The Sustainable Table - Business Leaders Talk Welfare
Join Elissa Lane, the dynamic CEO of Global Food Partners, on her podcast, "The Sustainable Table - Business Leaders Talk Welfare." In this enlightening series, Elissa engages with top business leaders at the forefront of integrating animal welfare and sustainability into their corporate ethos and operations.
Each episode features a new guest sharing their personal and professional journey towards more ethical business practices. These conversations illuminate the practicalities and challenges of adopting sustainable and animal-friendly policies, revealing how these leaders are influencing positive change within their industries.
Listeners will be inspired by stories of innovation, from implementing responsible sourcing strategies to leveraging cutting-edge technologies for sustainable sourcing. The podcast highlights the business benefits of such practices and delves into their broader societal and ecological impacts.
"The Sustainable Table - Business Leaders Talk Welfare," hosted by Elissa Lane, is a must-listen for anyone interested in how contemporary businesses are navigating the path to a more sustainable and humane future.
The Sustainable Table - Business Leaders Talk Welfare
From palm oil to cage-free: how credits can kickstart and transform responsible supply chains
In this episode of The Sustainable Table: Business Leaders Talk Welfare, host Elissa Lane sits down with Pak Win, the Deputy Director of Market Transformation for the Roundtable on Sustainable Palm Oil (RSPO) in Indonesia. Pak Win shares his insights and experiences with RSPO's credits program, which has transformed the sustainable palm oil market.
Listeners will gain valuable knowledge on how:
- RSPO credits have enabled companies to meet their sustainability goals and support and incentivise local sustainable farmers
- Global Food Partners' cage-free credits (Impact Incentives) can do the same for companies looking to meet their cage-free egg commitments in Asia
Tune in to gain deep insights into the transformative power of credits programs and learn how they drive sustainability and responsible sourcing in the palm oil and cage-free egg industries. Don't miss Pak Win's valuable lessons and practical advice for businesses committed to responsible sourcing and welfare initiatives.
Hello everyone, welcome to our podcast, the Sustainable Table Business Leaders Talk Welfare. For those of you joining for the first time today, welcome. My name is Iglesias Lane and I'm the CEO and co-founder of Global Food Partners. On this podcast, we interview thought leaders in the fields of cage-free and other sustainability, responsible sourcing and welfare initiatives. I'm excited to have with us today Pak Win, the Deputy Director of Market Transformation for RSPO in Indonesia.
Speaker 1:In this role, he oversees the management of RSPO's operations in Indonesia and collaborates with other RSPO global offices to ensure a cohesive and aligned regional direction with the organization's global goals. Pak Win actively engages with key stakeholders and policymakers to advance RSPO's vision of establishing sustainable palm oil as the standard. Papwin is based in Jakarta, indonesia. For those unfamiliar with the Roundtable on Sustainable Palm Oil, or RSPO, the organization was established in 2004 to promote the growth and use of sustainable palm oil products through global standards and multi-stakeholder governance. Oil products through global standards and multi-stakeholder governance.
Speaker 1:Rspo certification ensures that palm oil is produced sustainably, protecting the environment, communities and wildlife. One of RSPO's key mechanisms is RSPO credits, which allow companies to support sustainable palm oil production even if they cannot source physical certified sustainable palm oil. Each credit represents one ton of certified palm oil, providing economic incentives for producers to adopt and maintain sustainable practices. As our cage-free credits program Impact Incentives continues to grow and gain traction, we wanted to invite Pak Win to share his invaluable experiences with the RSPO Credits Program, to share key learnings and the transformative impact it has had. We'll delve into how RSPO Credits have enabled companies to fulfill their commitments and help farmers enhance their practices and gain market access. Welcome, win, very happy to have you with us today.
Speaker 2:Thank you for having me Win.
Speaker 1:very happy to have you with us today. Thank you for having me so. First I gave a bit of a bio and background on RSPO, but can you tell us a bit more about yourself and the role that you play as the Deputy Director of Market Transformation at RSPO and your work in Indonesia?
Speaker 2:Yes, as you already explained, I work for RSPO in Jakarta office in Indonesia. I oversee the management of Indonesian office, you know, contacting with our stakeholders here in Indonesia, with our members, government and counterparts like yourself. So very happy to be here and share our experience in RSPO credits programs.
Speaker 1:Thanks, pakwin. And for those that may be new to RSPO, I gave a bit of an introduction. Is there anything you would want to add about RSPO? A bit more of an overview of the organization, including the RSPO credits program.
Speaker 2:Yes, rspo has been around for 20 years in 2024. So it's our 20th anniversary this year. Our offices are in more than 10 countries. We have offices in Jakarta, our headquarters actually in Kuala Lumpur in Malaysia.
Speaker 2:And if you are talking about the credit program of RSPO, the RSPO credit actually is a mechanism within RSPO certification system that is designed to support sustainable palm oil production. The credits work similarly to carbon credits, if you like. It's kind of the offset in the market. So the general function of the credits of RSPO starts from the production. So we make sure that our production is aligned with RSPO standard and receive certification. So that's the first step. The first step that we will work for the credit is that we will be working with our members, the producers that already receive certification, so certified producers can receive palm oil credits when they produce certified palm oil. And then the credits listed on the RSPO PalmTrace platform. Palmtrace is RSPO marketplace, so where the producers and the buyers can interact and negotiate on the price of the incentive and then have dealing with each other and then the company, the buyers, will purchase the credit.
Speaker 2:And we say in our certification system that credit is to support sustainable practices, meaning they are not really buying the physical of certified sustainable palm oil, but they are supporting sustainable practices and the companies or the buyers can use credits to demonstrate their commitment to sustainability. They can make claims in their end products by saying that they support sustainable palm oil production and by having these credits in their supply. They also channel the resources from the credits that they buy to the certified producers. Credits that they buy to the certified producers so mainly the producers that produce credits is smallholders. So you know this independent smallholder that produce certified sustainable palm oil. Rspo roles is to conduct audits and ensure compliance to the certification system and we continuously reporting and tracks the impact and progress of the credit. So overall, the credit system helps to create a market-driven approach to promote the sustainable palm oil production and also supporting environmental conservation, social responsibility and economic benefits for the producers, especially for the independent smallholders.
Speaker 1:Thanks for that explanation. So you mentioned RSPO is in about 10 countries. Is that right? Are there producers? So there's palm oil producers spread across the 10 countries, so in Indonesia, where you're based, and then in about nine other markets.
Speaker 2:Yeah, it's for the market and for the supply side and also demand side. So we have also office in Europe, that's more on the demand side of the CSPO.
Speaker 1:And companies are using RSPO credits to offset for their global supply chains, for the Asia supply chains.
Speaker 2:Yes, correct.
Speaker 1:Everywhere correct.
Speaker 2:Yeah, correct Okay.
Speaker 1:Yeah, thanks for walking us through that process from start to finish. It's quite similar to our cage-free credits or impact incentives program. We have the certified cage-free farmers that are local, they are audited, they're certified. Then buyers can come. They offset their use of conventional caged eggs. So companies will buy physical cage-free eggs wherever they can and fill the gap with cage-free credits and they're paying for the credits, the incentives, which go into the hands of the farmers, which incentivizes more sustainable, higher welfare Stimulator system Very similar.
Speaker 1:Yeah and yeah. While we were developing our incentives program, we did a lot of research on RSPO, on carbon credits, on the different book and claim systems that are there. So are you able to give any specific case studies or specific examples of, let's say, a food corporation, a food or hospitality corporation, that has been able to meet their sustainability goals around palm oil using credits? So how did that work? What were the benefits for them? If you can walk us through, if you have any specific examples you can share, yeah, we have our big member.
Speaker 2:I can name Unilever. We have also Nestle, kellogg, mars, that they have 100% sustainably sourced palm oil in their products. For example, I will go for Nestle. Their goal is to achieve full traceability and ensure that 100% of their palm oil is responsibly sourced.
Speaker 2:Nestle uses a combination of physical, sustainable palm oil and RSPO credit. So you know it's not only buying the credits but also the use of physical. That's's very important that they are also using the physical sustainable palm oil, but in their action they also buying RRSPO credits, just like you also explained before. So this kind of approach ensure that they support sustainable practices even in the region that, for sourcing the physical sustainable palm oil, is challenging. So this combination of physical and creative also can be applied in the region that the sustainable palm oil is not there yet.
Speaker 2:So another company that I can name here is Kellogg. It's almost the same strategy. They're also buying the physical and credits. I can go for the small Indonesian company that's going 100% for credits. The reason is because they consume a small amount of palm oil, so for them, the best choice to support the sustainable palm oil, the protection of sustainable palm oil, is to buy the credits. I can name, like the Bali Soap. So it's a small company in Bali. They produce soap and they buy credit and they put the RSPO trademark in their packaging saying that they support production of sustainable palm oil.
Speaker 1:Okay, Thanks for those examples. So it sounds like there's a whole range of companies, the large scale leaders, global leaders like Nestle.
Speaker 2:Kellogg's Medium small.
Speaker 1:Medium, small, okay. And for the small, for the companies that don't necessarily source large volumes you mentioned the example. They can buy credits. You mentioned the example. They can buy credits basically because they don't have the economies of scale, the leverage over the producers for the smaller volumes, yes, so they're able to. So then they can buy the credits and then report in their sustainability reports, wherever to stakeholders, that they are supporting the production of sustainable palm oil, yeah go ahead the production of sustainable palm oil.
Speaker 1:Okay, and so companies like you mentioned Unilever, nestle, kellogg's are buying physical sustainable palm oil wherever they can and then credits to basically fill that gap. Is there usually a transition plan in place or can you tell us a bit more about that? I know I've seen a lot of the graphs and the annual reports that shows kind of that transition. If they're starting off with a large volume of credits over the years they're transitioning to a physical, more towards a physical supply chain as the market grows and they're able to access the physical palm oil. Can you explain how they do that, what the transition looks like?
Speaker 2:Yeah, well, the ideal of supporting sustainable production of palm oil is to buy the physical. That's the most ideal is to buy the physical. That's the most ideal. The credit is more to facilitate independent smallholders, for example, because in their supply chain it's just stopped at the production of fresh fruit bunches, for example. But for the company that they want to buy physical move from the credits to physical, there are several steps that they can do. The most important one is that they need to build relationship with suppliers, whether they are ready to supply the amount that physical palm oil needed by the company, amount that physical palm oil needed by the company.
Speaker 2:By engaging this existing supplier, they can also have the cooperation with them to support the production of sister palm oil. One company, for example they source from North Sumatra and the supplier in North Sumatra is not RSPO certified. They also work with smallholders. So the transition that they can do is they work collaboratively with their suppliers to meet the common goals and to achieve the RSPO certification. So by doing that they can move from buying credit to readily available physical, sustainable palm oil from their suppliers. So it's a journey need more investment in these sustainable practices supporting suppliers, working with suppliers, supporting smallholders so they can move from credits to physical.
Speaker 1:The company that you mentioned would be buying credits right now and they're also working directly with their supplier to the standards yeah, to meet the sustainability standards. So they're doing both at the same time, yes, and then transitioning as that supplier of physical palm oil meets the standards, gets certified, then they can purchase directly, correct and move away from the credits.
Speaker 2:Yes, okay.
Speaker 2:Yeah, okay, and this is a pretty general question, but if you could name a couple ways, the main ways that you think that you've seen the palm oil market has transformed since the credits program began, yes, the key changes that we already seen is that we have the increase of awareness, especially from independent smallholders, because we know that independent smallholders consist of around 30 to 40 percent of global supply for palm oil. So we are seeing the increase of awareness from the independent smallholders to go for a more sustainable way to produce palm oil, because in this credit system we provide incentive for them, we create awareness. We work with smallholders At RSPO. We have this RSSF RSPO Smallholders Support Fund that we support smallholder inclusion in the supply chain. We are also trying to include smallholder production to the big players' supply chain how to integrate this smallholder's production and the supply chain of the big players in palm oil industry. We also see the improvement of transparency and traceability.
Speaker 2:Like I said, financial incentive for producers, for independent smallholders. We also see the policy and regulatory support that we see also the positive environmental and social impact. Again, this is especially for the independent smallholders. We also see a collaborative effort across the industry. The big players are willing to work with the small one and the small one also supply to the big one. So you know, this kind of collaboration that we see and actually the most impact that we have is that we can provide access to new market and financial benefits to independent smallholder.
Speaker 1:So a lot of benefits for farmers who wouldn't otherwise get that market access because they're smallholders, the scale of their production, yeah, okay, and now I have some questions for you which will relate a bit more to our cage-free credit program. I'm very interested in hearing about your learnings, maybe how they can be applied tofree credit program. Very interested in hearing about your learnings, maybe how they can be applied to our credit program benefits that you've seen for companies using RSPO credits, how cage-free credits might be able to benefit them. So, as you know, a lot of these same food and hospitality businesses have cage-free egg commitments. Many of them in Asia have 2025 deadlines. They need to be 100% cage-free, so using 100% cage-free eggs whether that's shell eggs, liquid egg by the end of 2025.
Speaker 1:There are various challenges to that, as you can imagine. Some markets are a lot easier. Cage-free production has been growing. There's different sized farmers. Other markets are more challenging. Or, for example, if you have a hospitality company with a property on a remote island, it's challenging. Or you have a company that procures powder egg and they need cage-free powder egg and they don't meet the MOQ. So there are various challenges, hence why we have launched, we developed and launched this cage-free credit program. It's very similar to what you're describing to incentivize producers to grow the market, to incentivize certified production. Companies can achieve their commitments and transition over time as the market grows. So if you're thinking about what the benefits have been for RSPO credits, what do you think could be the biggest benefits for these food and hospitality businesses that have cage-free commitments in Asia of using cage-free credits More like to fill the gap, not necessarily 100% credits, but to fill the gap.
Speaker 2:Yeah, yeah, like I said before that credits facilitate the use of any sustainable products where this product is not yet available. So I think that's the basic idea of having credits. Food and hospitality will be benefits from these credits. They can claim they are supporting the production of kids' free eggs, similar with the RSBO credits. I think the first one is that they can enhance brand reputation and consumer trust. Consumers now are becoming more conscious about animal welfare and prefer to support businesses that align with these values.
Speaker 2:Using cash-free credits can send a signal to the commitment of this industry, these businesses, to a more ethical sourcing, which can enhance their brand reputation. I can also see the market differentiation. Businesses that use the cage-free eggs credits can differentiate themselves from the competitors, so there's also market incentive for them. The ethical sourcing stakeholder engagement can be incorporated to the initiative of buying cage-free eggs credits, showing their commitment to social responsibility, to the environmental, social and governance initiative. We can also see positive environmental impact in this cage-free egg credit, see positive environmental impact in this cage-free egg creating. I assume that cage-free egg production involves also more sustainable farming, sustainable farming practices, which can reduce environmental impact, reduce carbon footprint. Also. We can understand that this initiative also reduces carbon footprint during their production. And the most important one for this Kids Get Free egg is the improved animal welfare. So we understand now that the consumer also having this value of care with animal welfare, promoting better living condition and reducing animal suffering, promoting better living condition and reducing animal suffering so that's the value added I would say that they can have by having this credit system.
Speaker 2:If there is a new regulation, for example, you know regulation can be by government or this voluntary regulation by standard. In the food, in the hospitality, we have this standard for tourism standard with this regulatory ensure compliance with any future regulations. So they are already there. Customer loyalty also I can see that once we know that this food or hospitality industry they concern about animal welfare, so the consumer will prioritize to use the services of this industry. Market influence and leadership. Adopting cash-free credit can also position the business as a leader in promoting annual welfare. So they will be a leader, not a follower. So if I can summarize all of these benefits that I can see from catch-free trade-ins is that the first one is enhanced brand reputation aligned with social responsibility goals, positive environmental impact, improved animal welfare. Regulatory compliance whether this is a mandatory or voluntary regulation, customer loyalty very important one sales growth, maybe employee satisfaction and market leadership.
Speaker 1:Yeah, thanks for that. It's always good when the answer to that question is long because there's so many benefits. So you named a lot of benefits and the improved animal welfare part is important that you highlighted. I think sometimes there's still some confusion with so. If you're buying a credit, a certificate, is the animal welfare being improved?
Speaker 1:We always try to highlight is that and it's the same with palm oil credits is if you're buying credits, you are getting that bird out of a cage on a local cage-free farm. It's impacting the same number of animals the same number of birds are able to move around, spread their wings, live in cage-free environments and the same impact, or even maybe bigger impact, as it incentivizes, as you were saying about palm oil, other farmers to get certified and to join the program and for this market to increase. So and I have a lot of follow-up questions for you, but in the respect to your time, I could talk to you about this for hours. I'll move on to my next question, which is I'll move on to my next question, which is if you could share, let's say, two to three, of the most important lessons or learnings from your time working at RSPO. You mentioned RSPO has been around for 20 years and happy 20 year anniversary to RSPO.
Speaker 2:Thank you.
Speaker 1:And so what would be those two or three most important lessons learned that maybe we can take into account and think about as we move forward and grow our cage-free program?
Speaker 2:Yeah, I can give you three most, I would say, important lessons. The first one is the certification and standard. So we need to have a very clear certification standard and mechanism for verifying compliance of the producers, because this is the soul of the credit the importance of having a robust certification and standard. It's very important to develop rigorous certification standard for case-free protection, aligning with existing animal welfare certification. If any reflect the best practices in the animal welfare standard. Make sure that the certification and standard is robust.
Speaker 2:The second one is the transparency and traceability. So the transparent supply chain. We can show the traceability, you know, we can verify the origin of the product and the coming back again in this sustainability credential of the product, the chain of custody. If, for example, a company buy the credits, they know exactly where this credit will be going, which farmers will be supported with this credit. So that's very, very important, I think.
Speaker 2:The third one is market demand and incentive. So we need to work on the market demand so we also show to our producers that are already certified and having credits that there is demand for the market. There is a consumer that wants to use their products or buying their credits. By having this demand, we can also make sure that the incentive and the economic viability of the credit is there so we can expect that our market you, you know, our buyers will also pay incentives, so pay more for a sustainable product. So, yeah, that's three most important lesson that I think should be on the, on your projection for the next year, especially. Your target is 2025. 2025 is just uh.
Speaker 1:Next year, yeah, it's so close yep, 18 months away, end of 2025, yeah it's so close so close.
Speaker 1:But, yeah, the good thing again, that's one of the things with credits why we develop this program is because the deadline is so close. With all of these challenges, even if a producer can expand or transition to cage-free, they need to start now. So the purchase order needs to be there now. The contract needs to be signed, because it takes time to get the flock in, to get good practices in place. So, yeah, clear certification standards, robust certification, transparency, knowing where the product came from, and that market demand and incentive Very important. Yeah, one of the things we made sure to do with our cage-free credits program is with that transparency, which is really nice. So the buyer so let's say, compass Group, who recently announced they will fill the gap with credits when they start buying credits, they'll know exactly who the cage-free farmer is that is selling the credits. They can visit the farm, they can do the impact stories.
Speaker 1:They can….
Speaker 2:Impact story is very important. Impact story is very important.
Speaker 1:And you can have that story of transformation and change that's happening locally on the ground, with farmers who are doing the right thing and show the photos, the videos and how that change has happened, because this company is supporting the farmers. So a couple more questions. The second to last question is what future trends do you foresee in the market of sustainable products and how can credit programs continue to play a role?
Speaker 2:I think there will be increased demand from consumers for sustainable products, that's for sure. The trend, I think, will continue as more people prioritize environmental and social responsibility in their purchasing decisions responsibility in their purchasing decision. We also see the regulatory changes again, whether this is government mandatory regulation or market-driven regulatory. Just like RSPO, it's a voluntary measuring covering this environmental and social, and also now the carbon emission, the waste management or even human resources, human rights issue and yourself for the animal welfare. So the trend is growing. So the increased consumer demand for the sustainable products.
Speaker 2:So where is the role of credit programs? The first and most important role of the credit programs is to provide a financial incentive. In every initiative of credits, the financial incentive will come first. That's why sometimes the credit label as greenwashing. That's why also, we really need to have this transparency, impact stories, field visit, for example, to really make sure that this is not any greenwashing initiative. So financial incentive still there. And the credits program again it's facilitating market mechanism for sustainability. We can use credits to facilitate the support for sustainable production of any goods in remote area, like you said, the hospitality, the hotels in the middle of Caribbean Sea. So it will be hard to really have this physical supply of gauge-free egg, for example. So this facilitates market mechanism. So the credits will still be there, supporting the efforts of production of sustainable goods.
Speaker 2:If we look at more global, it's kind of also as a driver of global collaboration. It cannot be just a country or within the certain jurisdictional area, but it creates global collaboration. The example of RSPO, for example, a small lithium company in the UK. For example, they only consume 200,000 tons of CPO per year, for example. That's a very small amount, so it will not be feasible for them to buy the CSPO, the physical CSPO, but the credit is there and it needs a global collaboration so they can go to the palm trees and look which producers sell the credits. So you know global collaboration is still needed.
Speaker 1:Yeah, the part you mentioned about the most important part is incentivizing the farmers. The growers couldn't agree more. There's so many in the case of eggs, so many farmers, producers who we meet in countries like Indonesia or Thailand or China or Japan across the region that are so willing to go cage-free, to transition or to expand or to get certified, but they need that incentive. So, as we like to say, it's the chicken and egg situation what comes first, the buyers or the farmers making the eggs, but the farmer's livelihood. So we completely understand they need that incentive to make the investment into improving their practices. So we are really hoping that the credit system plays that role and gets that incentive to the farmer and motivates that farmer to get certified and motivates that farmer to get certified, to participate in this program, to expand and influence other farmers.
Speaker 2:Before I ask you the last question, is there anything else you would like to add? Collaboration with other certification or credit system? I don't know if K3X protection can also show to reduce the carbon emission, for example. That will be very important Because that's also the issue that we are facing now in RSPO. So that's why we have this GHG calculator calculator, so each of our members can go to this calculator and doing the tricks in our online tools and showing that. Well, members of RSPO, we reduce our emissions by 30% and we can report that. So you know, aligning this with other sustainability certification system or initiative, that will be very important.
Speaker 1:Indeed, that would be great. We don't currently have that for cage-free eggs. That sounds like a great tool where you can go in and calculate other sustainability benefits buying credits. So the final question that we ask all of our guests is what is the best piece of life advice you've ever received?
Speaker 2:this doesn't have to be related to rspo palm oil or work yeah, I once read in a book that one of these characters said that the world is not fair but but negotiable. So this also reflects in this credit system. So the world is not fair. That's why we need to shift from, I would say, passively accepting all the circumstances that we have now to more actively seeking solution and advocating for fairness. So we know that the world is not fair, but negotiable. This is depend for us to leverage our skills, resources, influence and navigate our challenges to be a benefit of the society. Again, the world is not fair, but negotiable.
Speaker 1:I love that and I wrote it down. Yeah, that is a really good piece of advice and a good quote. Do you remember where it's from? I think you mentioned a book. Yes, I think it's from.
Speaker 2:I forgot it's from Prince Ryder. I forgot the name. Okay, great, I will look at, or I think I can Google it. The word is not fair. I forgot the name. Okay, great, I will look at, or I think I can Google it. The world is not fair.
Speaker 1:I love that. Yeah, I think for all of us working on sustainability or animal welfare, everyone in the world comes across something that's not fair. But I love that we do have some power to try to change things and negotiate for something better.
Speaker 1:Yes, love that. Thank you for sharing that. So thank you for joining us today, pak Win, this was a really great discussion. Thank you for sharing all of your learnings, your insights. You have a lot of experience with RSPO credits and sustainability. Like I said, I could continue this conversation for many hours. Love to have that kind of conversation. I will get in touch with you when I am in Jakarta or if you're ever in Singapore, let me know and we can continue the conversation.
Speaker 1:But yeah, thanks for all of your insights and congratulations on all RSPO has done to transform the entire market for responsible, more sustainable palm oil. To be notified of our latest episodes, don't forget to subscribe to the Sustainable Table Business Leaders Talk Welfare Podcast. Wherever you get your podcasts, such as Apple Podcasts, spotify, youtube Podcasts and more. See you soon.
