From Voluntary to Mandatory: A Review of Prospects and Challenges in Implementing Palm Oil Sustainability Certifications in Indonesia

Indonesia, as the world's largest palm oil producer, faces increasing international pressure to adopt sustainable production practices. In response, the Indonesian Sustainable Palm Oil (ISPO) certification evolved from a voluntary initiative into a mandatory regulatory instrument. This study aims to review the prospects and challenges associated with this transition, focusing on institutional readiness, stakeholder alignment, and market responsiveness. Employing a qualitative literature review method, the study systematically analyses peer-reviewed journal articles, policy documents, and industry reports published between 2015 and 2025. Data were collected using a structured document analysis protocol and processed through thematic synthesis to extract recurring patterns, contradictions, and insights across 80 selected sources. Findings indicate that while mandatory certification strengthens Indonesia’s sovereign control over sustainability standards, major challenges persist. These include limited smallholder readiness, high compliance costs, lack of institutional coordination, and misalignment between ISPO and international schemes like RSPO. Despite these barriers, recent digital innovations, capacity-building programs, and regulatory reforms suggest positive movement toward inclusive and credible certification systems. The study concludes that transitioning to mandatory certification requires a comprehensive policy ecosystem that integrates financial incentives, technological support, and international cooperation. Future research is recommended to explore the socio-economic impacts of certification on smallholders and to assess the effectiveness of digital monitoring tools in enhancing traceability and compliance.