The Annual Communication of Progress (ACOP) 2022 reporting cycle for RSPO Members has officially closed with a new all-time record submission rate of 95.9% (including late submissions), which exceeded the previous year’s rate of 94.1%. Once again, the RSPO Secretariat wishes to thank all RSPO Members for this encouraging response rate, which clearly demonstrates members’ support and strong commitment to make palm oil sustainable through market transformation.
There were a host of major disruptions in 2022, including geopolitical conflicts that caused a shock to global vegetable oil markets creating food and energy price inflation, a third consecutive La Niña weather pattern affecting harvests through heavy rains in Southeast Asia and dry conditions in the Pacific Americas, as well as restrictions on export trade in Indonesia. Despite this, analysis of the latest ACOP reporting cycle (combined with audited RSPO certification data and trades) has shown encouraging progress in the production, consumption and awareness of RSPO Certified Sustainable Palm Oil (CSPO),
CSPO production reached a key milestone in 2022 by exceeding 15 million MT, representing 20% of global crude palm oil (CPO) production, five years after reaching the 10 million MT milestone in 2018. We note that growth is coming from progress within the existing RSPO membership base, as well as increasing scale through new memberships globally: total RSPO membership continued its annual growth trend with a +5.4% increase, while sanctions related to ACOP non-submissions fell to the lowest level ever at 76 members.
Key highlights observed among RSPO members who operate oil palm plantations and mills include an increase in global certified hectarage (+6.6%) and CSPO production (+4.8%), driven by gains in Indonesia, Latin America and Africa.
CSPO production in Latin America now represents one-third of the region’s total production. In Africa, the number of certified plantations and mills doubled in 2022 with African regional CSPO share hitting double digits at 11.7%. In total, the share of global palm oil production represented by RSPO Members is 42% of 77.6 million MT, 20% of which is certified as CSPO and the additional 22% in the process of certification per RSPO rules.
More Independent Smallholder members, female participation
In 2022, Independent Smallholder (ISH) groups with RSPO membership grew significantly to 166, of which 81% (groups) are now certified. Female participation also increased, with women representing 28% of ISH members within groups.
RSPO ISH certification has also expanded from three countries in Southeast Asia to six globally, with the first certifications obtained in Africa and Latin America. This development is attributed to the assistance provided by local mills, RSPO downstream members and NGO members, as well as financial grants from the RSPO Smallholder Support Fund (RSSF). While most ISH are able to sell certified FFB physically, ISH Credits remain a crucial market mechanism, particularly in Indonesia, where smallholders pivoted significantly to ISH Credits. The pivot in Indonesia highlights the vulnerability of smallholders to market and supply chain disruptions (shocks to the global vegetable oil market, Indonesia’s initial ban of palm oil exports subsequently evolving into export quotas), with ISH Credits offering a direct market mechanism for certified independent smallholders.
Despite a challenging macroeconomic situation, global palm oil trade and refining also increased in 2022. Physical CSPO volumes traded, refined and processed by RSPO Members grew by +11.0%, with significant room to grow in this section of the supply chain as RSPO Members currently account for 78.3% of global palm oil traded. These intermediate CSPO volumes are then used to manufacture industrial and consumer goods for downstream consumption. Accounting for physical CSPO and RSPO Credits, total downstream consumption grew by +7.4% in 2022.
With downstream consumption, RSPO Members with Consumer Goods Manufacturers (CGM) operations reported +6.2% rise in total CSPO purchased, with total CSPO exceeding 7 million MT and robust growth observed in China, Indonesia, Malaysia, Latin America, North America and ROW. For RSPO Members with Retailer operations, total CSPO volumes passed 1.5 million MT, with high levels of certified uptake in Europe and North America, and growth through membership expansion in Asia and South Africa.
Beyond the Big Four markets
CSPO uptake in Europe (excluding biofuels) and North America are now nearly at 90%. In the Big Four markets (Indonesia, India, China, Malaysia) volume and uptake growth continued, in 2022, despite being price sensitive markets impacted by global geopolitical and economic disruptions.CSPO volumes in other regions also remain on a growth path in spite of challenging conditions.
Notably, CSPO uptake in Japan grew to an estimated +26.7% in 2022, up from less than 3% in 2018. Australia and New Zealand also registered estimated CSPO uptake of over 40%, with positive uptake performance likewise observed in Mexico and South Africa.
Looking ahead, call to strengthen support for smallholders
Indicative RSPO trade data for January to June 2023 shows CSPO production and trade trending to growth globally. This is encouraging, as it signals that global markets remain supportive to make palm oil sustainable across the entire supply chain.
However, there is also change on the horizon, particularly with the impending implementation of trade regulations centred on individual aspects of sustainability, with the European Union Deforestation Regulation (EUDR) due 31 December 2024 being the closest. RSPO is embarking on a digital transformation, focusing first on enhancing certification and traceability systems, to support RSPO Members in compliance to such regulations.
The encouraging progress in CSPO production, consumption and awareness since 2004 has largely been because of the efforts of all RSPO Members. RSPO must continue supporting members with appropriate systems, tools and guidelines in a changing sustainability landscape.
RSPO is calling all members to ensure that efforts to continue and accelerate progress are inclusive, particularly to the over 7 million smallholders who depend on oil palm for their livelihood.