Sustainability certification is important to REA because it provides third party verification that international and national standards for environmentally and socially responsible palm oil production are being achieved and maintained.
The Roundtable on Sustainable Palm Oil
The Roundtable on Sustainable Palm Oil (RSPO) is a multi-stakeholder organisation which aims to promote the production and use of palm oil in a way that is ‘legal, economically viable, environmentally appropriate and socially beneficial’. REA joined the RSPO in 2007 and is committed to implementing the RSPO principles and criteria for sustainable palm oil production throughout the group's palm oil operations. The group contributes to the development of the RSPO by actively participating in the Biodiversity and HCV working group and the GHG emissions reduction working group.
In 2011, REA obtained RSPO certification for its two longest established palm oil mills, which as of April 2015 have been verified to be in compliance with the new RSPO standard (RSPO P&C 2013). In 2014, 59% of the crude palm oil (CPO) and 68% of the crude palm kernel oil (CPKO) produced by the group was RSPO certified. REA’s third mill, which was commissioned in September 2012, is due to undergo an RSPO audit before the end of 2015.
In early 2013, REA’s commitments and progress towards achieving RSPO certification was given a score of six out of seven in an assessment of RSPO member palm oil producers conducted and published by the international conservation NGO WWF. To read the report click here.
RSPO Supply Chain Certification
In 2012, REA obtained RSPO supply chain certification (SCC). This allows the group to sell the crude palm oil (CPO) and crude palm kernel oil (CPKO) produced by RSPO certified estates to buyers looking to make physical purchases of RSPO certified sustainable palm oil (“CSPO”).
If it can be proven that a specific batch of CPO or CPKO originated from an RSPO certified source, it can be sold as ‘Identity Preserved’ or ‘Segregated’ certified sustainable CPO or CPKO. If the certified product mixes with non-certified products in the supply chain then it can be sold as certified sustainable CPO or CPKO using a mass balance system. This requires records to be kept to demonstrate that the volume of CPO and CPKO sold as sustainable palm oil does not exceed the amount produced by the upstream RSPO certified mills over a specified time period.
At present the mass balance system is preferable for REA because it enables the group to continue to purchase oil palm fresh fruit bunches (FFB) from independent smallholders who are not yet RSPO certified. By continuing to engage with these smallholders, the group can assist them to improve their practices, which should enable them to obtain RSPO certification in the future. In order to produce segregated CSPO, REA would have to exclude these smallholders from its supply chain. For many of these smallholders, this would prevent them from obtaining income from their land because there are very few alternative palm oil mills near enough to process their FFB. More information about how REA is working with smallholders to improve their practices can be found here.
Pending identification of a suitable buyer for RSPO certified CPO or CPKO through the mass balance system, REA currently uses the RSPO book and claim system to sell Greenpalm certificates for its RSPO certified oil palm products. This system enables end users of oil palm products to support RSPO certified producers by purchasing Greenpalm certificates, even if they do not physically purchase palm oil from these producers. However, unlike the other RSPO SCC systems this does not necessarily mean that the palm oil a buyer purchases originated from an RSPO certified producer.
International Sustainability and Carbon Certification
The defining feature of the International Sustainability and Carbon Certification (ISCC) standard is that it requires that the net GHG emissions associated with the production and use of palm oil as a biofuel must be at least 35% lower than if the equivalent amount of energy was generated by burning fossil fuels. Due to the fact that biodiesel produced from ISCC certified palm oil is deemed to meet the requirements of the European Union Renewable Energy Directive (EU RED), EU member states can count biodiesel produced from ISCC certified palm oil towards their renewable energy targets.
REA’s established oil palm estates, two mills and transhipment terminal obtained ISCC certification in August 2012. REA’s third mill also underwent an ISCC audit in April 2015 and it is anticipated that the certificate will be issued in July 2015.
In 2014, REA sold some 75,000 metric tonnes of ISCC CPO to the biodiesel market.
Indonesian Sustainable Palm Oil
In 2010, the Indonesian government introduced new regulations mandating that all palm oil companies must be audited against the Indonesian Sustainable Palm Oil (ISPO) standard. This standard is largely based on existing national regulations and includes requirements covering key economic, environmental and social issues. All three of REA’s mills and their supply bases undertook the first stage of the ISPO audit in November 2014. The second stage of the audit took place at the end of April 2015.