Palm oil, made from the oil palm tree, is an important source of income for many farmers in Southeast Asia, Central and West Africa, and Central America. Growing and producing palm oil (often by planting only one type of crop on land that was once forests storing carbon and home to many plant and animal species) often happens at the same time as serious human rights issues, such as forced labor, child labor, and harm to people and animals. These effects can be major because oil palms provide 38% of the world's vegetable oil from only 6% of the land used for vegetable oil farming. Products made from palm oil are found in many types of cosmetics. There have also been many cases of misleading claims about protecting the environment and preventing harm to animals in palm oil production, including companies that received certifications for being sustainable.

Statistics

Approximately 1.5 million small farmers in Indonesia grow the crop. In Malaysia, about 500,000 people work directly in this industry, and many more are employed in related businesses.

As of 2006, the total land area used for palm oil plantations was about 11,000,000 hectares (42,000 square miles). In 2005, the Malaysian Palm Oil Association, which manages about half of the world’s palm oil crop, reported that they care for roughly 500 million trees that help store carbon over many years. Demand for palm oil has increased and is expected to continue growing.

From 1967 to 2000, the area in Indonesia used for growing palm oil expanded from less than 2,000 square kilometers (770 square miles) to more than 30,000 square kilometers (12,000 square miles). Deforestation in Indonesia for palm oil and illegal logging has happened very quickly. A 2007 United Nations Environment Programme (UNEP) report warned that most of the country’s forests could be lost by 2022. However, the rate of forest loss has slowed in the past ten years.

Global palm oil production is expected to reach a record 46.9 million tonnes in 2010, an increase from 45.3 million tonnes in 2009. Indonesia contributed most of this growth.

Social issues, human rights abuses, and violence

Oil palm is an important crop that helps the economy and creates jobs. It allows small landowners to join the money-based economy and often leads to better roads, schools, and health facilities in local areas. In some places, growing oil palm has replaced older farming methods because palm oil can provide more income. However, modern farming methods have also caused problems, such as not having enough food. This happens because land is used heavily, which harms the soil and makes it harder for people to grow their own food. As a result, people must find food elsewhere since they can no longer rely on their land.

In some cases, oil palm plantations have taken over land without asking the Indigenous Peoples who live there or giving them money. This has happened in countries like Papua New Guinea, Colombia, and Indonesia. In Sarawak, a region of Malaysian Borneo, there has been discussion about whether the Long Teran Kanan community was properly consulted before their land was used for palm oil plantations. Taking land from Indigenous groups has caused conflicts between plantations and local people in these countries.

A 2008 report by groups like Friends of the Earth stated that palm oil companies in Indonesia have reportedly used force to take land from Indigenous communities. Some Indonesian plantations also rely on workers from other countries or people without proper papers, which has raised concerns about poor working conditions and negative effects on communities. Problems related to child labor have also been a major issue.

Losing land to oil palm farming is linked to violence. Frédéric Mousseau, a policy director at the Oakland Institute, said that "often, after losing their land, communities in Africa and Asia face violence, threats, and hardship." Reports by The Associated Press described incidents involving "sexual abuse, rape, human trafficking, child labor, and slavery" at palm oil plantations, noting that "many plantations have labor problems."

Deforestation

The production of palm oil involves clearing large areas of forest, which has caused a slow loss of plant and animal life in these regions. Tropical rainforests in countries like Malaysia and Indonesia are ideal for palm oil plantations because they have the right climate with plenty of rain and sunlight all year. Between 1990 and 2005, the area in Malaysia used for palm oil grew from 1.8 million hectares to 4.2 million hectares. During this time, over 1.1 million hectares of tropical rainforest were lost. Rainforests are home to many different species, but their numbers have dropped quickly because animals are easily harmed by deforestation. When land is cleared for palm oil, animals lose their homes and must move to find food, often coming closer to human settlements. Some animals cannot move and their populations shrink, breaking the balance between plants and animals in their environment. Converting forests into plantations reduces biodiversity, making forests less rich in species compared to untouched forests. One species at risk is the critically endangered Bornean orangutan. A study from 2018 found that between 1999 and 2015, more than 100,000 orangutans were lost due to activities like palm oil production. Researchers tracked this by counting nests, which decreased from 22.5 nests per kilometer to 10.1 nests per kilometer over 16 years. Growing palm oil also helps spread invasive species, such as the ant Anoplolepis gracilipes in Southeast Asia. Studies show that biodiversity declines in most groups of animals, including ants, bats, primates, bees, beetles, birds, dung beetles, isopods, lizards, mosquitoes, moths, and small mammals. However, some species, like dung beetles, isopods, lizards, and bats, lose numbers but not variety. Bees are an exception, as they lose numbers but gain more species in oil palm areas.

Clearing forests to plant palm oil harms soil quality. When trees are removed, the soil is more likely to erode. Palm oil trees require large amounts of fertilizers and pesticides to grow quickly and stay healthy. Young trees take in many nutrients from the soil, reducing its quality. This forces workers to use more fertilizers and pesticides to keep the trees growing. Palm oil trees are planted very close together to save space, which makes the soil even more stressed. The trees compete for limited nutrients, water, and minerals, leading to more fertilizer use. This harms the soil and makes it hard for plants and animals to survive. A study from 2019 found that replacing forests with palm oil plantations reduces the number of species that mix soil, even if the total mixing remains the same.

In tropical countries like Malaysia and Indonesia, where palm oil plantations are common, there is frequent rain and sunlight. Plantations near rivers cause problems for nearby communities because fertilizers and pesticides are washed into rivers by rain. Villagers rely on rivers for drinking water and food, making them vulnerable to harmful chemicals. Exposure to polluted water can cause health issues like cholera, E. coli infections, and lead poisoning.

Soil erosion and poor soil quality also harm the lives of people living near palm oil plantations. These communities can no longer grow food or harvest timber from the land. They must find new sources of food and materials, which sometimes forces them to move. This creates economic challenges, as governments must spend resources to support these communities.

Other environmental issues

In Indonesia, the growing need for palm oil and timber has caused the clearing of tropical forest areas within national parks. A 2007 report from UNEP stated that, at the rate of deforestation in 2007, about 98% of Indonesia’s forests could be lost by 2022 due to legal and illegal logging, forest fires, and the expansion of palm oil plantations.

Malaysia, the second-largest producer of palm oil, has promised to protect at least 50% of its land as forests. By 2010, 58% of Malaysia’s land was covered in forests.

Palm oil farming has been criticized for several reasons:
• Greenhouse gas emissions: Deforestation in tropical regions contributes about 10% of human-caused carbon dioxide emissions, which can worsen climate change.
• Habitat destruction: This threatens critically endangered species, such as the Sumatran elephant, Sumatran tiger, Sumatran rhinoceros, and Sumatran orangutan.
• Reduced biodiversity: This includes harm to areas with high levels of unique plant and animal life.
• Land disputes: Some palm oil farms are built on land owned by indigenous people in Sarawak, Kalimantan, and Sabah on the island of Borneo.
• Zoonotic diseases: Deforestation in tropical regions is linked to an increase in diseases that spread from animals to humans.

In some areas where palm oil is grown, weak enforcement of environmental laws allows plantations to expand into areas near rivers and release waste, such as palm oil mill effluent (POME), into the environment. POME is a waste product from palm oil production. Managing this waste is costly and difficult, so it is often dumped into nearby water sources. POME contains high levels of nutrients, which can cause algae to grow rapidly. This reduces oxygen in water, harms aquatic life, and disrupts ecosystems.

More environmentally friendly methods have been developed. One example is treating POME using a process that produces biogas (methane) and electricity. However, maintaining the right conditions for the microorganisms involved in this process is very challenging.

Damage to peatland, partly caused by palm oil farming, contributes to environmental harm. Peatlands store large amounts of carbon, and their destruction releases this carbon into the atmosphere. Peatland damage is linked to about 4% of global greenhouse gas emissions and 8% of emissions from burning fossil fuels. A study found that converting peatlands contributes 16.6% to 27.9% of total greenhouse gas emissions from Malaysia and Indonesia combined. Young palm oil plantations produce 50% more emissions than older ones. This is a growing concern as more tropical peatlands are turned into plantations to meet rising demand for palm oil.

Researchers are exploring ways to reduce harm from palm oil production. They suggest that protecting large areas of primary forests could help reduce the impact of palm oil farming on wildlife and biodiversity. Groups like Greenpeace, the Roundtable on Sustainable Palm Oil, and Amnesty International are working to stop the use of unsustainable palm oil and the companies that sell it.

Greenpeace claims that deforestation from palm oil farming releases more greenhouse gases than biofuels can absorb. They highlight that Indonesian peatlands, which store large amounts of carbon, are being destroyed for palm oil plantations. Greenpeace states that peatlands are important carbon sinks, and their destruction already accounts for 4% of global carbon dioxide emissions. However, the Tropical Peat Research Laboratory reports that some studies show oil palm plantations can act as carbon sinks by absorbing carbon dioxide and producing oxygen, similar to other trees. Malaysia’s Second National Communication to the United Nations Framework Convention on Climate Change also notes that oil palm plantations contribute to the country’s overall carbon sink.

Greenpeace documented peatland destruction in Riau, a province in Indonesia’s Sumatra region, which is home to 25% of Indonesia’s palm oil plantations. They warn that this destruction could have severe consequences, as Riau’s peatlands hold 14.6 billion tonnes of carbon, equivalent to one year’s global greenhouse gas emissions.

Environmentalists and conservationists are encouraging partnerships with palm oil companies to buy small areas of existing plantations. These funds could be used to create private nature reserves. This approach is seen as more effective than current confrontational methods that risk the livelihoods of many small farmers.

Haze, a type of air pollution, is a recurring problem in Southeast Asia. It is partly caused by burning rainforests and peat swamp forests to clear land for palm oil plantations.

National differences

In Indonesia and Malaysia, the two countries that produce more than 80% of the world's oil palm, small farmers own between 35% and 40% of the land where oil palm trees are grown. These farmers also produce about 33% of the total oil palm harvest. In other regions, such as West African countries where oil palm is mainly grown for local and nearby markets, small farmers grow up to 90% of the yearly harvest.

Malaysia has made a promise to protect at least half of its land as natural forests. Because of this, the growth of new palm oil plantations has slowed in recent years. Malaysia's Plantation Industries and Commodities Minister, Bernard Dompok, said that expanding palm oil production is no longer possible. Now, Malaysian farmers are working to increase production without using more land.

In January 2008, the leader of the Malaysian Palm Oil Council wrote a letter to the Wall Street Journal, explaining that Malaysia understood the importance of creating a sustainable palm oil industry. Since then, the Malaysian government and palm oil companies have focused on producing more certified sustainable palm oil (CSPO). Malaysia is now the largest producer of CSPO in the world, making half of the global supply. It also has 40% of the world's CSPO growers. Indonesia produces 35% of the world's CSPO.

In Indonesia, the Indigenous Peoples' Alliance of the Archipelago (AMAN), led by Mina Susana Setra, has worked to create policies that balance economic needs with the rights of indigenous people. About 99% of the land given to palm oil companies in Indonesia is already occupied by indigenous communities. In 2012, AMAN helped win a court case that recognized the land rights of indigenous people. However, programs to protect these rights, the environment, and developers have not been fully implemented except in a few cases.

In West Africa, the situation is different from Indonesia and Malaysia. According to the United Nations Development Program's Human Development Report from 2007–2008, palm oil production in West Africa is mostly sustainable. This is because it is mostly done by small farmers who grow a variety of crops instead of only oil palm. The United Nations Food and Agriculture Organization encourages small farmers in Africa to grow palm oil because it can help improve the lives and incomes of poor people.

Increasing demand

Food and cosmetics companies, such as ADM, Unilever, Cargill, Procter & Gamble, Nestlé, Kraft, and Burger King, are helping to increase the need for new palm oil supplies. This need was partly because some industries wanted to replace oils that had high levels of trans fats.

Although palm oil is used to make biofuels and some people have suggested using it in large-scale projects, a 2012 report by the International Food Policy Research Institute found that the rise in palm oil production is mainly because of food needs, not because of demand for biofuels.

Biodiesel made from palm oil grown on land that is not a forest and from already existing plantations can lower greenhouse gas emissions. Greenpeace says that clearing peatland to grow oil palms releases large amounts of greenhouse gases, and biodiesel made from palms grown on this land might not reduce overall emissions. However, research by Malaysia's Tropical Peat Research Unit found that oil palm plantations on peatland produce less carbon dioxide than forest peat swamp. It has also been suggested that this research group was asked to work by politicians who support the palm oil industry.

In 2011, eight of Malaysia's Federal Land Development Authority (FELDA) plantations were approved under the International Sustainability and Carbon Certification System (ISCC), becoming part of Asia's first ISCC-certified supply and production chain for palm biodiesel. This certification system follows the rules of the European Union's Renewable Energy Directive (RED). In 2012, the European Commission approved the Roundtable on Sustainable Palm Oil's (RSPO) biofuel certification program, allowing certified sustainable palm oil biofuel to be sold in Europe.

Sustainability

In 2016, at least 17.4% of palm oil fruit produced worldwide met voluntary sustainability standards, such as the Roundtable on Sustainable Palm Oil (RSPO), Rainforest Alliance, and organic certifications. The RSPO, created in 2004, works with growers, processors, food companies, investors, and NGOs to promote sustainable palm oil production. Starting in 2008, palm oil that meets RSPO standards is labeled "certified sustainable palm oil" (CSPO). Two years after this label was introduced, CSPO made up 7% of the global palm oil market. By October 2012, 12% of palm oil was certified by the RSPO. However, in the first year of CSPO certification, only 30% of sustainable oil was labeled as CSPO.

In 2010, The Economist criticized the RSPO for not setting clear standards for greenhouse-gas emissions from plantations and for having members that produce only 40% of the world’s palm oil. In 2007, Greenpeace criticized RSPO-member food companies for relying on suppliers involved in deforestation and peatland destruction.

In 2010, after receiving $1 billion from Norway, Indonesia paused new agreements to clear natural forests and peatlands for two years. Indonesia also planned to create its own government-led certification system to enforce mandatory rules for all palm oil producers in the country.

In 2011, Malaysia began developing its own certification, called "Malaysia Sustainable Palm Oil" (MSPO), to support sustainable production nationwide. The program targets small and medium-sized producers and was expected to launch in 2014. Malaysia also started using Life Cycle Assessment (LCA) methods to evaluate the environmental impact of oil palm production, including seedlings, fruit, and refined oil. Assessments of downstream industries, like biodiesel, were also conducted.

In July 2020, scientists used satellite images to show that certified "sustainable" palm oil production caused deforestation in Sumatra and Borneo and harmed habitats of endangered mammals over the past 30 years. A 2024 study by the Research Institute for Sustainable Excellence and Leadership questioned whether general assumptions about land use changes apply to Malaysian palm oil. The study said these assumptions often ignore Malaysia’s unique land policies and called for more localized, evidence-based evaluations of palm oil’s environmental effects.

Oil palm producers can join Clean Development Mechanism (CDM) programs, where developed countries invest in clean energy projects in developing nations to earn carbon credits and reduce global emissions. Investors are cautious about palm oil biofuel projects because of their impact on rainforests, but some CDM projects focus on reducing waste-related emissions without expanding plantations.

Palm oil production has grown significantly since the late 20th century, increasing 15 times between 1980 and 2014. While Indonesia and Malaysia are the main producers, Latin American countries are becoming more involved in the global palm oil industry.

SPOTT is a free online tool that evaluates companies in the palm oil, timber, and natural rubber industries based on their public disclosures about environmental, social, and governance (ESG) issues. SPOTT assesses 100 companies using three frameworks with over 100 indicators grouped into 10 categories. These indicators were developed by ZSL with technical experts to align with the United Nations Sustainable Development Goals.

Company policies and pledges may not always be followed effectively. While media monitoring on company pages can offer some insights, independent checks are needed to assess how well policies are implemented.

The World Wildlife Fund (WWF) releases an annual report on the use of sustainable palm oil by major companies. In 2011, 31 of 132 companies surveyed received top scores for using sustainable palm oil, an increase from 2009, when no companies received top scores. In 2015, 87 companies, including Unilever and Nestlé, pledged to use only sustainable palm oil. However, the WWF says progress is too slow.

Retailers like Walmart and Carrefour, which commit to selling sustainable oil products, say slow growth in sustainable palm oil is due to low consumer interest and awareness. They worry that weak demand could raise costs and reduce the availability of sustainable palm oil.

A 2010 report suggested that protecting 13 million hectares of tropical forest annually could boost U.S. agricultural revenue by $190–270 billion between 2012 and 2030. However, conservation groups criticized the report, saying its assumptions about stopping deforestation are unrealistic.