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Open AccessArticle

Public and Private Governance in Interaction: Changing Interpretations of Sovereignty in the Field of Sustainable Palm Oil

Partnerships Resource Centre, Rotterdam School of Management, Erasmus University, P.O. Box 1738, 3000 DR Rotterdam, The Netherlands
Public Administration and Policy Group, Wageningen University and Research, P.O. Box 100, 6708 PB Wageningen, The Netherlands
Author to whom correspondence should be addressed.
Sustainability 2018, 10(12), 4811;
Received: 15 October 2018 / Revised: 19 November 2018 / Accepted: 20 November 2018 / Published: 17 December 2018
(This article belongs to the Special Issue Public-Private Partnerships for Sustainable Development)


Since the 1990s, non-governmental organizations (NGOs) and businesses have gained prominence as architects of new forms of transnational governance creating Voluntary Sustainability Standards (VSS). The legitimacy and effectiveness of VSS are dependent on interactions with public authorities and regulation. While studies suggest that the (perceived) gain or loss of sovereignty by a state shapes public–private interactions, we have little understanding on how states use or interpret sovereignty in their interactions with VSS. In this paper, we explore what interpretations of sovereignty are used by states at different ends of global value chains in interactions with VSS. Based on a comparative and longitudinal study of interactions of Indonesian and Dutch state actors with the Roundtable on Sustainable Palm Oil, we conclude that states strategically use different and changing notions of sovereignty to control the policy and debate regarding sustainable palm oil. When interactions between public and private governance are coordinative in nature, notions of interdependent sovereignty are used. However, when interactions are competitive, domestic and Westphalian notions of sovereignty are used. Our results show conflicting interpretations and usages of sovereignty by different states, which might negatively impact the regulatory capacity within an issue field to address sustainability issues.
Keywords: VSS; public–private interactions; sovereignty; sustainability; palm oil VSS; public–private interactions; sovereignty; sustainability; palm oil

1. Introduction

Since the 1990s, non-governmental organizations (NGOs) and businesses have gained prominence as architects of new forms of governance to address sustainability issues [1,2,3,4,5]. Challenging or bypassing the territory-based sovereignty of the state, they have claimed central positions as new rule-making authorities and standard-setting bodies at the global level [6]. As a result, many Voluntary Sustainability Standards (VSS) have emerged to address a wide variety of issues, including sustainable forestry [7,8], biofuels [9], aquaculture [10], sustainable agricultural commodities [11], and responsible mining [12,13].
With the implementation of the VSS at national and local level, both stakeholders and scholars have more and more realized that these standards do not operate in isolation, but rather interact with state-based regimes and regulations [14]. Their legitimacy and effectiveness are dependent on these regimes and regulations [15,16]. Thus, the understanding of the operation of transnational private regulation requires the inclusion of the state into the analysis of VSS [2,14,17,18,19,20].
There is an increasing body of literature that investigates interactions of VSS with public authorities and regulation. These studies show that interactions between private and public governance can result in complementarity, substitution, or antagonism [21]. Complementarity occurs when governance systems are mutually reinforcing one another; substitution occurs when a governance system replaces VSS regulation; while antagonistic governance systems undermine each other [21]. Studies that pay attention to state responses to the emergence of private governance show that interactions with states at the consuming end of the value chain (e.g. [22,23]) may differ tremendously from interactions with states at the production end (e.g. [24,25,26,27,28]). On the one hand, we see dynamics of mutual reinforcement (that is, complementarity) between public and private actors, when the state uses VSS for implementing regulations or attaining public policy objectives [22,29]. On the other hand, we see that antagonistic dynamics of state actors with VSS can occur in the context of their limited respect for national regulatory sovereignty and weak alignment with national economic priorities, which might lead to the establishment of rival (public) sustainability standards [28]. Thus, the type of public–private interactions that occur seem to relate to the (perceived) gain or loss of sovereignty by a state in relation to the VSS.
While studies suggest that the (perceived) gain or loss of sovereignty by a state shapes public–private interactions [28], we have little understanding on how states use or interpret sovereignty over time in their interactions with VSS. However, most studies focus on either states at the consumer end or producer end of global value chains. Therefore, this paper analyzes how states that are connected to different positions of a global value chain interpret sovereignty over a longer period of time in their interactions with transnational private governance. More specifically, this paper studies the interactions of Indonesian and Dutch state actors with the Roundtable on Sustainable Palm Oil (RSPO), which is a global private governance initiative that developed a VSS for the palm oil industry. The next section details our analytical framework on sovereignty and governance interactions. Section 3 subsequently explains our research approach, data collection, and analysis methods. Section 4 and Section 5 present the empirical findings of our longitudinal study. The paper concludes with a reflection on the relationship between state sovereignty and public–private interactions in the context of VSS.

2. Analytical Framework

VSS are often presented as a reaction to decreasing capacities of states to solve the various problems posed by globalization processes [11,30]. The proliferation of non-state actors as new governance agents are thereby challenging the state as the supreme authority within a territory [31,32,33]. Due to increasing cross-border trade flows, states have increasingly shared their sovereignty over territory and transactions with market actors [34], and therefore cannot simply ignore private governance arrangements [35]. At the same time, private governance arrangements are often dependent on local public governance when it comes to the implementation of the VSS at the local level [10,36,37]. However, public–private relations related to the emergence of VSS are very different in nature [29]. Wijaya and Glasbergen [26] distinguished four different types of relations between VSS and state actors. The first relationship is a distant one, as it regards sustainability issues in commodity chains as a responsibility of the market itself and not of the state (see also [38]). The second recognizes the interdependencies between VSS and public strategies (see also [39]], while the third is about seeking congruence between private and public regulation. The fourth one is of quite a different nature, as in this conceptualization, the state is reclaiming its authority by developing rival strategies [27,28]. These four different observed relationships assert a different meaning to state sovereignty in relation to VSS.
Krasner [40] distinguished four meanings of state sovereignty: domestic sovereignty, interdependence sovereignty, international sovereignty, and Westphalian sovereignty. Domestic sovereignty refers to “the organization of public authority within a state and to the level of effective control exercised by those holding authority” [40] (p. 9). Interdependence sovereignty refers to the ability to control cross-border flows of goods, persons, ideas, etc. International legal sovereignty is concerned with the mutual recognition of states or other entities. Westphalian sovereignty refers to the principle of territoriality and the exclusion of external actors from domestic authority configurations. Whilst enjoying sovereignty on one dimension can be a precondition for establishing another, the relationships between these four dimensions are not self-evident. For instance, a state can enjoy a high degree of international legal sovereignty, but have difficulties in demonstrating domestic sovereignty. The four types of sovereignty indicate that every state faces the challenge of working on all different dimensions of sovereignty in different arenas.
The emergence of VSS has complicated the challenges of states to demonstrate or negotiate sovereignty in terms of all four dimensions. States have to decide whether or not to share rule-making authority with VSS that exercise control over cross-border flows. Krasner’s four dimensions of sovereignty and the related diversity of matters (territory, transactions, markets, people, culture, beliefs) over which a holder of authority can be sovereign [32] form a repertoire for states to interpret sovereignty in particular ways. These interpretations of sovereignty are both a tool and an outcome of interactions between state and non-state actors [41].
As explained before, public–private interactions can take a variety of forms. Eberlein et al. [42] classified four types of governance interactions: competition, coordination, cooptation, and chaos. We use this categorization to analyze and compare interactions of state actors with VSS. Competition can refer to rivalry between standards, but also to the issue of what institutional actor has the legitimate authority to regulate a certain issue field. Coordination can vary from active collaboration to mutual agreement on division of labor. Cooptation can range from convergence on norms and activities to meta-regulation and hegemony or subordination, through which certain governance arrangements achieve a quasi-monopolistic position [42,43]. Chaos is characterized by undirected and unpredictable interactions that display no clear pattern. Interactions are dynamic and may change over time: chaos may develop into competition and into coordination; vice versa, coordination might develop into competition or chaos [42]. The type of interaction of a particular state with a VSS is indicative of their interpretation of sovereignty: coordination and cooptation are indicative of shared sovereignty of state and non-state actors, whereas competition and chaos show that a state actor is trying to (re)claim its sovereignty or deny the sovereignty of a non-state actor. These interpretations of sovereignty are not given but may change over time, which may reflect changes in interactions. This paper aims to shed light onto how these different types of interactions relate to different interpretations of sovereignty.

3. Materials and Methods

Palm oil is a globally consumed vegetable oil that is used for food, feed, biofuel, and industrial purposes. The production of palm oil is regarded by many as a threat to the land and social rights of local communities, biodiversity, and the environment in general [44]. The RSPO, which was initiated in 2002, is generally regarded as a prominent VSS. To study the interactions of different states with the RSPO over time, two specific countries were selected: Indonesia and the Netherlands. Indonesia is the biggest palm oil producer in the world. The Netherlands is the biggest importer of palm oil in Europe, and Netherlands-based actors have played a key role in developing the RSPO [45].
Our research consisted of several phases. The first phase was exploratory and served to gain an initial understanding of the public–private interactions taking place between the Indonesian or Dutch state actors and the RSPO. For this purpose, we scanned public reports of the RSPO annual conference to explore whether state actors were invited as chairs or (key note) speakers. In addition, we scanned press releases of the RSPO as well as newspaper articles of Indonesian government officials. Based on this initial scan, we identified two rather distinctive episodes in which the type of interactions shifted significantly. The first episode took place during the rule formation process of the RSPO (2003–2009). The second episode started with the announcement and development of a national Indonesian standard: the Indonesian Sustainable Palm Oil (ISPO) standard (2010–2017). The Indonesian Ministry of Agriculture launched the ISPO as an obligatory standard in 2010 to support its international commitments to greenhouse gas reduction and enhance the competitiveness of Indonesian palm oil in the world market [46].
The second phase consisted of data collection to gain a deeper understanding of the kind of interactions during the two periods. For the first episode, we made use of the database “RSPO and the role of the state”, including data on the participation of public authorities in different groups and RSPO teams compiled by Rebecca Howard and Otto Hospes in 2010. For both episodes, we conducted a desk study of the minutes of RSPO Executive Board meetings and RSPO general assemblies, which are publicly available through the RSPO website. The analysis of these archival data were complemented with participatory observations at several conferences on sustainable palm oil organized by the RSPO, the Dutch government, or the Indonesian government. Then, semi-structured interviews with a total of 31 key actors in the palm oil industry were conducted. These included officials of the RSPO, ISPO, and Dutch government, as well as multinational companies and NGOs playing a key role in the RSPO.

4. Episode 1: The Rise of a Single Standard Regime (2003–2009)

In the early 2000s, WWF Switzerland began to explore the possibility of a partnership with the private sector to address the sustainability challenges associated with the palm oil industry. To this end, the WWF assembled a group of 25 European stakeholders—retailers, food manufacturers, palm oil processors, traders, and financial institutions—in London [47]. During this meeting, these stakeholders agreed to start promoting sustainable palm oil, which led to the establishment of the Roundtable on Sustainable Palm Oil (RSPO).
Given that palm oil production is mostly concentrated in Indonesia and Malaysia, most of the stakeholders felt that an initiative consisting of only European actors would not be very effective [48]. Therefore, WWF Switzerland invited the Malaysian Palm Oil Association (MPOA) to join the RSPO. This private national industry association called its Indonesian counterpart, GAPKI, to affiliate with the RSPO as well [47]. Both associations have strong relations with their respective national governments. One of the main reasons for GAPKI to join the RSPO was to avoid reputational damages, counter negative claims about palm oil, and discuss possible price premiums, market access, and preferential purchasing policies [15].
In 2004, the RSPO was officially registered as a foundation. The RSPO organized a multi-stakeholder process and agreed on global principles and criteria for sustainable palm oil production, a verification and certification process, and mechanisms for supply chain traceability. After field testing, the RSPO principles and criteria were adopted at the General Assembly of 2007. The RSPO currently counts over 4,000 members. Within the RSPO, only businesses and NGOs have decision-making power. However, many public–private interactions took place during the rule formation phase. We first outline the interactions between Indonesian state actors and the RSPO, and thereafter the interactions of Dutch state actors and the RSPO.

4.1. Interactions between the RSPO and Indonesian State Actors

4.1.1. Annual Conferences of the RSPO

Various interactions took place during annual RSPO conferences to which Indonesian state actors participated either as observers or speaker at the annual conferences of the RSPO. During the second annual RSPO meeting (RT2) in 2004, the Indonesian Minister of Agriculture gave a keynote address in which he expressed his specific and positive expectations about the RSPO: “[I] conclude my short remarks by proposing a special request to the organizer that this roundtable should also discuss steps toward [the] development of a protocol of good agricultural practice in the palm oil industry. I understand this is not an easy task. But I am optimistic the participants of this roundtable are highly competent for such an important task” [49] (in 2011, the then former Minister of Agriculture was appointed as special advisor of the RSPO). State actors were also involved in organizing RT2; the chair of the organizing committee was the chair of the Indonesian Palm Oil Commission (IPOC), a special commission falling under the auspices of the Ministry of Agriculture [50]. From that roundtable meeting onwards, the Indonesian Ministry of Agriculture and particularly its officials from the Directorate General for Estates and IPOC would be regular contributors, by providing keynotes and presentations, as well as by chairing sessions.
Not only Indonesian state actors were active in the roundtable meetings; other producing countries were invited to participate as well. At the fifth roundtable meeting in 2007, the Minister of Plantation Industries and Commodities of Malaysia held the closing address in which he praised the efforts of the RSPO: “The progress achieved by RSPO is indeed laudable, and I believe this is largely due to the multi-stakeholder approach (…) I would like to urge all growers to implement the RSPO principles and criteria for sustainable palm oil production diligently” [51]. However, the Minister was very critical about the positions of smallholders vis-à-vis the RSPO: “[Small-holders] will find it impossible to meet the standards required by the RSPO criteria”.

4.1.2. Thematic Working Groups

Interactions also took place at working groups organized by the RSPO to get consensus on contentious issues and organize collaborative action. Indonesian government officials participated in several of working groups, including the Biodiversity Technical Committee [52], the Greenhouse Gases Working Group, and the Smallholder Task Force. Representatives from the Indonesian Ministry of Agriculture wanted to discuss “the best approach in coordinating and expediting the Smallholders Task Force (STF)-related activities specifically for Indonesia” [53]. As a result of their work in the Smallholders Task Force, the Ministry of Agriculture signed a memorandum of understanding with the RSPO in 2009 to collaborate on training trainers of smallholders. In two periods, a total of 40 local facilitators (Facilitator Daerah) were instructed on how to train smallholders on the RSPO principles and criteria (interview with RSPO officer in Indonesia). More than 400 smallholders were trained by these agricultural extension officers on the RSPO principles and criteria.

4.1.3. National Interpretation Working Group of Indonesia

A specific working group in which Indonesian state actors were particularly active is the national interpretation working group Indonesia. The general purpose of this group was to adapt the global RSPO principles to the national context of Indonesia [54] and ensure that its implementation was congruent or compatible with the norms, laws, and values of Indonesia as a sovereign state [55].
The national interpretation team of Indonesia consisted of 65 members, of which 21 government officials of six Ministries—the Ministry of Agriculture, the Ministry of Environment, the Ministry of Industry, the Ministry of Labor and Transmigration, the Ministry of Economy, Finance, and Industry, and the Ministry of Trade—and of the Indonesian Palm Oil Commission (IPOC) and the National Land Agency (BPN) [56]. The IPOC was the group leader of the thematic commission on Environment and Natural Resources within the national interpretation team.

4.1.4. Interactions and Interpretations of Sovereignty

During Episode 1, the interactions of the Indonesian government with the RSPO could be characterized by processes of coordination and even cooptation. Coordination in this period became visible in the collaborative attitude of the Indonesian government (taking part in annual conferences, thematic working groups, and national interpretation groups) toward the RSPO. However, the RSPO is in the lead of the interactions and determines the rules of the game for developing a global standard for sustainable palm oil. Therefore, the interactions are also characterized by cooptation, wherein the RSPO is the dominant governance arrangement regarding sustainable palm oil.
The collaboration of the Indonesian government with the RSPO suggests that during this time, they were willing to share the control of cross-border flows of palm oil with a private regulatory arrangement. The Indonesian government implicitly practiced a notion of interdependence sovereignty, in which state and non-state actors share control over cross-border flows of goods.
During Episode 1, the RSPO uses the word sovereignty to explain the rationale behind national interpretation groups. This suggests that the RSPO to some degree respects the domestic sovereignty of the Indonesian government. Moreover, the RSPO seems to acknowledge international legal sovereignty by referring to state laws and regulations in their standard, and by inviting state actors to participate in public meetings and working groups. However, they do not allow state actors to engage in their formal decision-making procedures. Indonesian civil servants did not participate in decision-making processes regarding verification and certification processes and mechanisms for supply chain traceability. This suggests that the RSPO regards itself as sovereign over the palm oil supply chain.

4.2. Interactions between the RSPO and Dutch State Actors

4.2.1. Political Support

Dutch state actors have not been involved in hosting annual conferences of the RSPO or providing keynote addresses at such conferences. Yet, the Dutch government has been an outspoken supporter of the RSPO from the beginning onwards, expressing support for the RSPO as a form of self-regulation. In 2008, the Dutch Minister of Agriculture, Nature, and Food Quality communicated that “the RSPO is an example of a promising international voluntary initiative of producers, consumers, and NGOs (…)” making it redundant to formulate regulatory and legislative frameworks by the Dutch government to address the import of unsustainable palm oil [57].

4.2.2. Thematic Working Groups

The Dutch Product Board for Margarine Fats and Oils (MVO) has been a member of the RSPO since November 2005. Until the end of 2014 Dutch products boards were semi-public organizations in the agricultural sector: they were authorized to develop policies and instruments on behalf of the government, and at the same time articulate the interests of the sector (as per 1 January 2015, the 11 Dutch product boards were abolished by law; the product board MVO was transformed into a private agency). Membership in the MVO was mandatory for all Dutch companies in the margarine, fats, and oil sectors and had—and still has—a large emphasis on driving sustainability in the sector. The MVO was active in several working groups, and chaired the working group on trade and traceability, and was in that capacity part of the RSPO Executive Board meetings [55].

4.2.3. Financing of the Rule-Formation Process

This positive attitude of the Netherlands and other European Union (EU) countries toward the RSPO has resulted in another important role of governments in the development of the RSPO: financing of the rule-formation process. For example, the Task Force for the Smallholder Certification Support Network was funded by the Sustainable Trade Initiative (IDH), which is an organization established by the Dutch government. The IDH receives funding from the Dutch, Swiss, and Danish governments. Another example is the funding of the ‘framework for drafting criteria for sustainable palm oil’ by the GTZ, which is the German development cooperation organization under the German federal government [47].
In 2005, the governments of the Netherlands, Indonesia, and Malaysia agreed to start “an agricultural trilateral cooperation in order to stimulate market access and sustainable development (amongst others) in the palm oil sector” [58] (p. 149). With money from this partnership, an RSPO satellite office was opened in Jakarta, and a number of projects were funded aimed at implementing RSPO certification [59].

4.2.4. Interactions and Interpretations of Sovereignty

During Episode 1, the interactions of the Dutch government with the RSPO could be characterized by processes of coordination, although they are more indirect than the interactions of the Indonesian government with the RSPO. The Dutch government itself is not participating in meetings or working groups; at best, it participates in an indirect way through the Dutch product board for margarines, fats, and oil. The collaborative attitude manifests itself most prominently in the financial support by the Dutch government of RSPO projects.
These interactions show that the Dutch government uses and interprets sovereignty in the same ways as the Indonesian government, that is, to emphasize interdependent sovereignty. Theoretically put, they believe that sovereignty regarding cross-border flows of goods needs to be shared with private regulatory arrangements, such as the RSPO. This means that the RSPO is seen as sovereign over the global palm oil value chain.

5. Episode 2: The Rise of a Plural Standard Regime (2010–2017)

While the Indonesian government adopted a positive and collaborative attitude toward the RSPO during its rule-formation process, this drastically changed around 2010. Governments and palm oil producer associations of Indonesia and Malaysia began to overtly challenge the effectiveness and legitimacy of the RSPO to contribute to sustainable palm oil production in their country [28,54].
Whilst the change of attitude of the Indonesian government was drastic, this change has to be seen as the cumulative effect of a series of encounters of Indonesian government officials and palm oil producers with the RSPO. Shortly after the launch of the ISPO, various Indonesian government officials and stakeholders of the Indonesian palm oil industry aired their grievances about the RSPO principles and procedural rules: they felt that the economic benefits of palm oil production at the producer and country level were not articulated well enough; having a minority vote, the producers felt that their suggestions at (preparations of) annual meetings were often overruled [54]. Offermans and Glasbergen [60] indeed found that knowledge supply within the RSPO is strongly dominated by NGOs. The interactions between the Indonesian government and palm oil producers with the non-state members of the RSPO gradually led to more conflicted interactions. The Indonesian government did not only gradually distance itself from the RSPO, it also prepared the launch of a national standard. This example was soon followed by the government of Malaysia. The emergence of national standards marked the rise of a plural standard regime.
That the principles of the ISPO are lookalikes of those of the RSPO shows that the Indonesian government, similar to the RSPO, adheres to the idea of setting sustainability standards for palm oil. However, this cannot be seen as an acceptance of the sovereignty of the RSPO, which is also because the criteria of the ISPO offer more room for producers to expand into high conservation areas and peatland than those of the RSPO [27,28].

5.1. Interactions between the RSPO and Indonesian State Actors

5.1.1. Announcing a Competing Standard at an RSPO Conference

In the opening address on behalf of the new Indonesian Minister of Agriculture at the 2010 RSPO conference in Jakarta, the Indonesian Sustainable Palm Oil (ISPO) standard was announced: “ISPO [provides] guidance on sustainable oil palm development based on existing legislation in Indonesia. (…) [T]he provisions of ISPO are mandatory for plantation actors in Indonesia. The goals of ISPO are: (1) increasing awareness of the importance of producing sustainable palm oil, (2) increasing competitiveness of sustainable oil palm production, and (3) supporting the commitment of Indonesia in conserving natural resources and the environment. We can add that ISPO is proof of company compliance toward legislation as well as proof of the concern of Indonesian oil palm plantation players to carry out sustainable oil palm development” [61].
The president of the RSPO reported that 19 RSPO memberships were terminated immediately after the launch of the ISPO [62]. One of the organizations that resigned was GAPKI. The leadership of this Indonesian Palm Oil Association explicitly mentioned in the Jakarta Post (5 October 2011) that it wanted to support the ISPO as the public standard for sustainable palm oil. GAPKI felt that the organizational structure of the RSPO was biased in favor of manufacturers and retailers, while putting producers at a disadvantage (interview with special advisor of the RSPO; and interview with executive director of GAPKI). Producers have to pay the main part of the certification costs, while the uptake of certified palm oil has so far been very low (interview with industry representative; interview with executive director of GAPKI). The official argument for the establishment of ISPO is that the RSPO has a poor outreach, and cannot be effective in making palm oil production sustainable in Indonesia: only a fraction of the palm oil growers are members of the RSPO, and compliance to RSPO rules is voluntary [63].
The ISPO standard was the result of interdepartmental consultation between the Ministries of Agriculture, Environment, and Forestry, facilitated by the Indonesian Palm Oil Committee (IPOC) [27]. The standard is based on Indonesian laws and regulation, and therefore, neither business nor civil society was involved in drafting the criteria. However, businesses and NGOs are involved in the certification process itself.
The ISPO commission presented Indonesia as the sovereign power that has the exclusive right to regulate issues within its territorial boundaries: “We do not listen to pressure from the European market. This is our palm oil and this is what we do. We are sovereign” (interview with executive chairperson ISPO). The ISPO underlines that Indonesia is not giving in to foreign pressures for environmental protection at the cost of their own producers (interview with executive chairperson ISPO). “This [the ISPO] is Indonesia’s definition of sustainability. When a company complies with ISPO, they are sustainable according to the law” (interview with industry representative). “The government believes that it is our right as a country to address sustainability” (interview with Indonesian NGO representative). The Indonesian government wants to make a clear statement that the promotion of sustainable palm oil production in Indonesia belongs to the national scale and is not a matter of governance at the global level [54].

5.1.2. Seeking International Recognition for the ISPO Next to the RSPO

At the 2010 RSPO conference, the Indonesian government also announced that it wanted to get the ISPO standard recognized by the Word Trade Organization as well as international standard organizations, such as the International Organization for Standardization (ISO) [63]. However, seeking international recognition presents a challenge to the ISPO, because as large group of buyers of palm oil consider the RSPO standard to be the only credible one. Moreover, buyers feel that the RSPO standard is stricter than that of ISPO. “[The] RSPO is at least the best thing there is. It is accepted; ISPO is not. Of our clients, no one is actually interested in ISPO” (interview with international consultant). In a report of the 2010 roundtable meeting, a representative of the Association of Southeast Asian Nations (ASEAN) Oleochemicals Manufacturers Group writes: “It [ISPO] is seen as a watered down version of the RSPO P&C [principles and criteria]. (…) It is not known what measures the government would undertake to make the ISPO and its certification process internationally accepted as credible” [64].
The aim of the Ministry of Agriculture is to have all companies ISPO-certified by the end of 2014. However, an article in the Jakarta Post (3 March 2014, p.13) stated that only 40 out of roughly 2500 plantations have secured a government-issued certificate on sustainability, and another 153 applied for certification. The executive director of the ISPO commission declared in the article that the commission would not revise the deadline or launch specific initiatives to push the remaining plantations to apply for the certification. Yet, at the national level, the Ministry of Agriculture is confronted with a lack of resources, while at the local level, enforcement of the rules is difficult because of the high level of corruption in Indonesia. “The Indonesian state cannot even ensure the enforcement of their own laws, then why should ISPO be able?” (interview with international consultant). “Law implementation and enforcement is a very big problem in this country [Indonesia]. It is very unusual for the government to rely on third-party certification to enforce their law” (interview with United Nations Development Programme employee). Hidayat et al. [65] concluded that ISPO faces a lack of authority, while at the same time, there is a lack of incentives for local governments to enforce ISPO regulation.
To attain international recognition, the ISPO commission has approached importing countries directly by asking for bilateral support and approval. A team of representatives from ISPO visited governments, NGOs, and businesses in Europe, the US, China, and India (interview with executive chairperson of ISPO). While China and India are thus far not particularly interested in buying certified sustainable palm oil, many countries in Europe exclusively focus on the RSPO to make their imports more sustainable (see Section 5.2 below).

5.1.3. Developing a Joint ISPO–RSPO Study

Despite the tense relationship of the Indonesian government with the RSPO after the launch of the ISPO standard, several efforts were made to develop working relationships between the RSPO and ISPO. Under the auspices of the UNDP, the RSPO and the ISPO commission of the Indonesian Ministry of Agriculture signed an agreement in October 2013 to explore the differences and similarities between the two standards through a joint study. The study was supposed to be finished by December 2013, but was only published in February 2016, reportedly because the ISPO commission and the RSPO could not agree on the findings.
The report of the study is entitled “Similarities and Differences of the ISPO and the RSPO Certification Systems” [66]. One of the key recommendations of the study is to use the common elements required by both certification systems as a basis to conduct a joint audit process to reduce the duplicity of efforts [66]. However, the former executive director of the ISPO commission claimed that this is impossible, as the ISPO standard is an implementation of state law, and can therefore never be combined with market-driven certification (interview with executive chairperson of ISPO). Other stakeholders, including the executive director of GAPKI, do firmly believe in this strategy.
During the launch of the study, the new chairperson of the ISPO Secretariat took the opportunity to promote ISPO by saying: “This study marks a turning point in the international community’s effort to support and work with Indonesia’s laws and regulations relating to the palm oil sector. We are looking forward to strengthening the Indonesia Sustainable Palm Oil certification standard and improving market access for the industry” [66]. This statement does not reflect an intention of ISPO to increase collaboration with the RSPO.

5.1.4. Interactions and Interpretations of Sovereignty

During Episode 2, the interactions of the Indonesian government with the RSPO could be characterized by processes of competition. The Indonesian government explicitly distanced itself from the RSPO and established a competing sustainability standard.
The changing nature of the interactions indicates that the notions of interdependence sovereignty have faded, and have been replaced by notions of domestic and Westphalian sovereignty. The ISPO standard appeals primarily to domestic audiences and refers to national values [28]. However, the Indonesian government also tries to attain international sovereignty by seeking recognition for their governance strategy regarding sustainable palm oil from international organizations (e.g., the World Trade Organization and ISO) and from other states. The Indonesian government no longer wants to share sovereignty over the sustainability of palm oil that is produced on its territory.
The joint study does not mark the end of Episode 2, as the reactions to it show that the Indonesian government is not willing to share sovereignty over sustainable palm oil with foreign, non-state actors.

5.2. Interactions between the RSPO and Dutch State Actors

While the Indonesian government changed its sustainable palm oil strategy and its interactions with the RSPO drastically from 2009 onwards, the Dutch government maintained its collaborative and supportive attitude toward the RSPO.

5.2.1. High-Level Business Meeting Supporting RSPO

In 2010, the Dutch and United Kingdom (UK) governments convened a high-level business meeting of leaders from the palm oil sector in London. During these meetings, a declaration on sustainable palm oil was formulated, in which the objective was stipulated: “We are committed to underpinning the continued rapid growth in the production and use of RSPO-certified palm oil and derivative products, and contributing to the overall mainstreaming of certified products” [67].

5.2.2. The Amsterdam Declaration in Support of a Fully Sustainable Palm Oil Supply Chain

In trying to attain international recognition for their standard, representatives of ISPO visited the Netherlands several times (interview with executive chairperson of ISPO; interview with executive director of GAPKI; participant observations in The Hague, 2015). However, the Dutch government explicitly keeps supporting the RSPO and not the ISPO. In December 2015, five ministers (of the Netherlands, Denmark, France, Germany, and the UK) signed the Amsterdam Declaration in Support of a Fully Sustainable Palm Oil Supply Chain, which stated: “As European countries and as member states of the European Union, we take note and declare ourselves supportive of the private sector-drivenCommitment to Support 100% Sustainable Palm Oil in Europe, as signed by [the] European national sector organizations engaged with the palm oil supply chain at the Amsterdam Conference on theEU and Global Value Chains” [68]. The commitment that is supported in this declaration explicitly mentioned the RSPO as the preferred way to achieve sustainability in the sector: “We declare to work together and support each other in transforming toward a 100% sustainable palm oil supply chain in Europe by 2020. We aim to achieve this through actions such as the following: defining sustainable palm oil as a stepping stone approach, working toward RSPO-certified (or equivalent) at minimum (…)” [69].
The rationale behind the Amsterdam declaration is explained as follows: “As the world’s largest economy, Europe has an opportunity and responsibility to move the global economy to a more sustainable path. Europe is the second largest global import market for palm oil, and home to some of the world’s biggest brands and companies. Europe can be an important ‘game changer’ when it comes to a sustainable palm oil supply chain for the world. This can only be achieved if all of the public and private stakeholders work together in a coherent way according to each role and responsibility. This includes [the] industry parties, civil society, and governments of producing and consuming countries” [68].

5.2.3. Reactions to the Joint ISPO–RSPO Study

At the presentation of the joint study, the IDH and government representatives from Denmark, Norway, the UK, the United States, and Switzerland were present, “some of who used the study’s launch as an opportunity to express concerns to the Indonesian government on behalf of the world’s palm oil buyers” [66], as is illustrated by this quote of the Senior Forestry Advisor at the UK’s Department for International Development (DFID): “Currently, we recognize [the] RSPO, but not ISPO. Why? Because there is a communication issue; we don’t know where the palm oil comes from. There’s also a credibility issue; [there are] problems with governance and transparency. We will recognize ISPO when it is a true multi-stakeholder standard, when it is audited independently… ideally we would love to recognize ISPO”.

5.2.4. Interactions and Interpretations of Sovereignty

In contrast to the Indonesian government, the interactions of the Dutch government with the RSPO continue to be characterized by processes of coordination during Episode 2. The Dutch government maintained its strategy to show their public support for the RSPO through for example the Amsterdam Declaration.
The Dutch government keeps granting interdependence sovereignty to the RSPO. By seeking other EU countries to acclaim the sovereignty of the RSPO, they also grant international sovereignty to the initiative. By holding on to this interpretation of sovereignty and preferring the RSPO over ISPO, the Dutch government disregards the Westphalian interpretation of sovereignty on the part of Indonesia. The Netherlands, as a large importer of palm oil, feels entitled and responsible to exert influence abroad in this field. The reactions to the publication of the joint study show that this event does not mark the end of Episode 2, but that the two opposing interpretations of sovereignty continue to exist.

6. Discussion

Different types of interactions of state actors with the RSPO indicate different interpretations and uses of sovereignty over sustainable palm oil. Coordinative interactions of Indonesian and Dutch state actors with the RSPO reflect notions of interdependent sovereignty. Competitive interactions of Indonesian state actors with the RSPO reflect different uses of sovereignty: domestic and Westphalian sovereignty. Table 1 below summarizes the results of our analysis.
Not only states have a specific interpretation of their sovereignty vis-à-vis a private governance arrangement; also, the private governance arrangement has a specific interpretation of state sovereignty. However, this interpretation seems to be quite stable over time.
Our analysis both confirms and extends the argument of Vandergeest and Unno [24], who argued that private regulatory arrangements overlook more territorially embedded forms of legitimacy and public authorities whose mandates and claims overlap with certification standards. The RSPO acknowledges the existing legal system, but still claims rule-making and rule-enforcement authority in a specific territory. Hereby, private regulatory governance replicates key aspects of colonial-era extraterritoriality by contributing to “the creation of a variegated sovereignty in which the state does not have exclusive or absolute sovereignty”, because private certification is justified through a narrative of deficient states [24] (p. 9). Based on our research, we are able to extend this argument by looking at the ways in which two different states interact with one private regulatory arrangement, each using different and changing notions of sovereignty to exert control in the issue area of sustainable palm oil. Dutch state actors seem to use the extraterritoriality of the RSPO to indirectly claim some form of sovereignty in Indonesia as the major palm oil producing country of the world. The government of Indonesia shifted its interpretation and use of sovereignty to reclaim its shared sovereignty from the RSPO. Thus, interpretations and uses of sovereignty are not carved in stone. When the Indonesian government realized that the RSPO might actually hamper the economic interests of Indonesian producers, they began to interact differently with the RSPO and started to develop a national standard. To rationalize this, they changed their interpretation and use of sovereignty: sovereignty was not any longer interpreted by the Indonesian government as shared and interdependent, but rather as exclusive and Westphalian.

7. Conclusions

Our analysis shows that sovereignty is not a static concept; instead, it is used strategically by different state actors, and its use changes over time. Conducting a longitudinal study allowed us to see changing pattern of interactions, showing a dynamic picture of sovereignty. Interpretations and uses of sovereignty can be derived by looking at the actions of a governance arrangement—be it public or private—and its interactions with other governance arrangements.
Interestingly, the changing interpretation and use of sovereignty by the Indonesian and Dutch state supports Krasner’s original argument on the political use of sovereignty by rulers: rulers are motivated by a desire to stay in power, not by some abstract adherence to international principles. In our case, the Indonesian state showed a desire to stay in power regarding the palm oil produced on its territory, rather than adhering to and accepting transnational private regulation. The implementation of transnational private regulation that was felt to inadequately address the views and interests of Indonesian producers prompted the Indonesian government to shift its use of sovereignty from shared to exclusive, and from interdependent to Westphalian.
Different interpretations of and strategies toward sovereignty do not necessarily lead to direct conflicts between states. During Episode 2, Indonesia contested the RSPO, reclaiming domestic sovereignty, while the Netherlands promoted it—claiming interdependent sovereignty. This however indicates an antithesis between commodity producing and consuming countries. This duality might decrease the regulatory capacity and outreach of private and state-initiated regulatory complexes. The development of rival standards by producing countries may create a further differentiation and fragmentation of the governance of sustainable agricultural commodities (cf. [38]), especially when consuming states focus solely on promoting private VSS. Aligning the public strategies of different countries and private strategies with one another might increase regulatory coherence to increase sustainable practices in global value chains. Future research could focus on the consequences of different and possibly conflicting frames on sovereignty on the regulatory capacity within an issue field.

Author Contributions

Conceptualization, G.S. and O.H.; Methodology, G.S. and O.H.; Software, G.S.; Validation, G.S and O.H.; Formal Analysis, G.S.; Investigation, G.S. and O.H.; Resources, G.S. and O.H.; Data Curation, G.S. and O.H.; Writing-Original Draft Preparation, G.S. and O.H.; Writing-Review & Editing, G.S. and O.H.; Visualization, G.S.; Supervision, G.S. and O.H.; Project Administration, G.S.; Funding Acquisition, O.H.


This research was funded by the Interdisciplinary Research and Education Fund (INREF) of Wageningen University (SUSPENSE).


The authors would like to thank research assistant Rebecca Howard for compiling the archive “RSPO and the role of the state” (see Materials and Methods) and Johanna Deike for conducting field research on the re-positioning of the Indonesian and Malaysian state in Sustainable Palm Oil Governance. The authors would also like to thank the Interdisciplinary Research and Education Fund (INREF) of Wageningen University for financially supporting the research for this paper.

Conflicts of Interest

The authors declare no conflicts of interest.


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Table 1. Interpretations of sovereignty.
Table 1. Interpretations of sovereignty.
Episode 1Episode 2
  • Interdependent sovereignty: seeking control over cross-border flows. Sharing this type of sovereignty with the RSPO
  • Domestic sovereignty: taking part in national interpretation processes
  • Domestic sovereignty/Westphalian sovereignty: by disregarding the RSPO and focusing on national audiences.
  • International sovereignty: getting the ISPO standard recognized
The Netherlands
  • Interdependence sovereignty: seeking control over cross-border flows via the RSPO
  • ‘Denial’ of Westphalian sovereignty on the part of Indonesia by disregarding ISPO
  • Interdependence sovereignty: seeking control over cross-border flows via the RSPO
  • International legal sovereignty: inviting states to cooperate
  • Interdependence sovereignty: seeking shared control of cross-border flows
  • Recognition of minimal type of domestic sovereignty: national interpretation teams
  • International legal sovereignty: inviting states to cooperate
  • Interdependence sovereignty: seeking shared control of cross-border flows
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