As frameworks such as the EU Deforestation Regulation (EUDR) and NDPE IRF v6.0 continue to raise the bar, companies are under increasing pressure to show that their sourcing is not only documented, but also transparent, verifiable, and accountable. In that context, traceability has become closely linked to both credibility and market access.

That sounds straightforward in theory. In practice, it rarely is.

Palm oil supply chains are inherently complex, involving multiple tiers of suppliers, from plantations and independent smallholders to dealers, mills, and refineries. Visibility often stops at the mill level, while supplier data can be inconsistent and information systems fragmented. As a result, many companies still struggle to build traceability systems that are reliable enough to support both compliance and day-to-day decision-making.

Turning Fragmented Data Into Actionable Supply Chain Intelligence

Companies need a way to connect scattered data.

Inovasi Digital helps companies do that by combining supply chain information, geospatial analysis, and supplier engagement tools into a more cohesive and scalable system. This approach results in traceability systems that provide more granular visibility to support compliance, monitoring, and decision-making.

A big part of this comes down to moving beyond mill-level reporting. Instead of stopping at a facility, companies need to understand the sourcing landscape behind it. That means linking suppliers to geolocation data or polygon boundaries and building a more detailed view of where materials are actually coming from. This can include:

• direct managed plantations
• independent third-party plantations
• independent smallholders

With this level of visibility, companies are in a much stronger position to understand their sourcing structures, identify potential environmental and compliance risks, and respond to regulatory and sustainability requirements with more confidence.

From Mill-Level Reporting to Plot-Level Visibility

One of the most important developments in supply chain traceability is the shift from mill-level visibility to plot-level mapping.

Accurate spatial data plays a critical role in verifying the origin of raw materials and assessing environmental risks such as deforestation and land-use change. In practical terms, this means that traceability is no longer only about identifying which mill a product comes from, but also about understanding the sourcing landscape behind that mill.

As illustrated in the NDPE IRF v6.0 example for Napal Mill, publicly available datasets can be used to map actual mill suppliers. In this case, the supplier type is identified as Direct Managed Area. Where users already have plot-level data (whether as full-shaped maps, grid maps, or polygons), the requirements for achieving “delivering” status under NDPE IRF v6.0 can be met more effectively.

The Smallholder Challenge

The traceability challenge becomes even more complex when smallholders are involved.

Independent smallholders make up a significant part of the palm oil supply chain, but they are often the hardest to include in a structured traceability system. 

Through Agriplot, this challenge can be addressed at scale. The platform makes it possible to identify ownership status, capture geolocation data for individual plots, and organize this information in a more structured way.

The example of Agro Wira Ligatsa Mill illustrates this clearly. Smallholders connected to the mill have been mapped and further disaggregated by ownership. Under NDPE IRF v6.0, the key requirement for smallholders is the availability of location information at the village level. Based on this mapping, the mill would meet the criteria for achieving “delivering” status under the framework.

That may sound technical, but the implication is simple: when smallholder data is organized properly, traceability becomes far more achievable.

Traceability as a Strategic Asset

Traceability should no longer be seen as just a compliance task. When done well, it becomes a strategic asset, one that helps companies understand their supply base more clearly, respond to risk earlier, and build stronger confidence with buyers, regulators, and other stakeholders.

Through platforms such as Agriplot, companies can strengthen transparency, improve accountability, and support better supplier performance across the supply chain. More importantly, they can build the confidence needed to respond to both regulatory requirements and stakeholder expectations in a more credible way.

Building Trust Through Better Data

Ultimately, the future of sustainable supply chains depends on the ability to demonstrate traceability that is clear, accurate, and verifiable.

That is what traceability is really about.

Not just knowing the origin of a shipment, but being able to connect data, geography, suppliers, and evidence in a way that holds up under scrutiny. When digital systems make that possible, traceability stops being a compliance burden. It becomes something much more valuable: a foundation for trust, supporting stronger decision-making, more effective risk management, and long-term sustainability outcomes. 

When crude oil prices rise, vegetable oil prices including palm oil tend to move upward as well. 

Figure 1: Historic relationship between oil and commodity prices (Source: Indexmundi and World Bank)

This is driven by substitution effects and growing interest in biofuels as an alternative energy source. To put it simply, when fossil fuel prices rise, biofuels become more attractive, which increases demand for vegetable oils. In the short term, major producing countries such as Indonesia and Malaysia may benefit from higher prices and stronger demand. However, price spikes also create uncertainty. Buyers and sellers may hesitate to commit to contracts. Trade routes can shift. Shipping delays become more likely. In other words, volatility brings risk.

On the social side, surging global energy prices often fuel domestic inflation, increasing living costs for workers and communities around plantations. At the same time, high commodity prices can encourage rapid land expansion as companies chase short-term profits. Without strong oversight, this can increase the risk of deforestation, land conflicts, and labour-rights issues — especially in supply chains involving smallholders.

From a sustainability perspective, the situation is complicated. On one hand, high prices can tempt companies to prioritise production over environmental commitments.. On the other hand, global regulatory pressure continues and is becoming stricter. The European Union, for instance, has introduced the European Union Deforestation Regulation (EUDR), requiring products to be deforestation-free and supported by geolocation evidence. In addition, the Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to conduct due diligence on environmental and human-rights risks across their supply chains. NDPE commitments (No Deforestation, No Peat, No Exploitation) also remain a key benchmark for many multinational buyers.

This situation could create a “two-speed” market. Jurisdictions with stricter regulations will continue to demand transparency, traceability, and data-based verification. Meanwhile, more pragmatic markets may prioritize price and supply availability. This fragmentation increases the risk of “leakage,” where higher-risk products are diverted to markets with weaker oversight.

All of this highlights one key lesson: sustainability and supply-chain resilience now go hand in hand. 

Deforestation monitoring cannot stand alone, it must be linked to logistics risk analysis, supplier stability, and cross-country regulatory compliance. Supplier transformation and strengthening smallholders are critical to maintaining long-term market access. Digital traceability systems and geospatial monitoring are no longer just reporting tools. They help companies see where their products come from, identify disruptions quickly, and respond faster. 

Accurate data is the cornerstone of a sustainable supply chain which has been proven time and again to be more resilient to disruptions. Sustainable chains often require better mapping of suppliers, allowing for faster identification of, and response to, bottlenecks or disruptions. The focus on sustainability often overlaps with strategies that increase agility and the ability to adapt quickly to changes, making them more capable of handling unexpected shocks. In practice, sustainable supply chains often turn out to be more resilient because they are better mapped, better monitored, and more transparent.

Geopolitical tensions may eventually ease. But the global push for stronger sustainability standards is likely to continue. In an uncertain world, palm oil producers and traders that build transparent, responsible, and adaptable supply chains will be better positioned to withstand shocks — and stay competitive in the long run.

Source: 

1. Reuters – Iran conflict disrupts global shipping as tankers are stranded, damaged – 2 Mar 2026.
   https://www.reuters.com/business/energy/iran-conflict-disrupts-global-shipping-tankers-are-stranded-damaged-2026-03-02/
2. Reuters – Mideast-Asia oil tanker rates at highest since 2020 as Iran tensions simmer – 26 Feb 2026.
   https://www.reuters.com/business/energy/mideast-asia-oil-tanker-rates-highest-since-2020-iran-tensions-simmer-2026-02-26/
3. Reuters – Oil rises as expanding US-Israeli conflict with Iran elevates supply risks – 3 Mar 2026.
   https://www.reuters.com/business/energy/oil-rises-expanding-us-israeli-conflict-with-iran-elevates-supply-risks-2026-03-03/
4. European Commission – Corporate Sustainability Due Diligence (CSDDD) – overview page (Directive 2024/1760) – accessed Mar 2026.
   https://commission.europa.eu/business-economy-euro/doing-business-eu/sustainability-due-diligence-responsible-business/corporate-sustainability-due-diligence_en
5. European Commission (DG Environment) – Regulation on Deforestation-free products (EUDR) – official information page – accessed Mar 2026.
   https://environment.ec.europa.eu/topics/forests/deforestation/regulation-deforestation-free-products_en
6. European Commission – Green Forum – Deforestation Regulation implementation timeline (application dates) – accessed Mar 2026.
   https://green-forum.ec.europa.eu/nature-and-biodiversity/deforestation-regulation-implementation_en
7. Sustainable Palm Oil Choice (industry explainer) – What is NDPE (No Deforestation, No Peat, No Exploitation)? – accessed Mar 2026.
   https://www.sustainablepalmoilchoice.eu/ndpe-commitment/
8. The Guardian – Maritime insurers cancel war risk cover in Gulf as Iran conflict disrupts shipping – 2 Mar 2026.
   https://www.theguardian.com/business/2026/mar/02/maritime-insurers-war-risk-cover-gulf-iran-shipping-strait-of-hormuz
9. Tun-Hsiang Y., Bessler, D and Fuller, S.W. 2006. Cointegration and Causality Analysis of World Vegetable Oil and Crude Oil Prices. https://www.researchgate.net/publication/23506721_Cointegration_and_Causality_Analysis_of_World_Vegetable_Oil_and_Crude_Oil_Prices

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.

As the global demand for sustainable commodities intensifies, the palm oil sector is undergoing a critical transformation. At the heart of this shift lies the urgent need for traceability, transparency, and credible deforestation- and conversion-free (DCF) claims.

InovasiDigital is leading this transformation—providing robust digital infrastructure and intelligence to trace palm oil from plantation to product, ensuring compliance with the EU Deforestation Regulation (EUDR), and upholding NDPE (No Deforestation, No Peat, No Exploitation) commitments.

Why This Matters: Supporting Global Sustainability Commitments

Our traceability platform provides the foundation for:

Empowering Inclusive Sustainability

Importantly, our system also brings smallholders into the fold. By integrating cooperative groups, FFB agents, and local processors, we help ensure that sustainability is inclusive, equitable, and impactful at every level of the value chain.

 Partner with InovasiDigital

At InovasiDigital, we believe that data is the new currency of sustainability. By transforming complex supply chains into transparent ecosystems, we empower stakeholders—from producers to brands—to act confidently, communicate credibly, and contribute meaningfully to a deforestation-free future.

Let’s build the future of sustainable palm oil—together.

Over the past two decades, the palm oil industry has become one of the most crucial global sectors for domestic consumption and a major export commodity. However, behind its success lies a significant challenge—non-compliance in cultivation practices contradicting sustainability principles. This has led to deforestation and expanding peatland plantations, which are vital for climate mitigation.

This article is based on the Earthqualizer report, which exposes alarming trends in palm oil plantation development. It highlights a critical concern: the high rate of non-compliance and the industry’s failure to hold actors accountable.

The Hidden Footprint of Non-Compliance

The report notes that from the total impact of deforestation and peatland conversion between 2016 and 2024—covering an area of 471,238 hectares of deforestation and 115,587 hectares of peatland degradation—125,092 hectares remain unidentified in terms of market and supply chain integration. The report refers to these as hidden cases, where market players and the palm oil supply chain have yet to be held accountable for their environmental impact, and the responsible plantation entities cannot be clearly linked.

The lack of transparency in supply chain information prevents many parties from being identified, thereby obscuring advocacy efforts and the necessary resolution. Statistics reveal that 125,092 hectares of non-compliance cases originate from 30 concessions, each affecting over 1,000 hectares, representing 81.64% of the total detected deforestation.

Furthermore, the report indicates that 87,224 hectares of the impact come from plantation concessions that lack processing facilities, while 37,872 hectares originate from concessions that do have mills but still fail to comply with sustainability policies, mainly No Deforestation, No Peat, and No Exploitation (NDPE) commitments. A significant challenge in advocating for these cases lies in the limited availability of transaction data within their palm oil supply chains.

A deeper analysis suggests that the root cause of non-compliance lies in the industry’s inherent complexity. The lack of transparency in the supply chain remains a central issue, exacerbated by the fact that companies and supply chains are not well-structured to ensure clarity and accountability regarding raw material sources.

Persistent Non-Compliance

Large plantation groups and global brands that have adopted NDPE policies and joined forums such as the Consumer Goods Forum (CGF) play a critical role in driving change. They are expected to be more responsible and transparent regarding their palm oil sourcing and to enforce stricter monitoring systems. However, reliance on spatial analysis and publicly available data for monitoring still leaves loopholes for violations. Many entities continue to operate non-transparently, withholding market administration documents and unpublished audit reports, making non-compliance even more challenging.

The impact of non-compliance is far-reaching, affecting both the environment and local communities who depend on healthy ecosystems. Deforestation negatively impacts climate change mitigation efforts and threatens wildlife habitats, while indigenous communities often lose their lands without fair compensation.

“Nothing is perfect,” but in the context of sustainability, there is an urgent need for improvement. The consistent implementation of NDPE policies and strengthened zero-deforestation and anti-exploitation advocacy must be reinforced through initiatives and collaborations among stakeholders. Government support, corporate responsibility, and civil society monitoring are essential to establishing a system that values sustainability while aligning with economic growth.

Where do We Go from Here?

Non-compliance in the palm oil supply chain is an issue that demands immediate attention. By improving transparency, strengthening regulations, and advancing monitoring technology, we can hope to reduce deforestation rates and pave the way for a more sustainable palm oil industry. As consumers and members of society, it is our responsibility to choose and promote sustainable production practices and ethical products—because sustainability is not just an option, but a necessity for the future of our planet.

Reference: – Earthqualizer. (2016-2024). “Orphan Case Report”.