Demand for Sustainable Palm Oil Rising
Singapore. With their products associated with deforestation and land conflicts, more and more companies are seeking to ensure that their supply chains are traced only to oil palm growers engaging in sustainable and ethical conduct, industry players and experts said on Wednesday.
Speaking at the 10th Annual Roundtable Meeting on Sustainable Palm Oil in Singapore, Cherie Tan, global director of sustainable sourcing of renewable and smallholder development at consumer goods giant Unilever, said that by 2015, Unilever will ensure that all of the raw materials used in its products come from sustainable sources.
“In April of this year, Unilever made a bigger commitment to 100 percent traceable certified palm oil by 2020, and we believe that this is a necessary step for the transformation of the palm oil industry as a whole,” she said.
“Unilever will share its 2020 traceable palm oil vision and make a call to the industry to partner together to make 100 percent traceable certified palm oil a reality.”
With the Internet proving to be an effective advocacy tool, activists are increasingly using social media to call for boycotts on products and services that contribute to environmental degradation.
The Indonesian branch of Change.org, an online petition forum, has recently shut down operations of a shark fin store and persuaded sponsors to back away from a traveling circus that featured live dolphins, citing cruelty to the animals.
Unilever products have also been targeted by activists who say the palm oil used in its products has contributed to deforestation and the destruction of wildlife, particularly in Indonesia. The archipelago accounts for 48 percent of the world’s palm oil.
Cherie said the Anglo-Dutch consumer goods manufacturer is in talks with the Indonesian government to establish a manufacturing plant in Sumatra, which hosts 2.1 million hectares of plantation areas, to ensure that all of the palm oil used in its products can be physically traced to certified sustainable palm oil (CSPO) producers.
But convincing palm oil producers in Indonesia to acquire CSPO certification from the Roundtable on Sustainable Palm Oil has proved to be a daunting task, explained RSPO’s vice president II, Edi Suhardi. Edi, who is also head of sustainability at palm oil producer Agro Harapan Lestari, said only 68 oil palm growers, processing and trading companies, and users of the product in Indonesia are certified. Fourteen of them, including Unilever, are international companies.
“There is skepticism and suspicion from [Indonesian] business associations and the government,” he said.
As of May, only 3 million metric tons out of 25 million tons of palm oil produced in Indonesia received RSPO certification, meaning Indonesian palm oil sales to multinational manufacturers like Unilever, which alone buys 3 percent of the world’s palm oil, would be next to impossible under the 2020 vision.
And from the palm oil producers’ perspective, that means losing a huge client. Unilever Indonesia’s net revenue stood at Rp 20.3 trillion ($2.1 billion) in the January to September period this year.
But the Indonesian government has been reluctant to recognize the environmental standards set by RSPO, which is used by many European buyers. Instead, Indonesia created its own standard, aided by the Indonesian Palm Oil Producers Association (Gapki), which exited the RSPO last year after its members expressed frustration at the tough environmental standards set.
RSPO adviser M.R. Chandran said there should be more than one grade of RSPO certification, which would allow “weaker companies” to get lower grade RSPO certifications while receiving guidelines for improvement. “Perhaps this will make RSPO less daunting to so many of the palm industry players,” he said.
More and more companies are buying only certified sustainable palm oil. Julian Walker-Palin, head of corporate sustainability at the British subsidiary of Wal-Mart, said that since last year, the retailing giant has been training its buyers to segregate products that contain sustainable palm oil from those of non-sustainable origin.
And for Chandran, that is a very powerful incentive for producers to start thinking about meeting the environmental standards set by RSPO.
“Standards are driven more by markets than by governments or industry. This of course can make them much tougher to deal with than laws,” he said.