ISPO Hulu: Upstream Sustainable Palm Oil Certification in Indonesia

Indonesia is the world’s largest producer of palm oil, and sustainability certification has become central to how the sector demonstrates responsible land use, labor practices, and environmental stewardship, both to domestic regulators and to increasingly demanding international markets. The primary vehicle for this is Indonesian Sustainable Palm Oil (ISPO) certification, Indonesia’s mandatory national sustainability standard for the palm oil sector. ISPO is structured across the supply chain, and ISPO Hulu, which is the upstream segment, is where certification requirements apply to palm oil cultivation itself: plantation companies and smallholders.

1. What Is ISPO, and Where Does ISPO Hulu Fit?

ISPO was established to ensure that palm oil produced in Indonesia is sustainably cultivated and managed, covering legal compliance, environmental protection, labor rights, community engagement, and continuous improvement in plantation management. Since 2020, ISPO certification has been mandatory (not voluntary) for palm oil business actors.

ISPO is generally split by supply chain segment:

• ISPO Hulu: The upstream segment, which covers the cultivation and production of fresh fruit bunches (FFB) by plantation companies (usaha perkebunan kelapa sawit) and smallholders (pekebun).
• ISPO Hilir: The downstream segment, which covers palm oil processing, refining, and derivative industries, falls under a separate certification scheme administered by the Ministry of Industry.

ISPO Hulu is where growers, from large private and state-owned plantation companies to independent smallholder farmers and cooperatives, must demonstrate compliance with Indonesia’s sustainable palm oil principles and criteria.

2. Who Needs ISPO Hulu Certification?

ISPO Hulu certification applies to two categories of upstream business actors:

• Usaha Perkebunan Kelapa Sawit (Plantation Companies): including private companies and state-owned enterprises (BUMN) operating palm oil plantations, regardless of scale.
• Pekebun (Smallholders): independent smallholder growers, who may apply individually or collectively through a kelompok pekebun (smallholder group), gabungan kelompok pekebun (federation of smallholder groups), or cooperative.

3. The Regulatory Framework Behind ISPO Hulu

ISPO Hulu sits within a regulatory hierarchy that has recently been updated:

• Presidential Regulation No. 16 of 2025 (Perpres 16/2025) on the Indonesian Sustainable Palm Oil Certification System, which is the current overarching legal basis for ISPO, replacing the earlier Presidential Regulation No. 44 of 2020 (Perpres 44/2020).
• Ministry of Agriculture Regulation No. 33 of 2025 (Permentan 33/2025) on Indonesian Sustainable Palm Oil Certification for Palm Oil Plantation Businesses, which is the current technical implementing regulation for ISPO Hulu sets out:

The principles, criteria, and indicators (P&C&I) that plantation companies and smallholders must meet, requirements and procedures for certification, audit procedures for assessing compliance with ISPO principles and criteria, dispute resolution mechanisms related to certification outcomes, requirements and procedures for certificate transfer, oversight of ISPO certification implementation, certification costs and financing facilitation for smallholders, administrative sanctions, and incentive provisions for smallholders.

4. How the ISPO Hulu Certification Process Works

While procedures can vary slightly by applicant type, the general certification pathway includes:

• Application: The plantation company or smallholder group submits an application to an accredited, independent certification body, i.e., Lembaga Sertifikasi ISPO (LSISPO), along with required legal, land, environmental, and operational documentation.
• Document Review: The LSISPO reviews submitted documentation against the applicable principles, criteria, and indicators for the applicant category (company or smallholder).
• Field Audit: Auditors conduct an on-site assessment of plantation practices, environmental management, labor conditions, community engagement, and internal control systems, verifying conformity with ISPO requirements.
• Independent Decision-Making: Certification decisions are made through an independent process at the LSISPO, separate from the auditors who conducted the field assessment, to preserve impartiality.
• Certificate Issuance: Once compliance is confirmed, an ISPO certificate is issued, valid for five years.
• Surveillance and Renewal: Certified plantation companies and smallholder groups undergo periodic surveillance audits during the certificate’s validity period, and must reapply for certification before the five-year term expires.

5. Why ISPO Hulu Certification Matters

• Mandatory compliance: ISPO certification is a legal requirement for palm oil plantation businesses in Indonesia, with the government also moving to phase in mandatory certification for smallholders over the coming years, supported by financing facilitation and incentive programs.
• Global market access: With international buyers and regulators, including under emerging deforestation and due-diligence requirements in major export markets, increasingly demanding proof of sustainable sourcing, ISPO certification helps position Indonesian palm oil competitively in the global market.
• Improved plantation management: The principles and criteria under Permentan 33/2025 push both companies and smallholders toward better agricultural practices, environmental management, and labor standards.
• National positioning: Indonesia has positioned ISPO as central to its ambition to be recognized as a world-class sustainable palm oil producer.

6. SIP’s Verification Service for ISPO Hulu

SIP is currently building its ISPO Hulu certification service in accordance with the principles, criteria, and indicators set out in the standards. SIP is currently undergoing the accreditation process with the National Accreditation Committee (Komite Akreditasi Nasional/KAN) for ISPO Hulu and has not yet completed this process.

Business actors interested in ISPO Hulu certification are encouraged to contact SIP to discuss the current status of this service and expected timelines.

Contact SIP to learn more about the ISPO Hulu certification service.