Renato J Orsato, Stewart R Clegg, Horacio Falcão. Journal of Change Management. Volume 13, Issue 4, 2013.
1. Introduction
Palm oil has become a controversial commodity. While it is a renewable (bio) fuel and is used as raw material for thousands of products, in the past decades it has also been identified as a major cause of deforestation and loss of biodiversity in Southeast Asia. The island of Borneo is a particular example. Until the 1970s, it was almost entirely covered by tropical forests but in the past decades logging, agriculture and mining have resulted in massive deforestation in part to provide land for palm oil plantations. Deforestation has significantly reduced the only habitat of the orang-utan and other species, such as the pygmy elephant, clouded leopard, Sumatran rhino and other lesser known animals, as well as thousands of species of plants, which may disappear altogether within the next 20 years. The remaining forests are under extreme threat.
Until 1997, the environmental degradation of Borneo had not become an issue in either public opinion or politics. In that year, however, fires that had been set to clear land for palm oil plantations engulfed the whole region of Malaysia and Indonesia with dense smoke, causing respiratory problems and creating an international public outcry. The smoke drifted far, polluting distant cities such as Singapore. The link between deforestation and palm oil was established in the media. Eco-activist and non-governmental organizations (NGOs) that had been campaigning against deforestation and logging in the region exploited the momentum by intensifying campaigns against large organizations involved in the value chain of palm oil. The industry rapidly responded to the attacks and public outcry by organizing a multi-stakeholder coalition led by the largest players in the sector and launched the Roundtable on Sustainable Palm Oil (RSPO).
The RSPO is exemplary of thousands of similar initiatives that have emerged in the past three decades, which scholars (for instance: Prakash & Potoski, 2006) term as green clubs. While environmentalists tend to view such coalitions with scepticism, green clubs have been praised for promoting proactive sustainability management. While such opposing views divide opinion, studies of the formation of such clubs are relatively scarce (for a review of the literature in the field, see Orsato, 2009; Vogel, 2006). In their review, Prakash and Potoski (2012) stated that it is still unclear if the extent of the public benefits claimed for green clubs are largely a function of industry self-interest in positive representations rather than something that makes a substantial difference. King and Lenox (2000) and King, Lenox, and Terlaack (2005), in particular, question whether mass participation of firms in green clubs leads to higher aggregate effects of pollution prevention.
The paper analyses the main actors and the disputes between those seeking to preserve the forests of Borneo and those expanding palm oil production. It does so using a theoretical framework initially proposed by Orsato and Clegg (1999). We apply the political ecology framework to analysis of the case of eco-activism in the palm oil value chain. The research represents a direct response to the need for neo-institutional theory to incorporate a ‘balanced attention to both the influence of the institutional environment and the role of organizational self-interest and active agency within that environment’ (Hoffman, 2001, p. 134). By uncovering the political disputes that occur in the formation stage of an important green club, we provide grounds for a proper evaluation. The use of the political ecology framework enables us to explain the institutional wars (White, 1992) fought by stakeholders in the field (DiMaggio & Powell, 1983) defining what constitutes ‘sustainable palm oil’.
The research is based on a longitudinal case study of agricultural and industrial activities around the palm oil value chain. The data were collected over the period 2008-2010 and in fieldwork during 2009, involving participant observant of agricultural practices and semi-structured interviews with key players in the organizational field, as well as extensive documentary analysis. Before delving deep into the specific case of the green club of the palm oil industry (RSPO), the following section briefly reviews the evolution of green clubs and analyses their reputational value. Sections 3, 4 and 5 provide the context in which the disputes and trades-offs emerged with the expansion of palm oil plantations in Malaysia and Indonesia. In Section 6, we apply the political ecology framework to delve deep into the power disputes involved in the development of the RSPO and Section 7 presents the conclusions of our study.
2. Green Clubs
Since the early days of industrialism, laws and other forms of regulation, such as codes of practice, have attempted to make firms accountable for the pollution and other negative externalities they produce. Although they have been effective to a certain extent, the complexity of regulatory rulebooks, enforcement costs and rigidity have limited the effectiveness of such methods of pollution prevention and control (Borck & Coglianese, 2009; Fiorino, 2006; Prakash & Potoski, 2012). As a result, in trying to avoid compliance costs altogether, many corporations have looked for pollution havens—countries with more relaxed regulatory frameworks or weak enforcement capabilities (Antweiller, Copeland, & Taylor, 2001).
Large-scale disasters in the 1980s, most notably the explosion of the Bhopal plant of Union Carbide in India, challenged this logic. In addition, the Exxon Valdez oil spill in Alaska placed issues of pollution in the USA in the public consciousness. Distinct sectors of the business community and non-profit organizations responded to growing public demand for better corporate environmental management with the release of a series of voluntary initiatives, in the form of codes of conduct, environmental guidelines, charters and programmes (Nash & Ehrenfeld, 1997). Self-regulation also appealed as an ethical framework within which companies could represent their actions as responding to public concerns about the safe management of chemicals (King & Lenox, 2000; Prakash, 2000). Similar initiatives, emerging from civil society organizations (CSOs), have also become known as ‘civil regulation’ (Zadek, 2006). These initiatives share the common objectives of assisting business to implement environmental programmes and communicating them to the general public. Such voluntarism acted to deflect governments from imposing more restrictive regulations. A new mode of regulation started to emerge and a new phase of industry-governments relationship gradually gained ground (Howes, Skea, & Whelan, 1997).
Prakash and Potoski (2006) group such voluntary initiatives under the umbrella title of Green Clubs. Such clubs help firms to manage their reputation, especially where their operations have caused reputational damage through accidents or local pollution. By becoming members of Green Clubs corporations presumably will improve their environmental performance. The improvements, however, depend on the constituency of Green Clubs: often, the more demanding clubs were founded by a CSO, which aimed at gathering a wide range of stakeholders. Sector-specific Green Clubs, on the other hand, tend to be initiated by industrial associations with the original aim of protecting members against reputational ill. At least in the early stages, these clubs are inclined to concentrate on legal compliance and cost-cutting exercises, as Responsible Care did for the chemical industry.
The adoption of Green Club doctrines and guidelines may help corporations create positive public opinion about organizational practices. As indicated by Dowel, Hart, and Yeung (2000), for instance, a significant positive relationship between the market value of multinationals and the environmental standards used in their factories worldwide can be identified. Besides being cost effective for firms, the market may also value homogeneous (beyond compliance) standards across plants, reflected in stock values. The reputation of buyer organizations, normally located in wealthy countries, can also be affected by upstream practices throughout the value chain in emerging economies. For this reason responsible operations throughout the value chain became crucial (Christmann & Taylor, 2001). The growing number of certifications from companies operating in developing countries is a consequence of these elaborated value chains (Albuquerque, Bronneberg, & Corbett, 2007).
Overall, the proliferation of Green Clubs with general principles, codes of conduct and behaviour guidelines, will limit business impacts on nature. However, as the expulsion of members that do not comply with the clubs’ requirements is a rarity, there is room to question whether the clubs are more window-dressing rather than sources of self-restraining management policy. Indeed, as Orsato (2009) has indicated, these initiatives have served defensive goals very well. In the majority of cases, by endorsing the codes of green clubs, companies have avoided the disadvantages of being exposed to bad reputational campaigns.
In the following sections we focus on the context and historical developments (Sections 3, 4 and 5) that culminated in the foundation of a very large and ambitious Green Club: the RSPO, which has helped to protect the reputation of the industry in the recent past. However, as we elaborate, using the political ecology framework (Section 6), the legitimation of the club and its claims did not occur without major political disputes.
3. Palm Oil and Development in Malaysia and Indonesia
The labels of various foodstuffs, cosmetics, soaps, detergents and fuel often state that the product contains ‘vegetable oil’. The source of vegetable oil may be from any one or more of 15 or so different plants. Most probably, however, the vegetable in question will be the palm, the resource used in the manufacture of palm oil. The production of 42 million tons (Mt) of palm oil in 2010 means that palm oil now surpasses soybeans (35 Mt) as the most heavily traded agricultural product: indeed, it is the number one commodity in the category of vegetable oil. Due to its high yields—about nine times that of soybeans—palm oil is highly price competitive.
Asia accounts for more than 60% of domestic consumption of palm oil, followed by the European Union (EU) with 10%. In Asia, palm oil is largely used in the production of foodstuffs, personal care items and detergents. In Europe, the statistics demonstrate quite different uses: the EU became the second largest importer of palm oil in 2004, just behind China, almost exclusively on the basis of its use as a biofuel. The reasons for its adoption in this sphere are closely associated with a widespread view of biofuels as ‘carbon-neutral’. A growing world population, which will double demand for food by 2050, and increasing economic affluence in developing countries, has intensified the demand for vegetable oils. The estimate for 2050 is that the world crop will be about 240 Mt, roughly twice the current production. Between 1995 and 2008, for instance, growth in demand and the competitive prices of palm oil resulted in the area under cultivation increasing by 43%, while production increased about 2.5 times.
Palm oil production was established in Malaysia to supply European markets in the late nineteenth and early twentieth centuries, being developed on the basis of a plantation economy under the control of global interests established in the core of the world economy, such as Lever Bros. Nevertheless, its major expansion started only in the 1960s as a response to the post-Colonial Malaysian Government’s diversification policies. These were designed to reduce the dependence of the national economy on natural rubber, another plantation crop, which faced competition from synthetic rubber and a declining price. In the 1970s, palm oil plantations started to expand into more remote areas such as the Borneo states of Sabah and Sarawak.
The production of palm oil is a labour intensive agricultural activity that was envisaged by government as a means for reducing rural poverty, something encouraged by the creation of the Federal Land Development Agency (FELDA) in 1956. The development process consisted of clearing forests, planting palm trees, settling unemployed people, including ex-soldiers and Bumiputra (ethnic Malays) from elsewhere, as well as installing processing mills and marketing the oil. Although FELDA stopped the intake of new settlers in 1990, in 2002 its settlements accounted for 17% of the planted area and 20.6% of palm oil production in Malaysia.
Agriculture, forestry and fishing have traditionally been the main economic sectors of Malaysia contributing nearly 30% of the economy in 1970, although this had declined to 8.5% by 2007, when these sectors still employed 13% of the population. Overall, despite its strong contribution to the country’s development in the past, the Malaysian palm oil industry is at the crossroads. As a mature industry, unless it can achieve further growth and remain competitive, its contribution to the national economy will stagnate and eventually decline. Expansion is, however, limited by the increasing scarcity of two essential inputs—land and labour. Land expansion is restricted by the opposition of environmental activists to the clearing of native forests, while affluence is limiting the availability of people willing to work and live near palm oil farms.
In Indonesia the situation is similar. Palm oil is considered as a strategic commodity for the country not only because it is the main cooking oil for the population but also that oil was a key product that rescued Indonesia during the Southeast Asian Economic Crisis in 1998, when palm oil’s price shot up to US$ 600/barrel. Palm oil plantations in Indonesia grew from 5.06 Mha in 2002 to 6.33 Mha in 2006. Riau, a 9 Mha province, has the highest concentration of peat land in the world and a quarter of Indonesia’s oil palm plantations. Substantial growth has been achieved but with high environmental impact. According to the Indonesian Palm Oil Board, in 2006 about 2 million people were employed in the sector, and in 2007 agriculture accounted for 13% of Indonesian GDP, making it one of the largest producers and consumers of agricultural products in Asia.
4. Palm Oil and Human Rights
Palm oil production occurs through an intensive plantation economy that has displaced traditional indigenous pursuits of hunter-gathers. Traditional owners are not necessarily recognized in the administration of the palm oil economy.
The government official asked me if I have a land ownership certificate and I answered that every single durian tree, and every single tengkawang [Shorea spp.—illipe nut trees] tree, and every single rubber tree that we or our ancestors have planted are certificates. I am an indigenous person born here. My ancestors have already defended this land for generations. I do not want outsiders to disturb us. We will not allow any companies to establish plantations on our land. (Indigenous leader, Sekadau District)
After Indonesia’s seizure of independence from the Dutch in 1945, when the Japanese occupiers were evicted, a series of laws were enacted making the newly independent state’s government a major landowner. As a result, it is estimated that 60-90 million people derive their livelihoods from land classified as ‘State Forest Areas’, which cover 70% of Indonesia’s territory. Many of its rural lands consist of primary and secondary forests, in which there are agro-forestry systems with rotations of 30 years or more, including community planted rubber forests or other cash crops, fruit groves, as well as community-protected sites of cultural significance, such as burial sites in forest groves, in addition to homesteads.
Local communities adjacent to palm oil production are remote and fragmented, in terms of their relations with government and corporations. Unsurprisingly, such asymmetry in power distribution leads to a history of bad practices. Local communities are often impoverished and displaced. Palm oil is labour intensive. Its cultivation in what were previously forestlands that have been cleared means that its expansion takes place in what have become relatively unpopulated or low-population density areas. Recently, community support groups, together with local players, have founded NGOs with a mission of empowering and protecting communities. One such organization is Sawit Watch (palm oil watcher), an Indonesian local NGO supported by Oxfam Novib, was founded in 1998. Sawit Watch contacts and informs communities about their rights in relation to overall power disputes and how they affect their particular locale, as well as providing guidelines for action. At the beginning of 2008, there were 513 active conflicts identified in the 17 provinces (out of 33 provinces in Indonesia) where it had volunteers working.
NGOs have not prevented people from being harassed, abducted, killed, arrested and having their houses burned. Nonetheless, Sawit Watch and other NGOs have reported irregularities such as a lack of community consultation, as required by law; pay-offs of stakeholders and the provision of inflated promises in community consultations; a lack of clear negotiations concerning the allocation of oil palm smallholdings; the clearing of forested land without permits; a reluctance to either achieve or comply with environmental impact assessments; and corruption, especially of local political interests, all of which have led to disputes and conflicts.
5. Palm Oil and the Environment
5.1 Deforestation
Besides credit from banks, the main means of expansion of plantations is the sale of timber (both legally and illegally logged). As the production of palm oil is expected to increase, those high conservation value forests remaining are endangered. Between 1990 and 2000, Malaysia and Indonesia lost 25.6% of their forests. Since the late 1990s the rate of deforestation has increased even further in tandem with the scarcity of timber and illegal logging in national parks. The orang-utan habitat loss had increased 30% and, if things continued as they are now, by 2022 the forests in Malaysia and Indonesia will be nearly gone (Nellemann et al., 2007).
5.2 Local Pollution
In the past, when there was no oil palm plantation here, water in the river was very deep, but now it’s very shallow. We run out of water, it is difficult for people to find clean water in the dry season, not everyone has a drilled well. In the past in the forest, after a month and a half of dry season we would still find many small rivers. Nowadays after a month or so of dry season they have all dried up. (Smallholder, West Kalimantan)
The most important impact caused by palm oil production is water pollution. Plantations are intensively sprayed with pesticides and herbicides, creating toxic runoff, while effluent from the milling process is also toxic and, because of this, should be stored in special ponds. Nonetheless, Sawit Watch report that it is common to receive reports of effluents being discharged into rivers. Large palm oil plantations require substantial levels of water, normally supplied by irrigation. As a result, access to water becomes increasingly difficult in some communities. Although oil palm plantations are planted in areas of relatively high rainfall, some communities’ report that local rivers now have far less water. The most evident detrimental effect of palm oil plantation can be seen at the end of the life cycle of the plantation economy; plantations are often abandoned due to soil exhaustion after a 25-year cycle (the average time the trees are productive).
5.3 Carbon Emissions
After China and the USA, Indonesia is the third largest emitter of Greenhouse Gas (GHG) in the world, accounting for 4% of global emissions. The emissions from peat lands—drained to plant palm oil—represent 1% of total global emissions. Indeed, around half of the 22 million hectares of peat lands has already been cleared in Indonesia. In 2007, 20% of global GHG emissions came from deforestation and peat land degradation or drainage. Emissions have increased almost 50% since the early 1990s, largely as a direct result of the expansion of oil palm and pulpwood plantations into Indonesia’s peat lands. Palm oil produced on peat land with a depth of three metres carries a carbon burden more than 20 times the emissions linked to crude oil.
5.4 Biofuels
The surging tide of food prices, such as corn, wheat and palm oil, continues to add to the already worsening global inflationary pressure. (…) The record high crude oil prices further added pressure on the global economy, and heighten the fuel-food debacle. (Tan Sri Dato’ Lee Shin Cheng, Executive Chairman at IOI)
Neste, the largest Scandinavian biofuel producer, has positive views on palm oil that are not shared by eco-activist organizations. In May 2007, Greenpeace campaigned in Europe, along with World Wildlife Fund (WWF) and other NGOs, warning the government about the risks of biofuels as an alternative to petrol and diesel. Unilever, a major user of palm oil in cosmetic and other lines (Palmolive soap, for instance), seems to agree. The company declared its concern about biofuels, saying that they are neither environmentally efficient nor cost effective in reducing GHG emissions. According to Unilever, since palm oil is used as cooking oil by two billion of the poorest people in the world, any price increase has direct consequences on their purchasing power. Of course, it also has an impact on their input factor prices
6. Circuits of Political Ecology
As we have intimated, the evolution of events in the recent history of the palm oil industry (mainly from 1997 to 2011) has been politically complex. Institutional-power relations, cultural clashes and political economic disputes have all been involved in palm oil’s development. We will use the political ecology framework (Orsato & Clegg, 1999), originally adapted from Clegg’s (1989) circuits of power, to conceptualize the issues. Only as the process unfolds are we able to translate the sense that is being made, which we now represent in Figure 1 and describe in the remaining parts of the paper. In other words, we use the framework to intertwine the data with its interpretation.
Figure 1. Circuits of political ecology in palm oil production
6.1 Agency: The 1997 Haze
People and the media started asking why every year the fires in Malaysia and Indonesia were so bad—it was affecting public health even in Singapore. Part of the answer was palm oil [ … ] So, what initiated everything were the fires, a forestry issue, and not the orang-utans. Orang-utans are a sexy subject linked to the issue because preserving the forest is preserving biodiversity. (Teoh Cheng Hai, first RSPO Secretary General)
The haze that engulfed Southeast Asia and spread as far as Australia in 1997 became a key agency in the history of the palm oil industry. Large parts of the Indonesian archipelago as well as Singapore and Malaysian cities such as Kuala Lumpur were subject to a thick and unhealthily acrid haze resulting from the burn-off that followed illegal logging, as land was being cleared on a large scale. Prior to this period, urban elites, apart from activists, had not been too concerned about issues of logging and plantation creation that occurred far from their everyday lives. Extensive pollution caused by burning off in the cities changed this situation. During this period of pollution inundating the air that the elites breathed, people (mainly eco-activists and the media) were able to use the extraordinary situation to make others do things that they would not otherwise have done (be concerned about deforestation). The unanticipated effects of the logging and burn-off created an agency—pollution—with the ability to make a difference (Clegg, 1989). The fires started to attract media and public attention because of the direct and indirect environmental impact, which represented a not so clear but very present danger. Indonesia, Malaysia, Singapore, Brunei and Thailand all suffered economic losses, and many people endured health problems from the haze provoked by fires in Borneo. The event received substantial coverage from the media, catching the attention of people in the Australasian region and, over time, the world. Since the fires were set mainly to convert forests into palm oil plantations, for the first time the link between the cultivation of palm oil, deforestation and devastating pollution was clearly established for the general public, creating an important moment for the NGOs that had been campaigning against deforestation and logging in Malaysia and Indonesia.
6.2 Standing Conditions: ‘Deforest to Develop’
Agency cannot be exercised independently of the context that maintains and stabilizes the access of agents to resources. We can refer to this context as the set of standing conditions—those background and taken for granted conditions that sustain the stable context within which resource dependence routinely functions as a means for producing particular outcomes. Whether any particular episode in which power is exercised makes a difference depends on the ‘systematicity’ of the organization field, captured in the framework through the notion of standing conditions. The haze of severe pollution that hung in a pall over the whole region in 1997 acted as a massive irruption to the normalcy of extant standing conditions that consisted of governments turning a blind eye to illegal logging. For as long as this illegality did not impinge on urban elites and their networks then governments, whose members often had extensive interests in industries such as logging, could carry on regardless. The extensive pollution severely compromised the implicit tolerance of urban elites because the results of illegal actions were no longer contained, at a distance, safe from prying eyes. The activism of the eco-campaigners took on a new significance as the haze confirmed the reality of their warnings about the effects of land clearances. With the standing conditions for the normal business of illegal logging and plantation colonization of the cleared spaces disturbed, the power plays of leading actors were both more exposed and compromised.
6.3 Institutional Entrepreneurs and Obligatory Passage Points: The Foundation of the RSPO Green Club
The circuits of power in and around palm oil were transformed by the emergence of a new institutional entrepreneur in the organizational field, the WWF. The term, institutional entrepreneur, was introduced by DiMaggio (1988) when he described institutional entrepreneurship as the activity underlying the creation of new institutions: ‘new institutions arise when organized actors with sufficient resources see in them an opportunity to realize interests that they value highly … [Institutional entrepreneurs] create a whole new system of meaning that ties the functioning of disparate sets of institutions together’ (DiMaggio, 1988, p. 14). Institutional entrepreneurs play a pivotal role in creating or changing institutions (Clemens & Cook, 1999; Fligstein, 1997; Greenwood & Suddaby, 2006).
As a specific mechanism for institutional change, ‘institutional entrepreneurship represents the activities of actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones’ (Maguire, Hardy, & Lawrence, 2004, p. 657). This is exactly what WWF did. In 2002 this eco-activist organization initiated an engagement process with stakeholders of the palm oil value chain. In 2004, the initiative was formalized under the name of ‘RSPO’, with the objective of opening dialogue between stakeholders so as to promote the production of sustainable palm oil throughout the supply chain. The new institutional order emerged from a realization that the interest representation of the palm oil industry had been relatively rudderless and the industry had suffered reputational damage because of the extensive pollution. The decision was made that there had to be some consciously articulated social integration between producers.
The RSPO was designed to be a platform for stakeholders with differing views and positions in the matter. From the perspective of the NGOs, it was better to be involved in decision-making so that they could contribute to practise rather than merely critiquing from outside and at a distance. From the perspective of the producers, although the NGOs were hardly perceived as natural allies, their participation was important if the credibility of the new standing conditions that they were seeking to establish for the industry were to be stabilized. Hence, oil producers have joined en masse, representing 41% of RSPO membership and half of the world’s palm oil production. The RSPO became a powerful green club.
From the outset, the highest priority of RSPO was to develop Certification on Sustainable Palm Oil for plantations and millers, which standard was launched in December 2007. The standard was to function as an obligatory passage point in the institutionalization of the industry as ecologically accountable. The certification requires evidence of compliance to 8 Principles and 39 practical Criteria—also called ‘P&C’. The first RSPO certified batch of palm oil was obtained by United Plantations and shipped in November 2008. One aspect of the standard that is notable is that it does not address the wider issues of peat land exploitation and global warming but focuses only on the integrity of whatever is manufactured rather than the consequences of where it is manufactured.
6.4 Resisting the Terms of Institutionalization: Greenpeace’s Campaigns
Institutions reflect, produce and reproduce power relations (Seo & Creed, 2002; Stinchcombe, 1965, p. 194). These power relations can be thought of in terms of entrenched dominant interests and resistance to these entrenched interests (McAdam & Scott, 2005, p. 17). While entrenched interests may have superior material and network resources to engage in entrepreneurship (Greenwood & Suddaby, 2006), resisters generally have stronger incentives and are subject to fewer institutional constraints from the prior shaping of the field (Clemens & Cook, 1999, p. 452; Rao, Morrill, & Zald, 2000, p. 262).
The participation of international NGOs in the RSPO has been divisive. While WWF, Oxfam Novib, Rainforest Alliance and Conservation International joined, others did not. Friends of the Earth, Wetlands International and Greenpeace opted out and have been leading critics of RSPO activities resisting the terms of the institutional field being stabilized:
At present, the RSPO scheme does not prohibit palm oil producers from being involved in forest conversion and has no assessment of, or limits on, GHG emissions from the development of oil palm plantations. Furthermore, it has no system to segregate palm oil that meets RSPO criteria from palm oil coming from deforestation including peatland clearance. (Greenpeace)
In November 2007, Greenpeace released a report with the title ‘Cooking the Climate’, linking carbon emissions from cleared peat lands in Indonesia to the activities of RSPO members. The NGO demanded that all players and government not only stop Indonesian peat land fires by establishing a moratorium on clearing peat land for the plantation of palms for oil (which would save 1.3 Gt of CO2 emissions per year) but also that Indonesia’s degraded peat lands should be rehabilitated (which would save 0.5 Gt of CO2 per year). In the same month, Greenpeace welcomed the declaration of the Swedish petrol giant, OKQ8, that it would abandon plans to use palm oil in their new Eco20 biodiesel.
Not satisfied with the industry’s response, Greenpeace launched another campaign in April 2008, this time targeting Unilever—the multinational food producer. Activists wearing orang-utan costumes protested in front of the corporate headquarters in London and other installations in Europe. A video in a Dove® advertising format was published on YouTube (with 861,381 viewers by June 2009 according to the official link) and tens of thousands of emails were sent to Unilever from people around the world via the website of Greenpeace:
Unilever failed to bring the rapidly expanding palm oil sector under control. It knows what is going on and nothing is done about kicking out these companies from the Roundtable. (John Sauven, Greenpeace UK executive director)
Greenpeace demanded three things from Unilever: (i) support a moratorium on forest clearance and peat land degradation; (ii) do not trade with those engaged in deforestation and peat land degradation; and (iii) inform suppliers that purchasers will no longer buy from companies engaged in forest conversion and peat land degradation.
Unilever quickly responded to Greenpeace and the general public whose support had been enrolled by their Cooking the Climate report, by saying that Unilver shared the same concerns as everyone else about the expansion of palm oil production. Regarding Greenpeace’s demands, Unilever said that it: (i) wants to support the moratorium once ‘there is ample un-forested land available to meet even the most optimistic estimate of demand’ but still acknowledged that there is also work to be done, for which the company does not have the expertise; (ii) prefers to work with suppliers and help them to stop using unsustainable agricultural methods, as it did in the fish and tea industries, and (iii) intends to have all palm oil certified sustainable by 2015.
Unilever’s Director at the time tried to convince other stakeholders to engage in the moratorium but only managed to infuriate the palm oil producers.
We had to face a large opposition that felt completely damaged. Growers come from very far and the moratorium sounded like RSPO certification was not enough. Our suppliers were already asking time to get used to the certification and the support on the moratorium was an extra work. Some of them said ‘you are basically saying that we can’t grow’. (Lettemieke Mulder, Director of Global External Affairs at Unilever)
The central issue of contestation in the palm oil arena was crystallizing as who should be able to define what should be done in relation to the value chain of palm oil. While the potential Unilever/Greenpeace alliance sought to stabilize a new legitimacy the more traditionally minded and less cosmopolitan palm oil producers were striving to maintain a situation whose legitimacy, in the eyes of global sophisticated urban élites, was already deeply compromised. Positions were defined and represented in concert at national and international levels representing an agreed position from the palm oil plantation industry. The producers sought to structure the emergent circuitry of power on the peat land issues as non-problematic in order to maintain their existing interests.
6.5 System and Social Integration: Still Unstable
For Lockwood (1964, p. 251), the ‘materiality’ of any social ordering is evident in the social reality surrounding it. The material conditions of any such ordering include the technological means of control over the physical and social environment as well as the skills associated with them, constituting the basis for system integration. Social integration, on the other hand, deals with the symbolic sphere, with relations of meaning and the ways in which these define certain types of membership categories in relation to other categories within organizational fields. Hence, social and system integrations are distinct facets of the same ‘reality’. Struggles over relations of meaning and membership create social change through changes in social integration. They redefine what it means to be a member of an organizational field as well as what are normal practices within the contexts in which organizations are embedded.
The entry of Greenpeace’s Cooking the Climate into the arena of palm oil politics destabilized the attempt to create a new institutional legitimacy through certified system integration. The polarized views between industry representatives and NGOs can be observed in the following statement:
Some of these detractors [from anyone’s success] are in form of NGOs who want to relate us [palm oil industry] to forest destruction and habitat loss, and things like that. If you look at the Malaysian palm oil statistics, whatever we have done is all about switching from rubber, coconut or rice to palm oil. It’s got nothing to do with habitat loss or destruction, and that’s how ignorant these people are. These NGOs are very short-sighted and focused on trying to destroy a good economy like what we have developed out of palm oil. (Tan Sri Datuk Dr Yusof Basiron, CEO of MPOC)
At present this is where things stand. Institutionalization of producer interests has not brought the legitimacy desired; the system integration of the organization field has been achieved but it has not created overall social integration. There is evident tension attached to the participation of Unilever who might yet secede under pressure from Greenpeace.
7. Conclusion
In this paper, we used the framework proposed by Orsato and Clegg (1999) for the analysis of a specific business-environment relationship issue. Although voluntary actions of corporate environmental management can partially explain the evolution processes of the greening of industries, it seems imperative to look at business-environment relationships from perspectives that consider the ways in which power relations configure and define an organizational field. The concepts embedded in the framework are not tentative elaborations dissociated from more substantive works on power (see also Flyvbjerg, 1998; Haugaard, 1998). Rather, they represent a long trajectory initiated in the studies of Clegg (1975) that, more recently, have been developed as a specific application of a power perspective for the analysis of business-environment relationships (Orsato & Clegg, 1999; Orsato, den Hond, & Clegg, 2002). Therefore, the paper uses a theoretically grounded framework for the analysis of the political context in which environmental disputes occur—in this case, the organizational field of the palm oil.
The dispute that occurred between Greenpeace and RSPO—the green club formed around the palm oil industry—shows that political actors try to secure their interests through the designation of what is obligatory and what is not in a specific institutional field. In the end, the palm oil manufacturing industry was able to form a sufficiently strong lobby to counteract the demands from Greenpeace, which allowed the industry to reproduce their preferred rules and, with minimal concessions, to approve their own code of conduct and definition of what consists sustainable palm oil. The detailed analysis of such dispute reflects the political ecology of the palm oil production, which addresses one of the main criticisms of approaches to environmental issues in organization studies: that more political perspectives are necessary (Jermier, Forbes, Benn, & Orsato, 2006).
We used the institutional field as the basic level of analysis in our study, which encompasses relations that are usually conceptualized as occurring within the traditional notion of an industrial sector. In doing so, we also satisfy the need for more studies developed at this level of analysis, as proposed by Hoffman (1999), in which the definition of the ‘field’ is based on the development of ‘an issue’. In this respect, our study of the ‘palm oil issue’ has implications for the development of an important theoretical tradition—institutionalism in sociological and organizational theory.
The institutional tradition has been criticized for neglecting the role of the state and of power relations in its theorizing (Clegg, 2010), an omission that we have sought to redress in this paper. We have explicitly married a field-level institutional analysis to a well-founded and legitimated theoretical framework drawn from the power literature. Doing this has enabled us to draw conclusions that go beyond stressing the usual role of institutional entrepreneurship in creating a new field. In fact, while stressing such entrepreneurship, we show that the field being constructed remains a contested terrain. In so doing, we do not fall prey to the problems of over-institutionalized analysis which sees normative coherence and isomorphism as a characteristic of the institutional field. By contrast, we argue that institutional fields can remain dynamic and unstable and the creation of a new institutional logic—such as that of RSPO—does not necessarily create isomorphic dominance and stability.
Finally, our study indicated that isomorphism emerges from conflict and negotiation over meaning and membership occurring in the organizational field. In this respect, it corroborates the findings of King and Lenox (2000, p. 698), which stresses ‘the potential for opportunism to overcome the isomorphic pressures of even self-regulatory institutions and suggest that industry self-regulation is difficult to maintain without explicit sanctions’. Our own findings also suggest that the actions of the Green Club of palm oil producers in moving towards certification to increase legitimacy should be balanced by consideration of the overall dynamics of the political ecology. Although palm oil producers did indeed work to secure their interests, they succeeded only temporarily in maintaining the elements of political ecology unaltered because other players within the overall circuitry—invisible to the producers before the haze of 1997 ignited urban elites—mainly eco-activist organizations, have also been forcing transformation. What was once a fairly local set of circuits has become globally constituted in circuits of political ecology that are far from stable in the now dynamic and global institutional field.