The Orchestration between Private and Public Governace: The Case of Sustainability Certification Schemes for Palm Oil

The palm oil industry has been increasingly relying on international private initiative schemes, e.g. RSPO (Roundtable on Sustainable Palm Oil). While the GoI (Government of Indonesia) established ISPO (Indonesian Sustainable Palm Oil) aimed to be the national standard. Despite the different approaches to addressing sustainability issues between the GoI and the transnational private party through the formation of different sustainability standards in terms of substantive and procedural aspects, the mutual dependence between the 2 parties is present.

While there are studies conducted to explore the interaction between private and public party, as well as the driver of the evolution in their relationship (Brandi, 2020), others evaluated how the state responds to the existence of transnational governance (Astari, A. J., & Lovett, J. C., 2019). However, a recent review of the literature emphasizes, that there is a need for more research on transnational interlinkages between institutions established by state and non-state actors (Hickmann et al., 2020).

The findings indicate that the standards under the ISPO certification scheme are created in order to achieve sustainable production while still considering the local producers’ capabilities to execute and accomplish them. On the opposite, the main focus of RSPO is to promote the interest of international buyers. The state thus tried to build a bridge connecting with the exponential channel while maintaining control over the production site within the country. ISPO become the bridge for the local palm oil producers and the international standard.

Rather than seeing the formation of a public-based certification scheme as a counterattack because the state feels threatened by the presence of a private certification scheme at all, we can see in a way that the state indeed responds to the presence of the first mover of the sustainable palm oil certification scheme, RSPO, by initiating a voluntary joint audit, socialization, benchmarking and adaptation in each other standards, which refers to another theory which is orchestration.

Therefore, our study will conceptualize the interactions between the GoI and the international private party through the formation of RSPO and ISPO as a form of orchestration or transnational hybrid governance. This study aims to better understand the observed patterns of the way private and public governance co-evolved to maintain compatibility at governing an industry.


Research team: Value Chain Analysis