Another certification racket. And again it’s run by WWF. Why do businesses pay this extortion money?
Palm oil is considered a commodity. So, most of the time, a buyer of palm oil will be trading with an intermediary that combines production from multiple farms. Some of those farms may be “sustainable”, others not. In fact, the buyer will have no clue where that oil actually came from. It could have been traded multiple times before it physically gets to their manufacturing facility. This creates a big problem if the goal is to make the commodity “green” or more “sustainable”: how can a buyer differentiate between a batch of sustainable palm oil and one that is not? One option, of course, is to secure a sustainable supply chain from the farm to the plant (like Unilever’s new pledge). But even Unilever was not keen to commit to it from the get go. It’s hard (and expensive) work.
The Green Palm Certificates offer an interesting solution (you can read all the details here). They decouple the physical flow of palm oil from the sustainability of the farms. Here is how it works. Unilever keeps buying its palm oil the same old way: sometimes without any clue where it came from. Unilever then buys a certificate from the Green Palm Programme for every ton of palm oil they purchase. Each certificate has been associated (and verified) with specific farms and they are guaranteed to have deliver to the market a ton sustainable palm oil. Everybody wins. The farmer gets the “Certificate” money to recover all the investment they made on being certified, even if the oil was paid based on “commodity” prices. Unilever is happy since they can guarantee that for every ton they bought, a ton was produced sustainably somewhere in the world, even if they did not receive that particular sustainable oil. Brilliant. They can even use a label in their products down the road for consumers to prefer their products. Brilliant again.
Sounds familiar? It should. The market mechanism is the same as the “carbon offsets” and “cap-and-trade” out there but much better: it is completely focused within the palm oil industry.