Key actors in palm oil business urged to up their game to win over hearts

Oil palm (Elaeis guineensis) trees are native to Africa but were brought to Southeast Asia over a century ago as an ornamental plant but has since been suited as a commercial crop.

Today, the “tree of plenty” has gifted us the most popular vegetable oil on earth. And products made from oil palm are simply beyond imagination. They are found virtually everywhere from our kitchen to bathroom and dressing table.

As our population grows, so does the demand for this versatile natural ingredient. While the spotlight has been shining on over 40 palm oil producing nations, it’s time we started paying attention to midstream and downstream industry players, who can take ownership of their deeds and act responsibly – to promote sustainable practices.

Companies can be drivers of change

Midstream processing or downstream application manufacturers or companies [collectively regarded as “companies” hereafter] should step up their effort to uphold a balance between economic and environmental sustainability. This can be done through sustainable sourcing along the supply chain.

It’s about integrating earnest social, ethical and environmental practices into every decision-making, internally and externally, to meet the growing expectations of all stakeholders, involving employees, shareholders, customers, NGOs, regulators, etc.

At the same time, companies can also take up a more active role in educating the public about the pressing need for such practices, being a role model that walks the talk. It adds value to corporate responsibility while fostering competitive edge.

BASF

Echoing the call loudly is BASF, one of the largest manufacturers of palm kernel oil and its derivatives for cosmetics and food. The German chemical company is committed to switching about 330 palm-based products to the RSPO "Mass Balance" standard by 2019 globally.

The world’s largest chemical producer has also pledged to have every of its personal care product to contain a certified ingredient in it by 2020.

BASF, being a member of the Round Table On Sustainable Palm Oil (RSPO) since its inception in 2004, traced almost 80% of its overall palm oil sourcing of more than half a million metric tons as of 2018.

The “BASF drives change in the palm-oil supply chain” report claims that BASF’s certified sustainable palm oil is 100% traceable and originates from 204 oil mills in Indonesia and Malaysia. And by 2020, BASF vows to make all its palm kernel-based oil purchases RSPO-certified and traceable.

"The industry is accountable for driving change and consumers expect companies to deliver on their promises," said Prerna Chatterjee, Marketing Manager - Sustainability, Care Chemicals North America, BASF.

Reiterating this was Dan Strechay, U.S. Representative, Outreach and Engagement at RSPO, who remarked: "The efforts of BASF to transfer its full line of offerings to certified sustainable palm oil is noble. That’s the behavior I look to see and would point to as transformative."

"As opposed to carrying certified and non-certified material, here’s a company that’s already making the move to provide 100% RSPO certified material. That means the products that the consumer ends up getting at the end of the day are going to support the production of certified sustainable palm oil," he added.

Nestlé

Nestlé, the world’s largest food company, is committed to using 100% responsibly sourced palm oil by 2020, a move that requires an industry-wide change. The Swiss company is also committed to driving innovation and industry transformation throughout the value chain of its worldwide food production.

Nestlé’s Responsible Sourcing Standard spells it out clearly that it sources through care and respect for individuals, communities and the planet, while delivering on its promises to meet consumers’ expectations on where its products come from and how they are made.

Driven by the tenet of enhancing quality of life and contributing to a healthier future through responsible sourcing, the household brand sets out specific requirements pertaining to sourcing and production for its supply chain tiers, from Nestlé to suppliers, through intermediaries and all the way back to the origins of the goods and services it buys, in an effort to minimise its impact on the planet’s resources.

Stakeholders who fail to comply with Nestlé’s Responsible Sourcing Standard will be struck off the list of its supply chain.

64% of the total palm oil that Nestlé purchased in 2018 was responsibly sourced with 54% of it traceable. Nestlé’s buys palm oil from processing companies that source it from mostly Malaysia and Indonesia; Latin America and West Africa.

One of the key requirements for its sustainable sourcing is: the supply must not come from areas cleared of natural forest after 31 December 2015. And of course, it has to comply with the RSPO principles and criteria – an industry-wide certification that promotes the growth and use of sustainable palm oil products.

The multinational food and drink company had earlier made a ‘no deforestation’ pledge in 2010 to support the Consumer Goods Forum’s ambition for zero net deforestation by 2020. The commitment covers all the raw materials it uses to make its packaging as well as foods and beverages.

In Malaysia, Project RiLeaf carried out by Nestlé Malaysia is another testament to its sustainable push. The tree-planting initiative on the banks of Kinabatangan River, Sabah fosters the co-existence of flora (mainly palm oil) and fauna in the area.

On the same token, the Malaysian Palm Oil Council (MPOC) is urging companies with a vested interest in the value chain to work harder towards achieving a common goal – a sustainable model of cultivation and production supported by a responsible supply chain.

Malaysian Sustainable Palm Oil (MSPO) certification

The Malaysian government is pushing for a 100% Malaysian Sustainable Palm Oil (MSPO) certification by 2020 to support the move, which also requires the already RSPO certified plantation companies to comply with the MSPO standards, while ensuring independent and organised smallholders who make up 40% of our total oil palm cultivation, to be on board as well. 

The MSPO certification scheme covers Oil Palm Management Certification and Supply Chain Certification.

Oil Palm Management Certification sets the standards for responsible management of palm oil plantations, smallholdings and palm oil processing facilities. The certification process is run by an accredited third party certification body to assess and verify that the oil palm management is in compliance with the standards’ requirements as prescribed in the MSPO standards.

Supply Chain Certification applies to parties (mainly companies) who process, trade or manufacture palm oil from certified oil palm management units. It shows the link (traceability) of the palm oil (product) from the mill to the final product, keeping certified palm oil product separated from its uncertified counterpart, thus ensuring the value of certification right through the value chain to the customer.

Calling for a collective effort

Companies that increasingly make responsible sourcing an integral part of their procurement and supply chain management will get the upper hand to boost their brand reputation. Once the industry accelerates the prominence of certified sustainable products, consumers and even our planet earth, have just everything to gain.

Plantation companies, smallholders, growers, processors, manufacturers, investors, traders, suppliers, retailers, exporters, importers, environmentalists, activists, NGOs, research and teaching fraternity, government agencies, policy-makers, decision-makers, observers and even the general public, we can all be the key actors to drive change to the industry by supporting sustainable palm oil!