Sustainable Palm Oil: Is It Really Possible?

Palm oil is a versatile vegetable oil found in over half of commercial food and consumer care products, yet its production remains controversial due to concerns about deforestation and biodiversity loss despite supporting millions of livelihoods across Southeast Asia, Africa and Latin America.

What is palm oil, and why is it important?

The palm oil industry has rapidly expanded since the mid-20th century, growing from 3.6 million hectares in production in 1961 to almost 20 million hectares in 2021. Oil palm trees are extremely productive, yielding more oil per hectare than any other vegetable oil crop, requiring four to ten times less land than sunflower, coconut or soy oil trees to produce an equivalent amount of oil.

Palm oil is tasteless and semi-solid at room temperature, making it ideal for spreadable products and resistant to spoilage, extending the shelf life of processed foods. It currently meets 40 percent of global demand for vegetable oil, making it difficult to replace.

For farmers, oil palms provide a steady source of agricultural income. As of 2020, more than 60 percent of the world’s palm oil was exported, making it a critical revenue source for producing countries. Indonesia and Malaysia together account for the overwhelming majority of global supply: Indonesia alone produces more than 30 million tonnes annually – nearly 60 percent of the world total – while Malaysia contributes a further 25 percent.

Together, the two countries employ nearly 5 million smallholder farmers and workers directly, with a further 6 million people supported indirectly, plus roughly 3 million downstream jobs in importing countries, according to the Sustainable Palm Oil Choice consortium.

Why is palm oil controversial?

Today’s palm oil production has come at a steep environmental price. Oil palms thrive in tropical climates – the same hot, humid, equatorial zones that contain much of the world’s biodiversity.

The expansion of plantations has meant the clearing of rainforests and peatlands, releasing vast stores of greenhouse gases and destroying habitat for critically endangered species, including orangutans and Sumatran tigers. Palm oil production alone accounted for 7 percent of global deforestation from 2000 to 2018, according to the Food and Agriculture Organization of the United Nations (FAO), although that trend has slowed significantly since the 2000s.

The expansion of oil palm production has been linked with the contamination of water sources, including rivers and lakes, as have land grabs and the use of forced labor. Kalangala, a Ugandan town in the Ssese Islands island in Lake Victoria, offers a cautionary tale against leaning too heavily on palm oil production at the expense of food crops. There, large-scale oil palm plantations damaged local biodiversity and environmental systems, threatened local food sources and stripped the soil of its nutrients. Now, the local environment is starting to recover as local people apply agroforestry principles to strike a balance in land use between cash crops and sustainable food production.

How is palm oil produced?

Colored orange-red due to its high carotene content, the fruit of the palm grows in bunches that produce two kinds of oil: palm oil squeezed from the fruit’s flesh, and palm kernel oil extracted by crushing the kernel, or seed, found inside each palm fruit. After harvesting, the fruit is sterilized to deactivate enzymes and thus prevent it from spoiling, and then pressed to extract crude oil for further processing. There is considerable commercial demand for both palm oil and palm kernel oil.

More than 40 countries worldwide produce palm oil. Aside from Indonesia and Malaysia, other significant producers include Brazil, Colombia, Guatemala, Nigeria and Thailand. Some 77.6 million tonnes of palm oil is produced globally – a number expected to grow to as much as 447 million tonnes by 2050, according to data from WWF.

Can we have sustainable palm oil?

The palm oil industry has responded to criticism by developing voluntary certification programs, which aim to verify that palm oil has been produced without deforestation and in compliance with environmental and labor standards. One of the best known of these is the Roundtable on Sustainable Palm Oil (RSPO), whose standards cover 5.1 million hectares of oil palm plantations in 24 countries, along with over 425,000 hectares of forest, according to its 2025 impact report.

The RSPO aims to ensure that palm oil is produced without deforestation and exploitation of workers. Its production standards set best practices, encouraging companies to implement robust policies, and urges transparency in the use and sourcing of palm oil so buyers can understand where the oil was produced and by whom. About 86 percent of palm oil used in Europe is now certified sustainable by RSPO, according to data from the European Palm Oil Alliance and the Initiative Sustainable Trade.

The EU is preparing to raise its own regulatory standards. The European Union Deforestation Regulation (EUDR) is set to enter into effect by June 2027 and will require that products sold in the EU, including palm oil, have been produced following national regulations and without causing deforestation or forest damage.

How can we support palm oil farmers?

As consumers, it’s important to be aware of the costs and benefits of sustainable palm oil production. Always read labels when shopping, and support vendors that demonstrate they’ve used certified sustainable palm oil in their products. Tools such as the WWF’s palm oil score card provide useful background about relevant corporations and their brands.

To further encourage awareness, CIFOR-ICRAF has developed a game in which you can play as a land manager, navigating the delicate trade-offs between ecosystems and human activities.

At the institutional level, smallholder producers may need support with the technical challenges of complying with traceability and verification requirements, such as providing GPS data for plots of land. Farmer associations say smallholders need greater awareness of why they must shift from traditional practices to those that are environmentally, socially and economically sustainable, including education in why this shift will benefit them.