Let's say 100 farmers around the world sell palm oil, for $100 a tub. About half wreck the environment, about half are very careful and replant what they harvest.
Western people come in and start to refuse to buy the "environment wrecking" Palm Oil. So they go to the environmental friendly sellers, and start paying $150 for ethical palm oil. On the other hand, people that don't care or places that can get away with it continue to use forest destroying palm oil. There is now a price difference ($100 for normal stuff, $150 for ethical stuff), so most non-western demand shifts to the cheap stuff.
End result: Still 100 farmers selling palm oil. 50 being ethical, and 50 not.
The 50 unethical farmers still make $100 per tub. The 50 ethical farmers now make $150 per tub.
The environment seems no different. The only difference is that $50 got transferred from the banks of wealthy westerners to the ethical palm oil farmers. Which is nice and all, but I am not seeing how it changed anything in the environment.
You would need almost EVERYONE to switch to the ethical route for it to do anything. That would cause surplus supply and price drops of unethical palm oil. Even 50% of users switching seems not nearly enough.