In April 2012, we announced that we would reach our 2015 target three years ahead of schedule. This has been achieved primarily through the purchase of GreenPalm certificates. Indeed, over the last five years, we have been the largest supporter of the book and claim system of sourcing sustainable palm oil. We recognise that GreenPalm certificates make a significant contribution to a more sustainable palm oil industry. However, they are only our first step.
To source sustainably we need to be able to trace our palm oil back to the plantation on which it is grown, and trace its route through certified mills, transport and use. In 2012 we set ourselves a new target to source all our palm oil from certified, traceable sources by 2020. We began sourcing traceable palm oil for our European markets in 2011, from suppliers certified by the RSPO.
In 2013, we made considerable progress on palm oil. In July, we invested $130 million in a palm kernel oil processing plant in Sei Mangke, Indonesia, which will process traceable to known certified palm oil. We are considering similar joint venture investments in processing crude palm oil derivatives elsewhere.
In November 2013, we announced a significant move in our journey to accelerate market transformation towards sustainable palm oil. We pledged that by the end of 2014, all the palm oil that we buy globally will be traceable to known sources.
In order to continue to transform the palm oil market to sourcing sustainably, we need to strengthen the RSPO and we need to change false, negative perceptions around sustainable palm oil, particularly amongst consumers.
The majority of the world’s palm oil supplies are not traceable back to the plantation on which they were grown. This is because palm oil from different plantations, mills and countries is intermingled at each stage of the production and delivery process. It is usually therefore not possible to identify whether it has been produced sustainably.
To guarantee that sustainably-produced palm oil reaches a buyer, a chain of custody must be in place from certified grower to buyer. This means that sustainable palm oil must be processed and shipped separately for purchase as a ‘segregated supply’.
The GreenPalm system enables RSPO-certified palm oil producers to register a quantity of their output with GreenPalm. Growers are awarded a GreenPalm certificate for each tonne of palm oil which has been sustainably produced and can sell the certificates via the GreenPalm trading system. This enables buyers to claim that they have supported the Sustainable production of palm oil(Link opens in a new window). The palm oil itself is sold, processed and purchased in the usual, non-segregated way.
All the palm oil that goes into our factories in Europe and the Americas is covered by GreenPalm certificates, as is the oil used in our Australasian, Malaysian and Indonesian operations.
In April 2012, we announced that we would reach our 2015 target three years ahead of schedule. We achieved this primarily through the purchase of GreenPalm certificates. We recognise that these make a significant contribution to a more sustainable palm oil industry, but they are only a first step.
Extending our ambition
People increasingly want to know exactly where palm oil originates and be able to trace it back to its source. However this can be very challenging, due to the fragmented nature of the palm oil supply chain.
To support our target on traceable supplies, we started to work directly with producers to buy segregated supplies of sustainable palm oil. We began sourcing traceable palm oil for our European markets in 2011, using suppliers certified by the Roundtable on Sustainable Palm Oil.
Leading market transformation
We have decided, as part of our 2013 strategic review of the Unilever Sustainable Living Plan, to play a leading role in helping to drive deforestation out of commodity supply chains.
We will do this by leveraging our purchasing scale as the world’s biggest multinational consumer goods buyer of palm oil and our convening capabilities as one of the world’s largest consumer goods companies. Turning our vision into reality relies on the creation of a market for sustainably-cultivated palm oil. This is complex and will take time since it involves many different stakeholders. Unilever was a founder member of the Roundtable on Sustainable Palm Oil (RSPO) in 2004. Since then, more than 1,000 members, from over 50 countries, have signed up to its eight principles to transform markets making sustainable palm oil the norm.
Today, about 15% of palm oil globally is certified by the RSPO. We continue to work with the organisation to increase availability. The Roundtable has set sustainability criteria against which suppliers can now be certified. However, to justify the investment, suppliers need certainty around the demand for palm oil. We need to encourage others to make public commitments similar to ours and help drive market demand. This in turn will reassure growers that they will get a return on their investment in sustainability certification.
Working with Industry to Tackle Deforestation
In 2008, we established a global coalition of companies and NGOs to combat deforestation. By the end of 2010, the majority of members had set public targets for purchasing certified, sustainable supplies of palm oil. The coalition comprised nearly 40 companies, including some of the world’s leading consumer goods companies.
At an industry level, in 2010 our CEO Paul Polman and former Tesco CEO Sir Terry Leahy, jointly obtained a commitment to zero deforestation by 2020 by all 400 members of the Consumer Goods Forum (CGF). The CGF includes all the world’s major consumer goods manufacturers, retailers and service providers, with combined sales of €2.5 trillion. This has accelerated the efforts of CGF members and sent a big signal to the market that this industry means business.
In December 2013, we announced a Memorandum of Understanding (MoU) with Wilmar, Asia’s leading agribusiness group. This ensures that Wilmar’s plantations and the companies from which Wilmar sources will only provide products that are free from links to deforestation and abuse of human rights and local communities. Wilmar announced its own sustainable sourcing policy which, like Unilever’s, focuses on ‘No Deforestation, No Peat, No Exploitation of People and Communities’. The company represents approximately 35% of the global palm oil market so this is a major step forward.
Unilever is leading the way in promoting sustainable and traceable palm oil. We are committed to deliver this for all our products by the end of 2014. We are actively campaigning to eliminate deforestation. We and others are working together to develop one independent, scientific, peer-reviewed global standard to drive change which is good for forests, wildlife and local communities.
We are convinced that an end to deforestation is within our grasp.
The Tropical Forest Alliance
Unilever was also instrumental in the foundation of the Tropical Forest Alliance and is playing a leading role in driving it forward. This is a public-private partnership between the Consumer Goods Forum and the governments of the US, UK, the Netherlands, Norway, Indonesia and Liberia.
The Alliance has three big priorities:
Driving deforestation out of South East Asia, where a lot of progress has been made in winning over the big operators and we are now helping smallholders achieve RSPO certification.
Driving it out of Latin America, where it’s primarily linked to soy and animal feeds.
Preventing it becoming an issue in Africa as the continent increases its production of palm oil. In February 2014 Unilever signed a partnership agreement with Solidaridad to promote RSPO certification and sustainable farming practices in West Africa.
Sustainable Palm Oil Sourcing policy
To help us reach our new goal, we launched a new Sustainable Palm Oil Sourcing policy. Building on the Roundtable on Sustainable Palm Oil’s (RSPO) principles and criteria, the new policy is designed to drive market transformation by working with key suppliers and the industry with a commitment to stopping deforestation and development on peat land, as well as to bring about positive economic and social benefits for people and local communities.
Through our Palm Oil Traceability Reporting and Verification Programme, we will require traceability reporting in the supply chain including our suppliers’ third-party supplies. Our palm oil traceability reporting tool was piloted in mid-2013, and will be rolled out fully in 2014.
Through our tender process, we will significantly reduce the complexity of our supply base. We will focus the majority of the palm oil volumes we buy from a few key suppliers who will be able to deliver traceable and certified palm oil for Unilever requirements. We will work with suppliers, traders and refiners who can source their palm oil and derivatives that will be traceable to known sources for the vast majority of our purchased oils. Over time these suppliers are expected to ensure that all of these known sources will become certified. The policy is available as a Download.
Increasing smallholder volumes
Whilst we are reducing the number of suppliers we work with, we will prioritise purchasing from suppliers that have volumes that can be traced to certified smallholders. We will work with suppliers to ensure inclusivity of smallholders through active engagement, yield improvement programmes and extension services. We will also actively work with other palm oil stakeholders, such as NGOs and governments, to encourage the integration of more smallholders into the global palm oil supply chain.
In 2013, we vastly expanded our smallholder programme. We began a five-year purchase of equivalent GreenPalm certificates from the first RSPO-certified, independent smallholders in Indonesia. We currently have Memoranda of Understanding (MOUs) in Indonesia and West Africa with IDH (The Sustainable Trade Initiative), the RSPO, PTPN3 and Solidaridad, respectively, to build traceable and sustainable smallholder volumes.
One example of a new smallholder programme is our vanilla-sourcing programme in Madagascar. Together with our supplier Symrise and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, we have launched a partnership to improve the livelihoods of 4,000 vanilla farmers in the Sava region. This unique initiative includes a comprehensive, three-year programme that will impact 32 communities and involve 44 schools and colleges, giving it the potential to improve 24,000 lives in one of the world’s poorest nations.
In 2014, we are looking at similar smallholder inclusion possibilities in Ghana and Brazil.
Changing negative perceptions
We have worked to change false negative perceptions around sustainable palm oil. In particular, we are engaging with consumers and customers.
For Unilever it is important that our consumers and customers have the confidence that the palm oil used in our products has been sustainably sourced from known and certified sources.
In March 2014, the Union of Concerned Scientists issued a scorecard in which they examined companies’ commitments to sustainable palm oil. Unilever, Mondelez and Nestlé were judged to have made ‘full commitments’, whilst 11 companies were judged to have made no commitments at all.
WWF continues to conduct assessments of the take-up of certified, sustainable palm oil (CSPO) by companies. Its third Palm Oil Buyers’ Scorecard, published in November 2013, revealed some encouraging signs of progress. The 2013 Scorecard coverage was global, assessing 130 retailers, food service companies and consumer goods and other manufacturers from Europe, Australia, Japan, the US and India. Previous studies had looked at major European, Australian and Japanese companies.
Along with three other manufacturers, Unilever scored a top 12 out of 12 in the latest Scorecard. WWF concluded that ‘all four companies had shown real commitment and action not only on buying CSPO but also on requiring action on climate change right along their palm oil supply chains.’
In November 2011 WWF published its second Palm Oil Buyers’ Scorecard assessing the palm oil buying practices of 132 European, Australian and Japanese companies. Unilever scored eight out of nine, and was acknowledged for its ambitious commitment to purchase all its palm oil from certified, sustainable sources by 2015, despite substantial logistical and cost challenges.
Unilever scored of 24.5 out of 29 in the 2009 Scorecard. WWF reported that both Unilever and Cadbury had made the most progress in moving their supply to certified, sustainable palm oil.
Richard Holland, Director of WWF’s Market Transformation Initiative said: “Unilever’s 2014 commitment marks a very promising step on the continuing journey towards real market transformation to sustainable palm oil. Unilever’s role and actions have been instrumental on this journey so far. They helped us establish the RSPO in 2004 and have been closely involved in its development into a credible institution and standard.
But as importantly, Unilever has also matched its commitment with action on buying RSPO certified sustainable palm oil. That is why we ranked Unilever amongst the top scorers in the industry in our Palm Oil Scorecard.
But the journey is not over. We will continue to work with Unilever and others through the RSPO to encourage further certification by growers and buying of certified palm oil by manufacturers and retailers. WWF also encourages leading companies in the sector to set the industry benchmarks on important issues like traceability, protection of peat lands, significant GHG reductions and no deforestation. We urge other companies along the palm oil value chain to follow the lead shown by Unilever”.