When the State Brings Itself Back into GVC: The Case of the Indonesian Palm Oil Pledge

Abstract

During the last decades the role of the state in governance of Global Value Chains (GVC) for sustainability has been largely ignored. This paper contributes to the re‐centering the state in GVC analysis. We provide an analysis of the rise and fall of the Indonesian Palm Oil Pledge (IPOP). IPOP is a commitment of some biggest palm oil companies towards zero‐deforestation in Indonesia, but was dissolved after serious critique from the Government of Indonesia (GoI). Our question is: why and how did the GoI decide to put an end to the IPOP? We show that the GoI orchestrated the IPOP's demise by framing it as a danger to smallholder development, as not acknowledging public standards, and as an illegal cartel. The GoI's counter‐framing re‐asserts its sovereignty over producers, rule‐making and economic organization. We argue that when a state perceives that when non‐state‐driven GVC governance threatens its sovereignty over producers, rule‐making and economic organization, it will engage in discursive power struggle with non‐state actors. More specifically, collective action of non‐state actors can particularly trigger a state to engage in discursive power struggle with non‐state actors.

Traders as sustainability governance actors in global food supply chains: A research agenda

“…For example, in Indonesia, a conglomeration of the five most powerful palm oil exporters (Cargill, Musim Mas, Wilmar, Golden Agri Resources, and Asian Agri) created the Indonesian Palm Oil Pledge (IPOP) in 2014 to collectively implement their zero‐deforestation commitments and lobby the government to adjust legislation in order to ensure that the legal basis for outlawing deforestation matches companies' commitments. However, 2 years later, IPOP disbanded under the threat of prosecution for violating competition law (Dermawan & Hospes, 2018). Some traders have globalized and diversified their sourcing strategies to such an extent that they are less reliant on single origins.…”

Introduction: Bringing Institutions Back in the Study of Global Value Chains

“…Dermawan and Hospes () highlight the growing importance of standards, as domestic private governance initiatives, within GVCs and the resulting power dynamics between state and non‐state actors, through an in‐depth analysis of the rise and fall of the Indonesian Palm Oil Pledge (IPOP). IPOP was a domestic institutional arrangement of the largest Indonesian palm oil producers aimed at zero‐deforestation by 2020.…”

Grounding transnational business governance: A political‐strategic perspective on government responses in the Global South

“…The reaction or involvement of Southern governments was seldom discussed (Peña 2014), or it was implicitly assumed that they were passive or incapacitated and would do little to support or hamper TBG initiatives. In recent years, a number of scholars have begun to explicitly discuss Southern government responses to TBG (Schouten & Bitzer 2015;Adolf et al 2016;Giessen et al 2016;Wijaya & Glasbergen 2016;Hofman et al 2017;Bartley 2018;Dermawan & Hospes 2018;Pacheco et al 2018;Pramudya et al 2018;Sun & van der Ven 2020). This recent research stream is, however, fragmented across different disciplines and fields, mostly disconnected from the earlier literature, and lacking an overarching framework to synthesize, describe, and explain these relationships.…”