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New Trase data reveals a fall in deforestation linked to Indonesian palm oil exports between 2018 and 2020. Where exporters have zero-deforestation commitments (ZDCs), their supply chains are consistently linked to less deforestation.
However, the sector’s success may be fragile amid price rises and an increasing market share being captured by suppliers with comparatively poor performance on forests and transparency.
Aerial view of rainforest deforestation in Indonesia for palm oil trade. Photo: Heri Mardinal / Getty Images.
A new assessment of palm oil exports from Indonesia (2018-2020) shows a nation-wide decline in the deforestation linked to the sector’s exports.
The data, released today by Trase, the data-driven transparency initiative, found exporters with zero-deforestation commitments (ZDCs) consistently sourcing with 70% of the per-tonne deforestation risk of their competitors.
“This is the first clear evidence of a link between ZDCs and lower deforestation risk in palm oil supply chains,” said Dr Robert Heilmayr of the University of California Santa Barbara (UCSB), who led the Trase research.
Refineries with traceability reports, which processed 87% of refined palm oil exports in 2018–2020, are also associated with lower deforestation risk. “Company transparency has now emerged as a positive factor, which has not always been the case previously,” said Dr Heilmayr.
According to the data, the largest markets for Indonesian palm oil – China, India and the domestic market – tend to rely on riskier supply chains, with 2.4 times the per metric ton deforestation risk of exports to the EU. China and Indonesia are both growing as destination markets.
Market concentration among exporters is declining. The top four accounted for 68% of exports in 2015, but only 59% in 2020.
“The fastest-growing smaller traders often lack strong commitments supported by transparent disclosures,” said Dr Heilmayr. “This raises concerns that the progress we’ve seen in the sector could falter – or even reverse.”
“Indonesia’s forests are not yet out of danger – 2.4 million hectares (ha) of intact forest remain in existing palm oil concessions,” said Auriga Nusantara Executive Director Timer Manurung. “Forest-rich areas in Kalimantan, Papua, Aceh and Sulawesi will face pressure if production expands, especially if new mills are built in areas with fewer mills today.”
“Trase data shows Indonesia making impressive progress,” said Helen Bellfield, Deputy Director of Trase at Global Canopy. “But the story of Brazil after 2012 warns us that gains in forest protection are fragile, and easily lost. This is the time to intensify both government and private sector efforts, such as strengthening the ISPO standard and stepping up implementation of ZDCs, including more detailed traceability reporting.”
Deforestation for palm oil in Indonesia has declined significantly in recent years, and our data show that the greatest declines have occurred in supply chains governed by zero-deforestation commitments. However, these achievements are fragile, and rising palm oil prices and the growing role of traders who have lower levels of public transparency threaten to undermine progress.
Dr Toby Gardner, Director of Trase and Senior Research Fellow at SEI
“Accelerating the implementation of existing commitments and ensuring that standards are raised across the sector, including through regulatory measures, is essential to maintain progress and continue to curb deforestation of these vitally important ecosystems,“ said Dr Toby Gardner.
Tool / Trase enables governments, companies and others to address the environmental impacts of supply chains.
Media coverage / In an interview with Jill Ettinger for Green Queen, SEI's Dr. Toby Gardner comments new study that finds 90% of tropical deforestation is caused by agriculture.
Feature / Palm oil deforestation falls in Indonesia, but price surge and growth in exporters with lower standards are still putting forests at risk.
Feature / Mairon G. Baston Lima writes that governments need to build synergies with other policies for sustainable land use in a Trase Insight.
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