The sustainability standards for palm oil production, governance and trade continue to heighten uncertainty in the industry. The multiple attacks on palm oil still center around environmental and social issues related to the commodity’s production, which are the key principles in the ethical palm oil sourcing policy adopted by multinational companies.

Ethical sourcing means that products and services from each point in the supply chain are obtained in an ethical and sustainable way.

The most common accusation of deforestation has not receded, despite strong evidence from various studies and surveys that oil palm estates are not the main culprit of deforestation, and that sustainability commitment among palm oil producers has strengthened. Allegations of rights violations concerning workers and indigenous peoples have cast a shadow over the industry.

Worse still, the industry has become an easy target, even in Indonesia, where it was blamed for the cooking oil debacle that lasted from January to June. This is despite the important role palm oil has played in the economy of the world’s largest palm oil producer as a major employer and a source of tax revenue and foreign exchange earnings.

Even though the cooking oil fiasco was caused by the skyrocketing global prices of edible oils following Russia’s invasion of Ukraine, both major producers of sunflower oil, the government hampered domestic palm oil producers with a spate of inconsistent trade regulations, including a draconian measure that completely banned palm oil exports.

Palm oil producers thus lost an opportunity to make windfall gains during the resulting palm oil boom. By the time the government finally revoked the export ban in May, international palm oil prices had fallen as the commodity entered the bust phase.