The Changing Landscape of Palm Oil Compliance
The global palm oil sector is entering a new era of accountability, driven by stricter deforestation regulations and an increasing demand for transparent sourcing. Compliance is no longer optional; it determines who gains or loses access to the world’s largest markets.
As the European Union Deforestation Regulation (EUDR) moves from discussion to enforcement, companies across the value chain—from producers to brand owners—must now meet a higher bar of traceability and legality.
The Global Palm Oil Mill Risk Assessment 2025 provides the most comprehensive overview to date, analyzing 2,508 mills across major producing regions. The findings reveal a clear message: the path to sustainable market access depends on bridging the gap between voluntary market commitments and legal compliance.
Dual Standards, One Urgent Reality
At the core of today’s compliance challenge lies a consequential but straightforward difference in dates.
- NDPE (No Deforestation, No Peat, No Exploitation) policies, followed by most global buyers, prohibit deforestation after 31 December 2015.
- EUDR, meanwhile, defines legality and deforestation cut-offs starting 31 December 2020.
This five-year gap has created a “compliance divide.” While a mill may meet the EUDR’s legal requirements, it could still violate the stricter NDPE standards demanded by sustainability-aligned buyers. The challenge for companies is not choosing between the two, but meeting both simultaneously.
The assessment identifies:
- 317 mills (12.6%) as High Risk under NDPE.
- 190 mills (8%) as High Risk under EUDR.
That difference—127 mills—marks the zone of greatest exposure, where reputational and commercial risks collide.
Regional Hotspots: Southeast Asia at the Center
The Southeast Asia Pacific (SEAP) region remains the heart of both global production and compliance challenges. Out of all 2,508 mills, 86% are located in SEAP.
- 303 mills in SEAP are High Risk under NDPE.
- 180 mills are High Risk under EUDR.
These findings show that risk concentration in SEAP is not just environmental—it’s structural. Smallholders play a vital role in the supply chain. Yet, they face the steepest barriers to compliance, including high certification costs, incomplete land legality, and limited access to digital traceability tools.
Unless these inclusion gaps are addressed, the transition to deforestation-free trade will leave many producers behind.
Traceability to Plantation: From Obligation to Opportunity
EUDR requires full geolocation traceability down to the plot of land. For many producers, this is a daunting technical and legal challenge—but also a strategic opportunity.
Investing in Traceability to Plantation (TTP) systems not only meets EUDR’s data requirements but also strengthens corporate integrity under NDPE. The Global Palm Oil Mill Risk Assessment 2025 identifies 263 mills (10.5%) as Potential High Risk under NDPE due to incomplete TTP data. These mills are not proven to be non-compliant, but cannot yet prove compliance—a data gap that can be closed through field verification and digital integration.
With the EUDR enforcement deadline only weeks away (December 30, 2025, for large companies), the need for rapid validation of traceability has never been more urgent.
From Risk to Responsibility
The findings of the 2025 Global Palm Oil Mill Risk Assessment reveal both progress and persistent challenges. The risk of deforestation is becoming more measurable, yet compliance remains fragmented. To transform these insights into action, companies must adopt a dual compliance strategy:
- Maintain NDPE as the uncompromising baseline for sustainability.
- Use EUDR traceability as the technical foundation for verification and proof of compliance.
This approach ensures that producers and buyers remain aligned with both market expectations and legal obligations—turning risk into responsibility.
Partnering for a Transparent Future
The transition to deforestation-free supply chains cannot be achieved in isolation. It requires the sharing of data, collaborative verification, and trust across all levels of the value chain.
Through initiatives such as Inovasi Digital Agriplot DDS and MosaiX, our teams are supporting partners to:
- Strengthen traceability from plantation to product.
- Verify legal boundaries and supplier compliance.
- Develop risk dashboards and field validation programs.
These tools enable companies to move from reactive compliance to proactive leadership in responsible sourcing.
To explore collaboration or access the data assessment, please contact us at info@inovasidigital.asia.
Together, we can bridge the compliance divide—building a palm oil industry that is transparent, inclusive, and free from deforestation.
For years, the palm oil sector has been at the center of global attention surrounding deforestation and the climate crisis. Yet behind this intense scrutiny, one policy has quietly but consistently delivered real impact: NDPE – No Deforestation, No Peat, No Human Exploitation. Born out of global market pressure, NDPE has evolved beyond trade contracts to become a key driver of environmental transformation on the ground.Earthqualizer’s Behind the Scenes
Since its inception, Earthqualizer Foundation and Inovasi Digital (EQ/ID) has played a critical behind-the-scenes role in supporting the NDPE ecosystem. Through satellite-based monitoring systems, a transparent public grievance mechanism, and real-time tracking of major palm oil companies, EQ/ID helps ensure supply chains are cleared of deforestation and peatland conversion. Operating quietly, this work has become one of the reasons for the decline in palm oil-driven deforestation in recent years.
Data Speaks: Deforestation Drops, Emissions Follow
Picture 1: Graph of Global Oil Palm-Related Deforestation and Peat Non-Compliance, 2016–May 2025 (ha) by Inovasi Digital
According to Chain Reaction Research and Global Forest Watch data, deforestation linked to palm oil expansion has dropped by over 80% since 2015. In 2021, only around 19,000 hectares of forests were cleared by large palm oil groups committed to NDPE, compared to over 100,000 hectares (ha) annually in the pre-NDPE years.
These trends are also reflected in Indonesia’s official data:
- Net national deforestation declined from 630,000 ha (2015–2016) to just 104,000 ha (2021–2022).
- The Forestry and Land Use (FOLU) sector contributed 66.6% of total national emissions reductions in 2022, equivalent to 285 million tons of CO₂e.
In short, NDPE works. It reduces emissions. It protects forests.
The Next Challenge: 20% of Palm Oil Remains Untraceable
Despite these achievements, significant challenges remain. Approximately 20% of Indonesia’s palm oil supply remains untraceable, increasing the risk that it may originate from forested areas, peatlands, or undocumented customary lands.
The analysis conducted by Inovasi Digital shows that out of 471,238 ha of deforestation and 115,587 ha of peatland degradation linked to global oil palm development from 2016 to 2024, approximately 125,092 ha are associated with untraceable oil palm, which we refer to as orphan cases (Read our complete report here).
These products still find their way into the market, especially the domestic one, without any oversight. This loophole threatens the credibility of Indonesia’s palm oil sector and could undermine its climate targets.
Much of this risk stems from palm oil concessions and areas classified as APL (Other Land Use Areas), which are still legally convertible to plantations despite containing forest and peatland.
According to the Indonesia FOLU Net Sink 2030 Operational Plan, total forested APL areas across all provinces amount to 6.01 million ha, including:
- Forests in APL located outside concession boundaries (non-HGU), and
- Forests within HGU areas (plantation business permits already issued).
Many of these areas also overlap with peat ecosystems, which release extremely high carbon emissions when drained or cleared.
The Emission Threat from APL Conversion:
Assuming a business-as-usual carbon emission estimate of 400–500 tons of CO₂e per hectare, the conversion of 6.01 million ha of forest and peatland could result in:
±2.7 billion tons of CO₂e
This is equivalent to more than twice Indonesia’s current annual GHG emissions—a massive threat to the country’s climate mitigation pathway.
Without clear regulation, a firm prohibition on converting forested APL, and the full integration of NDPE across these “gray areas,” Indonesia’s climate architecture risks collapsing from within.
Unlocking NDPE’s Full Potential for Climate Action
NDPE holds tremendous potential as a mitigation tool. To scale its impact, the following steps are essential:
- Mandate traceability down to smallholders and village-level sourcing.
- Provide technical and financial support to enable smallholders to meet NDPE standards.
- Activate district-level monitoring forums to mediate supply chain issues and ensure compliance.
- Push domestic markets and state-owned enterprises (SOEs) to adopt NDPE, not just export markets.
NDPE as a Cornerstone of Indonesia’s Climate Hope
Indonesia has set ambitious climate goals, aiming to achieve a FOLU Net Sink by 2030, a 43.2% emissions reduction target with international support, and Net Zero by 2060.
Yet these targets won’t be achieved through formal policy alone. A collaborative approach is needed, where government, markets, and civil society work together.
If the climate crisis is a shared responsibility, then NDPE is evidence that some of us have already begun to take action. Now is the time for everyone else to follow.