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DARE: Palm Oil Producers Need to Further Improve Sustainability

Growing oil palms and harvesting their fruits is a major source of income for 500,000 smallholders in Malaysia who depend solely on the commodity for their livelihoods, according to the Datametrics Research and Information Centre (DARE).

It said that for smallholders, palm oil cultivation is also crucial in the battle against poverty and plays a vital role in the improvement of socio-economic conditions in rural areas.  

"As for the country, the government also collects substantial revenue in the form of taxes, and this includes excise duty and levies from planters," it said in a statement. 

Based on the forecast in the 2024 Budget, the government's revenue from the two taxes alone is expected to hit RM1.64 billion and rise to RM1.8 billion next year. 

The government also collects substantial income tax proceeds from planters, both from major corporations and smallholders. 

As such, DARE said having sustainable palm oil business operations that meet the global Roundtable on Sustainable Palm Oil (RSPO) standards is crucial to the nation's economy and the livelihood of those involved directly or indirectly in the global palm oil supply chain.  

"While Malaysian palm oil sustainability efforts have borne fruit for those in the industry, there is still much more than the industry as a whole can do in its efforts to be truly green vegetable oil," it said.

DARE said that the impact of palm oil and its derivatives on people's daily lives is evident because they make up 60 per cent of composite products in a typical supermarket. This includes cooking oil, chocolates, biscuits, shampoo, detergents, and margarine.  

"While palm oil is the most widely used vegetable oil globally, it has also at the same time been associated with issues related to deforestation and threats to wildlife.  

"Hence, palm oil must be produced sustainably, not only to ensure we continue to enjoy the by-products that vegetable oil contributes to our daily lives but also for natures and environmental protection," it noted. 

DARE said that palm oil producers can further improve the sustainability of their business operations by engaging in a variety of environmental, social, and governance (ESG)-related initiatives, in addition to earning certifications from the RSPO and Malaysian Sustainable Palm Oil (MSPO).

This includes the goal of achieving net zero emissions, reforestation initiatives, planting more trees, and determining the level of Scope 3 emissions.

DARE said that this also entails having enhanced labour rights and working conditions, as well as a diversity and inclusivity policy that takes into account factors like gender, race, culture, and religion in addition to educational background. 

A portion of these sustainability-related initiatives can be measured and quantified in terms of their effects on the environment (carbon emissions, water use, renewable energy, ethical sourcing, paper waste); the social cost (better employee engagement, housing for employees, equitable pay, respecting human rights, workplace safety); and governance concerns.

  "However, the exact impact on the bottom line may not be easily captured," DARE said.


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