Certification using GreenPalm certifications
The majority of the world’s palm oil supplies are not traceable back to the plantation on which they were grown, as palm oil from different plantations, mills and countries is intermingled at each stage of the production and delivery process. It is 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 to trace palm oil back to the plantations on which it is grown
People increasingly want to know exactly where palm oil originates from 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 have already 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. To boost our supply of traceable palm oil, we are currently investing €69 million in a palm kernel oil processing plant in Indonesia. We are considering similar joint venture investments in processing crude palm oil derivatives elsewhere. See July 2013 news story for latest information.
Leading broader action
Turning our commitment 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 – governments, NGOs, processors, manufacturers, large growers and smallholders.
Unilever is working with the Roundtable on Sustainable Palm Oil (RSPO) 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.
In 2008, as part of our commitment, we established a global coalition of companies and NGOs to combat deforestation. The coalition meets regularly and comprises nearly 40 companies, including some of the world’s leading consumer goods companies. By the end of 2010, the majority of members had set public targets for purchasing certified sustainable supplies of palm oil. In addition, the pledges made on palm oil as part of the Consumer Goods Forum zero deforestation target are contributing to a growing market for sustainable palm oil.
Promoting the uptake of sustainable palm oil in China
Although around 14% of the world’s palm oil is now certified as sustainable, only half of the available certificates are being purchased. A key challenge is to promote awareness, encourage uptake and expand the market to accelerate the progress that companies like ourselves have made so far.
China is the largest consumer of palm oil, importing 18% of the world’s supply. It is also a fast-growing market for Unilever. As we work towards our 2020 target, it is essential to ensure that there is sufficient demand to drive the market for sustainably sourced palm oil in the country.
In July 2012, we joined 60 key players in the palm oil industry, including traders and the Chinese government, for the China Sustainable Palm Oil Forum. Working through the Consumer Goods Forum we contributed to the talks on how to promote faster uptake of certified sustainable palm oil in China.
The significance of palm oil
Palm oil is a nutritious vegetable oil that is a staple foodstuff for billions of people around the world. Palm oil is extracted from the fruit of oil palm, which is a high yielding and very productive plant.
Palm oil is an important crop. It is used in many products – both food and non-food – from margarine, soups and ice cream to shampoo, skin lotions, soap and candles. Around 50 million tonnes of palm oil are produced annually, on a planted area of about 12 million hectares.
Oil palms grow in equatorial conditions in Asia, Latin America and Africa, but more than 80% of the world’s supply comes from Malaysia and Indonesia. Since the 1990s the area of land used for palm oil cultivation has increased by about 43%.
The ever-growing demand for the oil is due to several factors, but the main reasons are:
growing populations that need to be fed
rising incomes in developing markets increase the desire to buy branded products
its use in biofuel production.
How do we use palm oil?
Unilever has a long history of using palm oil in its products. It is a versatile fat that can withstand refining at high temperatures, allowing individual components to be isolated for use in specific product applications.
Unilever purchases around 1.3 million tonnes of palm oil annually (mostly directly but with a small proportion through oleochemicals suppliers), which is around 3% of the world’s total production. However, over the past five years the total amount of palm oil (and speciality ingredients containing it) bought by us has decreased.
Palm oil ingredients are used across our portfolio, mainly in spreads, but also in savoury products (soups, sauces and bouillons) and ice cream. The oil is used in soap bars, while derivatives are also key ingredients in laundry and personal care products.
Our commitment to sustainable palm oil is not new. In the mid-1990s, as part of our Sustainable Agriculture Programme, we started developing Good Agricultural Practice Guidelines for oil palm. We also began working with our own plantations and growers to implement these guidelines.
To promote the production and take-up of certified sustainable palm oil, WWF conducted a global assessment of companies’ performance. 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.
More than 130 major retailers and consumer goods manufacturers were measured against four areas: active membership of the RSPO, public commitment to source RSPO-certified sustainable palm oil, disclosure of volume of palm oil used/bought, and disclosure of how much of the palm oil they use is certified or is supporting sustainable production. Unilever is the largest user of palm oil in the 2011 scorecard and the only company using over 100,000 tonnes of palm oil a year of which more than 50% is purchased from certified sustainable sources. Unilever was acknowledged for its ambitious commitment to purchase all its palm oil from certified sustainable sources by 2015, despite substantial logistical and cost challenges.
In April 2010 WWF published an assessment of six major Australian food companies and retailers. Unilever was rated the top company with a score of 24.5 out of 29. WWF reported that Unilever and Cadbury had made the most progress in moving their supply to certified sustainable palm oil.