental stability Quality of life Headline Indicator - Competitiveness - Productivity - Market share - Innovation Poverty - Land use biodiversity - Climate change - Renewable energy - Food security - Development

15 The way forward: POSDI to address the palm oil s sustainability issues in an objective, integrated and innovative manner No. Pillars 1 ECONOMIC EC1 2 EC2 3 EC3 4 EC4 Key Sustainability Indicators Compe11veness: Total oil palm products export growth by produc?on and value (Reference base year = 2010) Produc1vity: Annual produc?vity of FFB yield (FFB tonne per hectare) Market share: Share of Malaysian companies in the world's top 10 palm oil companies by market capitalisa?on (%) Innova1on: Palm oil- related patent filing and grant growth (Reference base year = 2010) Benchmark Threshold Worst Base Best None > 100 < At least one > = ± 2STD [ ] Both > 100 > 19.5 < > None > 100 At least one > = 100 Both > SOCIAL ENVIRONMENT SC1 EN1 7 EN2 8 EN3 9 QUALITY OF LIVING QL1 10 QL2 Poverty: Compound annual growth rate of mean gross monthly income of Felda sellers (%) Land use - biodiversity: Na?onal land use for oil palm (%) Climate change: Percentage reduc?on of GHG emissions generated through the use of a palm oil biofuel (with methane capture) instead of a fossil fuel (%) Renewable energy: Palm oil mills with biogas facili?es year- on- year (yoy) growth (%) Food security: Value of food import over total primary agricultural products exports (%) Development: R&D expenditure as a percentage of total turnover for MPOB (%) < > 7.20 > < < > < ± 2STD [ ] > > % < < ± 2STD [ ] > 1.65

16 Sustainability Performance, the Economic Leadership Pillar EC1 Key Sustainability Indicators Status as of Score Weightage (%) Compe11veness: Total oil palm products export growth by produc?on and value (Reference base year = 2010) Produc?on = 105, Value = 135 Produc?on = 107, Value = 120 Weighted Score EC2 EC3 Produc1vity: Annual produc?vity of FFB yield (FFB tonne/ha) Market share: Share of Malaysian companies in the world's top 10 palm oil companies by market capitalisa?on (%) EC4 Innova1on: Palm oil- related patent filing and grant growth (Reference base year = 2010) Filing = 110, Grant = 186 Filing = 50, Grant = Ø Malaysia has performed relatively well in increasing its export competitiveness and advancing its dominance in the global market. Ø However, the future will depend on: Ø the availability of new and innovative technology or product breakthroughs and the extent of improvement in the industry s FFB productivity to minimise potential land use change.

17 Sustainability Performance, the Social Inclusiveness Pillar SC1 Key Sustainability Indicators Status as of Score Weightage (%) Poverty: Compound annual growth rate of mean gross monthly income of Felda sellers (%) Weighted Score Ø The farmers in Malaysian enjoy stable income at a level that is much higher than national average.

18 Sustainability Performance, the Environmental Balance Pillar EN1 Key Sustainability Indicators Status as of Score Weightage (%) Weighted Score Land use - biodiversity: Na?onal land use for oil palm (%) EN2 EN3 Climate change: Percentage reduc?on of GHG emissions generated through the use of a palm oil biofuel (with methane capture) instead of a fossil fuel (%) Renewable energy: Palm oil mills with biogas facili?es year- on- year (yoy) growth (%) Ø National land area utilised for oil palm is far below the proposed threshold. Ø There is encouraging progress shown in the various efforts by the industry to achieve zero waste and zero carbon via renewable energy and methane capture initiatives.

19 Sustainability Performance, the Quality of Living Pillar QL1 Key Sustainability Indicators Status as of Score Weightage (%) Food security: Value of food imports over total primary agricultural products exports (%) Weighted Score QL2 Development: R&D expenditure as a percentage of total turnover for MPOB (%) Ø Despite the increase in palm oil products exports, Malaysia is selfsufficient and is able to meet its food requirements from domestic production. Ø There is a consistently growing investment into R&D. Ø Malaysian palm oil industry in a strong position to build a better quality of life and to enhance the well-being of the communities and the nation

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21 The palm oil industry will continue to grow and contribute to the increasing global demand for oils and fats. 1) The Malaysian palm oil industry has not shown any sign of abdicating its responsibility to support sustainable development. 2) The industry has gone far beyond the minimum they have overhauled the products and processes and have started to look outwards at economic, social, and environmental trends and challenges that promise to radically reshape their businesses and the overall quality of living in the future. 3) A framework such as POSDI is necessary for active monitoring and management of sustainable and responsible palm oil cultivation and production. Ø The palm oil industry will continue to grow and contribute to the increasing global demand for oils and fats.

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