Sustainability certification is important to REA because it provides third party verification that national and international standards for environmentally and socially responsible palm oil production are being achieved and maintained.
The Roundtable on Sustainable Palm Oil
The Roundtable on Sustainable Palm Oil (RSPO) is a multi-stakeholder organisation which aims to promote the production and use of palm oil in a way that is ‘legal, economically viable, environmentally appropriate and socially beneficial’. REA joined the RSPO in 2007 and is committed to implementing the RSPO principles and criteria for sustainable palm oil production throughout the group's palm oil operations. The group contributes to the development of the RSPO by actively participating in the Biodiversity and HCV working group and the GHG emissions reduction working group.
In 2011, REA obtained RSPO certification for its two longest established palm oil mills, which as of April 2015 have been verified to be in compliance with the new RSPO standard (RSPO P&C 2013). In 2014, 59% of the crude palm oil (CPO) and 68% of the crude palm kernel oil (CPKO) produced by the group was RSPO certified.
RSPO Supply Chain Certification
In 2012, REA obtained RSPO supply chain certification (SCC). This allows the group to sell the crude palm oil (CPO) and crude palm kernel oil (CPKO) produced by REA’s RSPO certified estates to buyers that look to purchase RSPO certified sustainable palm oil (“CSPO”).
If it can be proven that a specific batch of CPO or CPKO originated from an RSPO certified estate or mill, it can be sold as ‘Identity Preserved’ or ‘Segregated’ certified sustainable CPO or CPKO. If the certified product mixes with non-certified products in the supply chain then it can be sold as certified sustainable CPO or CPKO using a mass balance system. This requires records to be kept to demonstrate that the volume of CPO and CPKO sold as sustainable palm oil does not exceed the amount produced by the upstream RSPO certified mills over a specified time period.
At present, the mass balance system is preferable for REA because it enables the group to continue to purchase oil palm fresh fruit bunches (FFB) from independent smallholders who are not yet RSPO certified. By continuing to engage with these smallholders, the group can assist them to improve their farming practices, which can enable them to obtain RSPO certification in the future. If REA had chosen to produce segregated CSPO, REA would have had to exclude these smallholders from its supply chain. For many of these smallholders, this would prevent them from obtaining income from their land because there are very few alternative palm oil mills near enough to process their FFB. More information about how REA is working with smallholders to improve their practices can be found here.
The group uses the RSPO “PalmTrace” system whereby physical sales and processing activities of certified palm oil and palm kernel oil can be registered. RSPO PalmTrace also offers a marketplace and the option to register off market deals (“Book and Claim”) for RSPO “credits”, which confirm that the certified palm oil was produced by an RSPO certified company.
International Sustainability and Carbon Certification
The International Sustainability and Carbon Certification (ISCC) is a multi-stakeholder initiative and sustainability certification system. The defining feature of the ISCC standard is that it requires that the net GHG emissions associated with the production and use of palm oil as a biofuel must be at least 35% lower than if the equivalent amount of energy was generated by burning fossil fuels. Due to the fact that biodiesel produced from ISCC certified palm oil is deemed to meet the requirements of the European Union Renewable Energy Directive (EU RED), EU member states can count biodiesel produced from ISCC certified palm oil towards their renewable energy targets.
REA’s established oil palm estates, two mills and transhipment terminal obtained ISCC certification in August 2012. REA’s third mill also underwent an ISCC audit in April 2015 and it is anticipated that the certificate will be issued in July 2015.
In 2014, REA sold some 75,000 metric tonnes of ISCC CPO to the biodiesel market.
In 2017, all three of the group's mills passed the recertification audits and new ISCC certificates were issued for COM in March, POM in June and SOM in July 2017.
In February 2018, the ISCC recertification audit has taken place for POM, COM, SOM and for all Estates (Perdana, Sentekan, Lestari, Cakra, Berkat) and Bulking Station. No Non-Conformance Reports (NCRs) were identified during the audits, and the certifications have been issued in March 2018.
In making sales of CPO that is both RSPO and ISCC certified, the group has to decide which certification should apply to each sale.
Indonesian Sustainable Palm Oil
In 2010, the Indonesian government introduced new regulations mandating that all palm oil companies must be audited against the Indonesian Sustainable Palm Oil (ISPO) standard. This standard is largely based on existing national regulations and includes requirements covering key economic, environmental and social issues. All three of REA’s mills and their supply bases undertook the first stage of the ISPO audit in November 2014. The second stage of the audit took place at the end of April 2015.
POM and COM successfully retained ISPO certification in 2016 and passed audit surveillance tests in 2017. In July 2018, PT. Sasana Yudha Bhakti acquired ISPO certification.