Malaysia to launch MSPO Impact Alliance by 3Q to boost demand for certified palm oil ahead of EU deforestation law

The MSPO Impact Alliance is expected to be launched by the third quarter of this year ahead of the implementation of the European Union Deforestation Regulation (EUDR), said Plantation Industries and Commodities Minister Datuk Seri Johari Abdul Ghani.

Spearheaded by the Malaysian Sustainable Palm Oil (MSPO) — formerly known as the Malaysian Palm Oil Certification Council — the alliance will serve as a platform to pilot key initiatives such as green financing for certified producers, digital traceability solutions, deforestation monitoring tools, and inclusive sourcing incentives for smallholders.

These efforts aim to align with the requirements of the EUDR through collaboration with non-governmental organisations, accreditation bodies, financial institutions, technology providers, and multinational fast-moving consumer goods companies, including Nestlé (Malaysia) Bhd (KL:NESTLE).

“Most of the multinational companies operating in our country manufacture a range of products — from food items like confectionery to non-food items such as personal care products and detergents,” Johari told reporters on Friday.

“Through this platform, when buyers purchase our products and identify areas they believe should be improved or included, they communicate with us, and we work on enhancing the standard. These are some of the initiatives we’re undertaking and looking to incorporate,” he said on the sidelines of a memorandum of understanding signing ceremony between MSPO and Nestlé Malaysia.

As of end-December 2024, a total of 4.89 million hectares, or 86.47% of Malaysia’s oil palm cultivation area, had been certified under the MSPO standard.

The implementation of the EUDR, which aims to ensure that goods and products placed on the EU market do not originate from recently deforested areas or contribute to forest degradation, has been extended by one year from its original deadline of Dec 30, 2024.

Meanwhile, Nestlé Malaysia said its partnership with MSPO aims to support local certification efforts, strengthen engagement with smallholders, and deepen its involvement in Malaysia’s sustainable sourcing ecosystem.

Apart from increasing market demand for MSPO-certified palm oil, Nestlé Malaysia chief executive officer Juan Aranols said the company also plans to raise its sourcing of cocoa beans domestically for its confectionery products by 30% by 2034.

“We aim for 30% of our supply to come from Malaysia. But currently, local cocoa production is still relatively small, so there’s much to be done in terms of expanding the land area allocated to cocoa and sharing best practices to improve farmers’ yields. We’re working closely with the Malaysian Cocoa Board on this,” he said.

Nestlé Malaysia currently markets the KitKat @ Dark Borneo brand, made exclusively using cocoa beans grown in Sabah and Sarawak. The beans are sourced through the Nestlé Borneo Cocoa Initiative (NBCI), which was launched in September 2023.

NBCI is a strategic partnership between Nestlé Malaysia and the Malaysian Cocoa Board to expand the company’s Farmer Connect programme to East Malaysia.