Palm oil in Colombia: full transparency is crucial to end deforestation

Palm oil has the potential to make a local positive impact in Colombia, but only if companies do everything within their power to prevent deforestation, environmental degradation and the violation of human rights. All businesses in the palm oil sector, including financial companies, should identify and report on deforestation and human rights risk. Full transparency in the supply chain, respect for environmental human rights and landscape investments are necessary for the EU Deforestation Regulation and the anticipated Corporate Sustainability Due Diligence Directive to have a significant impact.

Header photo: palm oil plantation in Meta, Colombia. © FCDS

AidEnvironment and IUCN NL mapped the full palm oil supply chain from plantation level in Colombia to European buyer companies. Six case studies in the report share palm oil mills that are unlikely to comply with the environmental and/or human rights standards that are at the core of the EU Deforestation Regulation (EUDR) and the anticipated Corporate Sustainability Due Diligence Directive (CSDDD). Multiple companies in the EU, however, still buy products from these mills.

These recommendations are part of a recently publication by AidEnvironment and IUCN NL. The report ‘Uncovering the supply chain: palm oil from Colombia to the EU’, also includes recommendations for the Colombian private sector and policy makers in the EU and Colombia.

Main findings on palm oil related to deforestation in Colombia

Palm oil entering the EU market

In 2021, 14 percent (241,710 MT out of 1,747,000 MT) of Colombia’s palm oil production was imported by the EU. The main recipient EU countries of Colombian palm oil are the Netherlands, Spain, and Italy. At the same time, oil palm cultivated area has increased 75% in the past ten years and Colombia aims to become a large producer of biodiesel.

Location of palm oil mills

European palm oil buying companies are sourcing from palm oil mills in close proximity to Colombia’s main deforestation frontier and Indigenous territories. These locations increase direct and indirect risks of deforestation.

Additionally, mills in areas with security issues, for example close to land conflicts and illicit
crop production, requires much more attention from (RSPO and EU compliance) auditors to
ensure no environmental or human rights violations take place. In case incompliance is reported, European companies sourcing from these mills should take action.

Case studies: six palm oil companies

Six palm oil producing companies were investigated in this report. The case studies show that palm oil flows entering the EU market are linked to palm oil mills situated near areas where clear indications of savanna burning, environmental damage to watersheds, and displacement of Indigenous groups or peasants through forced or unfair land deals exist. Annex 1 to the report lists 81 Colombian palm oil mills and their respective connections to 39 buyer companies.

Because we deliberately selected cases with potential environmental and social impacts linked to oil palm expansion, the case studies in this report do not necessarily represent the situation of the entire Colombian palm oil sector. They do, however, provide a valuable indication of environmental and social realities in the sector.

Recommendations to companies in the EU

Identify environmental and human rights risks

Together with governmental institutions, the private sector has a crucial role in ending (indirect) deforestation, environmental degradation, and human rights violations linked to palm oil consumption in EU member countries.

European companies must do everything in their power to identify and report the risks in their supply chain, in full transparency. To accomplish this, companies and governmental institutions need practical solutions to improve and scale up transparency and traceability mechanisms for Colombian palm oil. This means upgrading their due diligence policies and disclosing data regarding the actors involved in their value chain, including plantations, palm oil mills, traders, and financiers. Reliable and detailed lists of palm oil mills play a vital role in the sector’s transparency.

Invest in landscape governance

Investing in landscape governance is crucial for the private sector to have a positive impact in high-risk landscapes. To prevent the expansion of the deforestation frontier and human rights violations in these areas, private sector entities must allocate resources to governance measures and programmes.             This should be done in close collaboration with communities, local expert civil society organisations and local governments.

Landscape investments are needed to avoid a scenario where transparency and traceability measures lead to EU oil palm buyers sourcing only from low-risk landscapes where deforestation occurred before 2020 (the cut-off date of the EUDR), while national and regional buyers continue to push the deforestation frontier in high-risk landscapes at the same rate.

Require RSPO certification

We strongly recommend that all companies require plantations and mills to obtain RSPO certification. Even though it is widely used, the cases studies in the report show that many European buyer companies are still in business with non-RSPO certified mills. The Roundtable on Sustainable Palm Oil (RSPO) standard is the largest independent sustainability standard for palm oil.

To ensure compliance with the upcoming EUDR and anticipated EU CSDDD regulation, buyers of palm oil will need to provide evidence of their compliance. Obtaining RSPO certification could be an independent means of proving this compliance. In combination with improving the RSPO standard, including ensuring that there effective enforcement in case of non-compliance, there is a potential to make a real difference.

More conclusions and recommendations for the private sector, and EU and Colombian policy makers are included in the report Uncovering the supply chain: palm oil from Colombia to the EU.