Taking responsible palm oil from aspiration to implementation

By Catherine Cheney 10 December 2015

Workers at an oil palm plantation in Papua, Indonesia. The growing global demand for commodities like palm oil, derived from oil palm trees grown in the tropics, is driving unprecedented rates of deforestation around the world. Photo by: Agus Andrianto / CIFOR / CC BY-NC-ND

In early December 2013, Glenn Hurowitz, an activist working to break the link between agriculture and deforestation, met with The Forest Trust founder Scott Poynton and Wilmar International CEO Kuok Khoon Hong at the Szechuan Court & Kitchen at the Fairmont Hotel in Singapore.

"Basically we were yelling at each other,” Hurowitz told Devex as he recounted the meeting where he and Poynton, whose organization works with companies like Wilmar to transform their supply chains, tried to hold the CEO of the agribusiness group to an earlier commitment he had made to a groundbreaking no deforestation policy for palm oil.

“Finally he said, if Unilever will sign on, I will do it,” Hurowitz said of the key moment in a series of late night texts and around the world flights that led to an agreement between Wilmar and Unilever for Wilmar to end deforestation throughout their supply chains.

“Among other things, they’ve revolutionized global commodity agriculture by bringing an extraordinary degree of transparency to the palm oil industry, forcing others to do the same. And they’re doing it despite their extraordinary scale,” Hurowitz said. “But even though they’re the best, they’ve still had huge problems with suppliers engaged in deforestation in their supply chain.”

The growing global demand for commodities like palm oil, derived from oil palm trees grown in the tropics, is driving unprecedented rates of deforestation around the world. The most popular vegetable oil on the planet, palm oil appears in half of the packaged goods sold in supermarkets worldwide.

Fires to clear land for agriculture in Indonesia, the largest producer and consumer of palm oil, are driving orangutans and other species to extinction and making the country the worst global warming offender on the planet with daily carbon dioxide emissions often exceeding those of the United States and China. The haze engulfing Indonesia, Malaysia and Singapore has drawn international attention to the problem of palm oil as well as potential solutions to preserve forests and peatlands, involve communities, and protect human rights.

Beyond no palm

Activists who long advocated against palm oil entirely have transitioned to campaigning for responsible sourcing and expansion of the palm oil, and, by doing so, have gained a seat at the table with the industry’s corporations. That, in turn, has given them an opportunity to help implement the solutions that may make conservation and human rights protections the norm. This shift in approach gives them the ability to encourage companies like Pepsi and McDonald’s to purchase palm oil solely from suppliers who can demonstrate that their supply chains do not contribute to the destruction of forests or peatlands.

“If a company is going to buy palm oil, they can pressure their suppliers to adopt responsible practices across their supply chain, which means they can act, ultimately as a positive force for change in the palm oil industry,” Sharon Smith of the Union of Concerned Scientists wrote Devex in an email.

While there are still some “say no to palm oil” campaigns, more and more activists have also taken a new approach with consumers, instead asking that they demand palm oil products produced with socially responsible and environmentally sustainable practices.

“Simply boycotting products containing palm oil — or any other commodity linked to deforestation — will not stop the destruction,” Greenpeace palm oil campaigner Fiona Mulligan said. “To deliver lasting forest protection, companies — producers and manufacturers alike — and consumers need to be an active part of the solution. That means using pressure and the promise of continued dollars to support true change on the ground.”

In effect, companies that get rid of palm or soy in their products, which wouldn’t be a bad thing lose their “leverage” to affect change in those supply chains or industries, said The Forest Trust’s John Van’t Slot.  

From sustainable to responsible

While some companies are eliminating palm oil, others, like Nestle, are instead working to create traceable supply chains in an effort to source the product responsibly.

Nestle for example is no longer buying GreenPalm certificates — a financial product endorsed by the Roundtable on Sustainable Palm Oil as a way for companies to offset purchases of palm oil — because it was only a temporary solution as the company worked out better systems with suppliers and its partner The Forest Trust, according to the company’s 2015 progress report. Steps like these put Nestle at the top of the Union of Concerned Scientist’s palm oil scorecard.

That’s in part because some activists have criticized The Roundtable on Sustainable Palm Oil, or RSPO, standards as weak — an example of how ideals are watered down to the point where agreeing on the lowest common denominator becomes more important than the original goals.

The term “sustainable palm oil” has been diluted such that it is “no longer a useful term to distinguish good palm oil from bad,” said Gemma Tillack, the agribusiness campaign director for the Rainforest Action Network.

The Rainforest Action Network now encourages companies to only use “responsible” palm oil, which it defines as “palm oil that has been produced from known sources without contributing to rainforest or peatland destruction, species extinction, high greenhouse gas emissions or human rights violations,” Tillack said.

There is a belief among some advocates that companies can individually make more progress than through standards making bodies, like the RSPO, which don’t hit a high enough mark.

“Our view is that companies should take ownership of the values that they want to see in their supply chain and not outsource it solely to standards-making bodies,” Van’t Slot said.

Environmental goals and concerns about cutting down rainforests to cultivate palm oil tend to be the primary motivation for activists, but they also acknowledge the potential economic development impacts of more integrated, inclusive supply chains.

About 40 percent of global palm oil volumes comes from smallholder farmers, but most of them are kept out of the RSPO-certified supply chains because of the costs and requirements of certification, said Van’t Slot. While the expansion of palm oil could help achieve poverty alleviation goals it must be done responsibly, he added.

Some proposed solutions to meet both economic and environmental goals include the high carbon stock approach, which identifies degraded lands for the expansion of palm plantations, and land swaps, in which companies can change legal land classifications in order to develop on these lands already reduced to small trees, scrub or grass.

Supply chains

Last month, Unilever — the largest end user of physically certified palm oil in the consumer goods industry — inaugurated a new palm oil facility in North Sumatra, Indonesia, as part of its plan to source all of its palm oil sustainably by 2020.

“The transformation of palm oil or palm kernel oil is difficult by itself, but getting sustainable derivatives will take a far longer time,” said Biswaranjan Sen, Unilever’s vice president of chemicals procurement and supply procurement. Derivatives go through a series of suppliers once they leave plantations, making it difficult to trace, which is what led Unilever to “look at an investment ourselves,” he added.

But mixed reactions to Unilever’s recent progress update on its palm oil commitment point to the complexity of the palm oil problem as well as the proposed solutions. 

“Unilever is now lagging behind its peers as its current palm oil commitment lacks both an ambitious deadline and clear requirements that its suppliers must meet to end the destruction of rainforests, peatlands and human and labor rights violations in all their operations,” Tillack said.

Smith called it one of the major players that, despite their pledges, are unable to verify that 100 percent of their palm oil purchases and complete suite of suppliers are not linked to irresponsible practices.

Unilever, however, doesn’t agree it is lagging behind. The company said in an email that by the end of 2015, 20 percent of its total volume will be physically certified palm oil, with the rest covered by GreenPalm. It can also trace 72 percent of its volume to its mill in the country of origin and is in the process of doing risk assessments in the 2,000 plus mills in its supply chain  it has covered about half so far. In addition it is “implementing a robust traceability and risk verification system on the ground with the Global Forest Watch tool in partnership with the World Resources Institute, as well as our partners Proforest and Daemeter,” according to the email.

While the Unilever’s of the world have a broad reach because of their size, the responsibility for tackling the palm oil issue is not their responsibility alone.

Smaller companies like Estée Lauder are working to turn their commitments on palm oil into action as well, but have found it difficult.  

“We don’t really have the influence in our supply chain to really drive behavioral change,” said Pam Gill Alabaster, Estée Lauder’s vice president of global corporate responsibility.

As a result smaller companies like Estée Lauder need to collaborate in order to move the needle as they meet their commitments, whereas companies that procure more palm oil can go it alone and make an impact, she said.

Collaboration

As with many other challenges, the actors in palm oil seem to agree that building a coalition of the willing and fostering collaboration between the triangle of industry, civil society, and government is an important part of creating solutions.

"The leading palm oil companies have aligned to advocate for improved forest governance and conservation in Malaysia and Indonesia,” Hurowitz said. “So you have the same companies that were once lobbying and bribing governments to weaken forests and human rights protections now the champions of strengthening them."

And while there may be improved alignment in some areas between companies and advocates, governments also have to step up.

“As players in the industry, we have been in some ways a bit naive in that we thought the issues could be addressed without the participation of the government and I think there’s increasing and growing realization that it requires the government to be present,” said Sen, who is also the co-chairman of RSPO.

Unfortunately, as the private sector and government work together on the balance of protection and production in the palm oil industry, both sides have been guilty of a gap between aspiration and implementation. In Indonesia, that has led to an environmental and health disaster for the country and a climate disaster for the world.

“As a country with one of the largest forest areas acting as the lung of the world, Indonesia is here today as part of the solution,” Indonesian President Joko Widodo said at the Paris climate change conference. “My government is developing Indonesia in a way that is giving due attention to the environment.”

But corporates and NGOs alike continue to express concerns about his ability to enforce central government policies on the local level. And Hurowitz said it is the problem of governance that really keeps Indonesia from following the example of Brazil, which has turned around the deforestation for soya products in the Brazilian Amazon.

There are local campaigns in Indonesia to build dams to protect peatlands, saw down illegal oil palm trees, and even tranquilize orangutans to move them to safer areas before they are killed. But, despite a domino effect of zero deforestation pledges, it remains to be seen whether rhetoric will translate to reality on a large scale.

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About the author

Catherine cheney devex
Catherine Cheneycatherinecheney

Catherine Cheney covers the West Coast global development community for Devex. Since graduating from Yale University, where she earned bachelor's and master's degrees in political science, Catherine has worked as a reporter and editor for a range of publications including World Politics Review, POLITICO, and NationSwell, a media company and membership network she helped to build. She is also an ambassador for the Solutions Journalism Network and the Franklin Project at the Aspen Institute.


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