How REA integrates sustainability in its core practices through certification

Sustainability certification 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 has contributed to the development of the RSPO by actively participating in the Biodiversity and HCV working group and the GHG emissions reduction working group. REA Kaltim’s two oldest oil mills, Perdana (“POM”) and Cakra (“COM”), were first certified in 2011 along with their supply chains. Each year since, these mills and their supply chains have undergone assessments to monitor their continued compliance with the RSPO standard. In 2016, POM, COM, the COM kernel crushing plant ("KCP") and their supply chains along with the group’s downstream bulking station successfully passed the full recertification audits that are required every five years.

In making sales of CPO that is both RSPO and ISCC certified, the group decides which certification should apply to each sale. Some 12% of the CPO and some 50% of the CPKO produced by the group is RSPO certified.

RSPO Supply Chain Certification

In 2012, REA obtained RSPO supply chain certification (SCC). This allows the group to sell its RSPO certified CPO and CPKO to buyers committed to purchasing RSPO certified sustainable palm oil.

If it can be proven that a specific batch of CPO or CPKO originated from an RSPO certified estate and 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 FFB from independent smallholders who are not yet RSPO certified. By continuing to engage with these smallholders, the group can assist them in improving their farming practices, which should 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 due to there being 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 first obtained ISCC certification in 2012. REA’s third mill obtained certification in 2015. Surveillance audits are conducted annually and recertification audits are conducted every five years. Following recertification audits, certificates were renewed in respect of all three of the group’s oil mills during 2018.

The majority of the ISCC certified CPO produced by the group is sold to the biodiesel market.

Indonesian Sustainable Palm Oil

The ISPO standard is a policy adopted by the Ministry of Agriculture on behalf of the Indonesian Government and is mandatory for all oil palm companies operating in Indonesia. REA Kaltim’s estates and mills first achieved ISPO certification in 2016 and have passed annual surveillance audits each year subsequently. The SYB mill and estates obtained ISPO certification in November 2018. ISPO does not apply to immature or development estates.