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China Steps Up Efforts to Embrace Sustainable Palm Oil
At the COP26 climate summit in Glasgow, 2021, Chinese President Xi Jinping signed the Glasgow Leaders' Declaration on Forests and Land Use, marking China's commitment to global climate governance and a stance against deforestation and land degradation. This pledge extends to the palm oil sector, as China takes strides to promote sustainable palm oil practices.
However, compared to mature markets like Europe and the US, China faces several challenges in bolstering the uptake of sustainable palm oil. One of the major hurdles is the lack of stringent regulations targeting palm oil sustainability in China. Unlike the EU, which has implemented the EU Deforestation Regulation (EUDR), China has not introduced similarly strong regulatory frameworks. This regulatory gap limits mandatory incentives for Chinese firms to switch to certified sustainable palm oil (CSPO).
Another challenge is the lower market maturity and certification uptake. In Europe and the US, over 90% of palm oil imports are certified sustainable, reflecting well-established certification systems and high demand. In China, RSPO-certified palm oil accounts for only about 8.7% of total palm oil imports, indicating that awareness, demand, and supply chain integration of sustainability standards remain at an emerging stage.
Consumer education and demand for sustainability are less developed in China, which reduces market pressure on companies to prioritize sustainable sourcing. Chinese firms and buyers tend to be more sensitive to top-down policy signals and may be harder to persuade to adopt voluntary sustainable procurement practices without strong regulatory or market drivers.
Less mature corporate ESG frameworks also pose a challenge. While ESG strategies are growing in China, they are still developing compared to Europe and the US, where corporate sustainability commitments strongly drive demand for certified sustainable commodities.
Despite these challenges, efforts in China are ongoing. RSPO membership in China has increased to 480, including several well-known companies across the entire palm oil value chain. The RSPO China forum in Guilin is the largest platform for sustainable palm oil issues in China.
One notable example of progress is Yili Group, a top dairy producer, which procured and imported its first batch of 750 tonnes of identity-preserved (IP)-level RSPO-certified sustainable palm oil, marking the first shipment of IP-level RSPO-certified sustainable palm oil to China. Yihai Kerry's Shanghai factory facility is the first in China to achieve RSPO-IP certification for sustainable palm oil processing.
Yili has also signed sustainable palm oil sourcing agreements with strategic partners, including Yihai Kerry, Bunge, and Cargill. Greater momentum among Chinese firms to position themselves as leaders in sustainable palm oil practices is evident.
However, RSPO has struggled to identify a government counterpart to work with to advance palm oil sustainability topics in China. China imports between five and seven million tonnes of palm oil annually, but palm oil is not considered as strategically important as soybeans in the context of China's broader economic development agenda.
Including sustainable palm oil or sustainable trade principles in bilateral trade agreements can effectively promote cooperation between countries and drive the development of sustainable palm oil. Proactive collaboration between China and palm oil-producing countries, such as Malaysia, Indonesia, and Thailand, is key to building a sustainable palm oil supply chain.
RSPO China head Fang Lifeng shares reflections and insights from RSPO's decade of presence in the emerging market. China currently consumes approximately half a million tonnes of certified sustainable palm oil annually. RSPO aims to steadily increase the percentage of RSPO-certified sustainable palm oil in China's total palm oil imports and continue promoting education to drive broader market transformation.
- China's commitment to global climate governance includes a stance against deforestation and land degradation, extending to the palm oil sector, where it aims to promote sustainable practices.
- One of the major challenges in boosting the uptake of sustainable palm oil in China is the lack of stringent regulations compared to mature markets like Europe and the US.
- The EU has implemented the EU Deforestation Regulation (EUDR), but China has not introduced similar strong regulatory frameworks, limiting mandatory incentives for firms to switch to certified sustainable palm oil (CSPO).
- In China, consumer education and demand for sustainability are less developed, which reduces market pressure on companies to prioritize sustainable sourcing.
- Corporate ESG frameworks are still developing in China compared to Europe and the US, where corporate sustainability commitments drive demand for certified sustainable commodities.
- Despite these challenges, efforts in China are ongoing, with RSPO membership increasing and Yili Group, a top dairy producer, exporting the first shipment of identity-preserved RSPO-certified sustainable palm oil.
- Collaboration between China and palm oil-producing countries, such as Malaysia, Indonesia, and Thailand, is necessary to build a sustainable palm oil supply chain and encourage the development of sustainable palm oil through sustainable trade principles in bilateral trade agreements.
