Q&A: Can palm oil ever be sustainable?
This article first appeared on the World Economic Forum Agenda.
Two of the world’s largest palm oil companies, Unilever and Wilmar, tell us how their commitments to ending deforestation are working out.
Unilever is a global food company that has pledged to source 100% sustainable palm oil from traceable sources by 2020. We talk to Jeff Seabright, the company’s chief sustainability officer.
(Scroll down the page for the interview with Wilmar.)
What is Unilever hoping to get out of the Tropical Forest Alliance first general assembly?
The TFA is our enabler to turn implementation into reality and now we must aggressively drive this forward and maintain momentum. Given the critical situation in Indonesia following last year’s forest fires and the amount of carbon dioxide this emitted into the atmosphere, there is no better place for us to meet than Jakarta, so we can continue the conversation with the people working so hard on the ground and start to understand some of the issues.
Our critical objective for 2016 is to move from ambition to action by landing a handful of real “produce protect” partnerships. The future of the TFA will depend on quality of engagements not quantity and numbers. It is critical that we deliver on the promise of public-private solutions for “production protection” models in our key geographies of Indonesia, West Africa and Brazil.
How has the Paris agreement affected companies’ no deforestation commitments?
The Paris agreement was a historic moment in time. We were hoping that the final agreement would acknowledge the important role that forests play in tackling climate change – and it absolutely did.
WRI analysis shows that the INDCs submitted represent the greatest collective commitment to reduce land use emissions ever seen in international climate negotiations. China, Brazil, Bolivia and the Democratic Republic of the Congo put forth targets that could alone contribute to the protection of more than 50 million hectares of forest over the next 15 years, an area the size of Spain. This could achieve a reduction of 17 gigatons (Gt) of CO2 over 15 years, or 2.5% of the current total annual emissions globally.
The challenge now is to help countries meet their INDC commitments on forests. One promising route forward is what we call place-based partnerships or a “produce protect” approach.
What is Unilever’s biggest challenges to meeting its no deforestation commitments?
Our biggest challenge remains traceability for palm oil sourcing. This is a current industry-wide issue.
In 2013 we made a commitment to get full traceability of our palm oil supply chain. To make sure this happens and ensure that our products are free from deforestation, Unilever works with Global Forest Watch, a NASA satellite based forest monitoring platform. Through this advanced platform, we continue to investigate, monitor and verify real-time developments in Indonesian and Malaysian forests. Should an incidence be identified as linked to our direct supplier or one of our suppliers’ suppliers, we will engage with our supplier to take immediate remedial action. To date, we achieved traceability of 72% of our palm oil. This will allow us to achieve our target to purchase all palm oil sustainably from certified, traceable sources by 2020 or earlier.
What has happened in Unilever’s palm oil supply chain over the last year?
Our focus has been traceability, advancing our smallholder farmer programme and creating wider system change through industry alliances such as the TFA.
On traceability, there was a significant development in November 2015, when we officially opened our Sei Mangkei fractionation plant in North Sumatra, a €130 million investment in the Indonesian economy. What is significant about this is that it connects smallholder farmers in a 50km radius to the factory, taking a landscape-management approach, so we know exactly where the palm oil is coming from and can work with partners such as RSPO and IDH to train the farmers in sustainable practices.
The landscape management approach goes beyond traceability, which can only manage environmental and livelihood benefits on a plantation-by-plantation basis, to deliver both supply-chain security for business, as well as net positive environmental impacts and improved smallholder farmer livelihoods at scale.
Knowing the origin of palm oil is an important first step. But to achieve the ambitious shared goal of a net positive environmental impact and improved smallholder farmer livelihoods, we need to go beyond traceability.
Unilever and IDH have commissioned the development of a delivery strategy to achieve our medium to long-term environmental and livelihood goals, initially focused on the key landscapes from which Unilever sources.
Wilmar International Ltd, the world’s largest palm oil trader, has unveiled an online platform that provides transparency and “traceability” in its supply chain, listing the names and locations of refineries and palm oil mills. We talk to Jeremy Goon, the company’s chief sustainability officer.
What are some of the key milestones Wilmar has achieved since the launch of its no deforestation policy in December 2013?
In December 2013, we made a commitment to drive sustainable practices and accelerate transformation in the palm oil industry, by announcing our No Deforestation, No Peat, No Exploitation Policy. This integrated policy extends across Wilmar’s entire supply chain, including our joint ventures and third-party suppliers.
The key milestones we have achieved are summarized in the graphic below.
What barriers do companies face in fulfilling their no deforestation commitments, and how can these be addressed?
The drivers of deforestation and degradation are bigger than the palm oil industry and need to be addressed holistically. Achieving sustainability goals will require cooperation and coordination of multiple stakeholders with diverse interests; including agri-business companies, NGOs/CSOs, local communities and governments.
Industry players should come together to implement and enforce their no deforestation policies throughout their supply chain, and also encourage and support the adoption of similar no deforestation policies by their suppliers.
Wilmar has had success with some of our major suppliers who have agreed to adopt similar no deforestation policies for their group- wide business activities. With those who have failed to show progress in complying with our sustainability requirements, we have decisively suspended business relationships with them.
Despite sustainability commitments by palm oil majors, there continues to be a market for unsustainable palm oil. NGOs should focus their campaigning efforts on these companies instead, and exert pressure on them to conform to high sustainability standards.
What can Wilmar do to help smallholder farmers?
Smallholders are an integral part of the palm oil industry, and we recognize that they face unique challenges in conforming to enhanced sustainability requirements, and attaining certification. Wilmar conducts ongoing consultations with smallholders, and provides them with technical assistance to support their compliance with our integrated policy. We are also working with Wild Asia, a Malaysian social enterprise, to help individual smallholders attain RSPO certification, and have a similar plan in place for Indonesia.
Wilmar is a signatory and founding member of the Indonesian Palm Oil Pledge (IPOP), together with five other palm oil majors. IPOP seeks to create an environment which enables and promotes the production of sustainable palm oil that is deforestation free, expands social benefits, and improves palm oil’s market competitiveness.