Why the RSPO’s Latest Appeals Decision Puts the Entire RSPO System at Risk

For nearly two decades, the Roundtable on Sustainable Palm Oil (RSPO) has been held up as the world’s leading voluntary sustainability certification scheme for the palm oil industry.

Its strength, on paper, lies in a system that binds companies to universal standards, promotes transparency across corporate groups, and addresses harms through a dedicated complaints mechanism.

But a recent Appeals Panel decision, delivered on 9 December 2025 in the long-running case against First Resources Limited, raises profound questions about whether the RSPO’s governance architecture is capable of delivering accountability at all. After four years of investigations, evidence submissions, and intensive engagement, the decision has left complainants and observers stunned - not for what it finds, but for what it refuses to see.

At the heart of the case is a question that cuts to the core of the RSPO 2020 Membership Rules:

What counts as a corporate group, and when should the actions of one entity be attributed to others that share ownership, management, or operational control?

This question matters because the RSPO, like most sustainability schemes, relies on group-level responsibility. Without it, companies can offload problematic operations into separate subsidiaries, hide behind complex ownership structures, and continue business as usual while presenting a clean face to buyers and consumers. Beneficial ownership rules and group disclosure requirements were created precisely to close these loopholes.

The RSPO Appeals Panel, however, has adopted an interpretation of the RSPO Membership Rules that does the exact opposite. In its decision, the Appeals Panel accepts that First Resources breached transparency requirements. But it rejects the central argument that four companies - referred to here as Companies A, B, C, and D - should have been treated as part of the First Resources corporate group.

The Membership Rules are clear on this point. Clause 7.3.5 states:

“Where entities are owned or controlled by the same beneficial owner, such entities shall be deemed to be part of a Group.”

The Appeals Panel dismisses this clause, effectively stripping it of operative effect and undermining the coherence of the Membership Rules as a whole.

Instead, the Panel relied upon Clause 5.2 on corporate control, and interpreted it narrowly, to the point that it considered the evidence presented of common beneficial ownership; familial shareholder control; employee-director relationships; operational manuals evidencing standardized management across entities; and documented economic dependence and supply-chain integration to be insufficient to demonstrate “control”. . The palm oil sector is no stranger to the use of shadow companies, nominee shareholders, family-controlled clusters, and proxy directors. These structures thrive in opacity, and they exist precisely to obscure lines of accountability. That is why beneficial ownership rules exist. They look beyond the legal façade to the underlying reality.

The threshold that the Panel adopted is so high that it becomes virtually impossible to reach in cases involving layered ownership structures, the very cases the RSPO system should be most equipped to

address, especially as RSPO has long acknowledged that sustainability challenges are often embedded within opaque networks of subsidiary and affiliated entities¹.

This decision suggests that unless those entities voluntarily declare themselves as a unified group, the system will not treat them as one, and essentially permits de facto groups to avoid responsibility by simply avoiding direct shareholding or board control.

If allowed to stand, this decision sets a precedent that threatens the structural integrity of RSPO’s accountability system because it incentivises companies to fragment their operations into multiple entities with shared beneficial owners but no formal corporate linkages.

This moves the RSPO certification scheme in the opposite direction of more progressive schemes such as Forest Stewardship Council (FSC) which has just adopted a Standards Operating Procedure to determine Corporate Group Control.

This is not a technical issue. It is existential. A certification scheme that cannot hold fragmented corporate groups accountable cannot claim to assure deforestation-free or rights-respecting supply chains. The palm oil sector knows this. Investors know this. The public knows this.

The question is whether the RSPO Board will act before the consequences become irreversible. While the RSPO Membership Rules already provide sufficient scope to recognise group-level responsibility based on beneficial ownership and de facto control, this case demonstrates how ambiguities in the current framework have enabled unduly narrow interpretation and misapplication by the Complaints and Appeals Panel (CAP).

If the RSPO wishes to maintain its standing as a credible sustainability system, several immediate reforms are necessary:

1. Clarify and strengthen the RSPO Membership Rules, through an open, transparent, and time-bound public consultation, to explicitly reflect internationally accepted definitions of corporate group structures, including those articulated by the Accountability Framework initiative and the FSC Standards Operating Procedure on Corporate Group Control. This clarification should remove any scope for restrictive interpretations that contradict the intent of the rules and underpin the rejection of the Appeals Panel’s findings in this case.
2. Formally reaffirm and operationalise the principle that beneficial ownership and de facto control, rather than only formal shareholding or board authority, trigger group-level responsibility, by issuing binding guidance applicable across the RSPO system. Such guidance is necessary to ensure consistent interpretation and to prevent future mischaracterisation of control relationships by decision-making bodies.

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¹ rspo.org/changes-to-the-rspo-membership-rules/