Strengthening Indonesia China Palm Oil Trade with Sustainable Practices 2025

Next steps Moving forward, the Taskforce on Green Value Chains will provide a platform for key stakeholders in the main palm oil producing and consuming countries, through an enhanced collaboration on sustainable palm oil trade, financial incentives and transparency on progress. The following three strategic steps provide a clear framework to operationalize a deforestation-free, inclusive and commercially viable trade model. 1. Facilitating sustainable palm oil in bilateral trade Bilateral cooperation should prioritize enabling mechanisms that legitimize and streamline the flow of sustainably sourced palm oil between Indonesia and China. This includes advancing mutual recognition of national sustainability standards (such as ISPO and MSPO), establishing data interoperability between Indonesia’s National Dashboard and China’s traceability systems, and piloting verified shipments. A Green Commodity Working Group can serve as the platform to align certification protocols, coordinate stakeholder engagement, and support the adoption of sustainability-based labeling in Chinese retail markets. 2. Mobilizing financial incentives for an inclusive transition Achieving scale in sustainable palm oil trade requires accessible and innovative financing for smallholders and supply chain actors. Indonesia and China should work together to develop blended finance instruments – including green bonds, concessional loans and sustainability-linked credit – that support compliance, traceability and replanting. Retail and consumer- facing incentives in China (such as vouchers or tax credits for certified products) can also help shift demand towards sustainable options. Financial mechanisms must be structured to ensure smallholder inclusion and reward verified sustainability performance across the value chain. 3. Launching jurisdictional pilots to facilitate resilient supply Jurisdictional approaches offer a credible and scalable pathway to delivering traceable, deforestation- free palm oil. Indonesia and China can pair palm oil-producing regions (e.g. Riau and West Kalimantan) with key Chinese import hubs (e.g. Tianjin and Shanghai) to co-develop sister jurisdiction pilots. These pilots should focus on shared data infrastructure, integrated monitoring and community-level inclusion. By embedding sustainability criteria in regional development strategies and aligning them with corporate sourcing practices, jurisdictional pilots can serve as a model for replicable, system-wide transformation. Strengthening Indonesia-China Palm Oil Trade with Sustainable Practices 11