Transforming the palm oil industry
Our ambition is to make sustainable palm oil commonplace. To achieve this, we’re working with partners to drive sustainable change within our own supply chain and the wider palm oil industry.
The importance of palm oil
People in Indonesia and Malaysia rely on the palm oil industry for their livelihood
Palm oil is a highly versatile crop. Not only is it a popular cooking oil, but it’s also used to create flavour and texture in many foods, and works as a stabilising, binding and foaming agent in many beauty and household cleaning products. It is also used as a biofuel. In addition to its unique and wide-ranging properties, palm oil happens to be the most land-efficient vegetable oil available.
Oil palms produce more oil per hectare of land than any other oil-producing crop. For example, to get the same amount of oil from soybeans, you would need seven times more farmland. In addition, the production of oil palm requires less energy, as well as fewer fertilisers and pesticides.
As such, the palm oil industry brings significant economic benefit to millions of smallholder farmers and the economies of producing countries. For example, in Indonesia and Malaysia, 4.5 million people rely on the palm oil industry for their livelihood.
For all the reasons above, palm oil is a popular ingredient in many consumer products and, as the world’s population grows, so too does demand for the crop. It is, therefore, in our interest to ensure its sustainability.
Palm oil is an important raw material for many of our brands – and securing a supply of sustainable palm oil is vital to the future success of our business.
Issues facing the palm oil industry
Palm oil has grown into a major global industry over recent decades. Farmers today produce over 70 million tonnes1 of palm oil annually – that’s more than double what they were producing just 20 years ago.2 Estimates indicate that palm oil plantations now cover more than 27 million hectares3 – an area bigger than the size of New Zealand.4
Palm oil plantations cover
- 27 million hectares
- - an area bigger than New Zealand
We committed to sourcing 100% of our palm oil sustainably by 2019
But palm oil only grows in the tropical rainforests, which are also home to a host of flora and fauna. The rising demand for palm oil has meant that, in some areas, deforestation of forests and high conservation land occurs in order to clear land for new planting. The expansion of palm oil plantations has led to land conflicts between plantation companies and local communities.
Unilever is convinced of the need to tackle the issues associated with palm oil such as climate change, deforestation, loss of biodiversity, land conflicts and human rights issues, and balance these against the economic benefit palm oil brings to millions of people working in the industry, as well as oil palm’s relatively efficient use of land. That’s why we made a commitment to source 100% physically certified sustainable palm oil by the end of 2019 and have taken a leadership role in working to transform the palm oil industry with our stakeholders.
Can palm oil have a sustainable future?
We believe so, and we are working hard to make it happen. Over the years, we have learned two important lessons about sustainability. First, there is no quick fix. The necessary solutions are multiple and often take time to implement. Second, no single organisation can deliver sustainability alone.
A sustainable palm oil industry, which meets growing global demand while simultaneously protecting the planet and people’s livelihoods and human rights, can only ever come about through cooperation and collective action. That means everyone involved in the palm oil sector – buyers, traders, suppliers, farmers, consumers and governments – working together. This is already happening, but lots more needs to be done and it needs to happen faster.
Find out more about how we are driving sustainable palm oil production.
What is Unilever doing to drive change?
For more than 15 years, Unilever has been at the forefront of driving industry-wide change to ensure a sustainable future for palm oil. We do this in two ways. First, by focusing on our own operations and supply chain, and second by working to transform the wider industry.
In our own operations, we work closely with our suppliers. All of our suppliers need to adhere to our Sustainable Palm Oil Sourcing Policy (PDF | 167KB), which was updated in 2016 with stronger commitments, particularly regarding human rights and the inclusion of smallholder farmers.
We are also working to increase traceability and transparency to enable clearer visibility of issues and how we can work with our suppliers and partners to resolve them. Find out more about how we are doing this here and how we address any concerns in our supply chain here.
To help transform the wider industry, we were a founding member of the Roundtable on Sustainable Palm Oil (RSPO), in 2004, a globally recognised certification standard to drive sustainable production in palm. The RSPO is made up of representatives from growers and buyers, commodity traders, non-profit environmental and social groups, and other influential organisations. We also work with the Tropical Forest Alliance (TFA), a global public–private partnership in which partners take voluntary actions to reduce the tropical deforestation associated with sourcing palm oil, soy, beef, and paper and pulp.
Roundtable on Sustainable Palm Oil
We were a founding member of the RSPO in
- because we realised that no single business can turn the industry around
Why doesn’t Unilever just stop using palm oil?
We choose to use palm oil because it is one of the most productive vegetable oils per land area: sunflower, soy and rapeseed all require far more land to deliver the same volume of oil. To stop using palm oil would result in a lot more land being cultivated to obtain the same quantity of oil, resulting in a much greater environmental impact. We’re committed to ensuring all vegetable our oils are grown sustainably and that agricultural cultivation no longer results in deforestation.
What are Unilever’s sustainable palm oil commitments?
Our Sustainable Palm Oil Sourcing Policy sets out our commitments and targets for ensuring the core volumes of crude palm oil and derivatives that we buy are sourced sustainably and with traceability. Our target was to purchase 100% physically certified and traceable palm oil by the end of 2019.
Tackling the complex social and environmental issues in the palm oil supply chain requires more than policy commitments – it requires the transformation of an industry. Through partnerships, advocacy and committed work on the ground, we're helping to lead real progress towards our vision of a supply chain in which sustainable palm oil is commonplace. In this section, we describe our work in the following areas:
Where is Unilever on its sustainable palm oil sourcing journey?
In 2019, we achieved 95% sustainably sourced palm oil and palm kernel oil for our core volumes.* This was achieved through a combination of segregated and mass balance supply. Unilever was also the largest supporter of independent smallholder certificates and we sourced another 4.5% of our volumes through independent smallholder certificates, reaching a total of 99.6% sustainably sourced overall. See Targets & performance.
* Core volumes exclude derivatives of palm fatty acid distillates, which are by-products of the refining process, and tail ingredients. These represent very small volumes in our products. Core volumes also exclude materials processed by third-party manufacturers and volumes purchased and used in certain markets due to market norms.
Is certification of palm oil the best solution?
Certification is one of the ways to help transform how palm oil is produced and traded, and the RSPO has played a key role in setting and maintaining standards for the whole sector. However, we know that certification alone does not guarantee solutions to all the social and environmental issues facing the sector. Although many companies now support palm oil certification, still only about 20% of the total industry volume was certified by 2019. In response to this, we’ve developed a number of additional sustainability programmes with our partners as we strongly believe that it’s essential to support and promote widespread change in the industry.
How does Unilever ensure traceability within its palm oil supply chain?
By enhancing our own and our stakeholders' understanding of where our palm oil comes from, we improve our ability to identify and address risks and build trust in our supply chain. For Unilever, traceability ultimately means following the palm oil and derivatives that we purchase back to the land area that is associated with a mill, including dedicated plantations, plasma smallholders and independent smallholders.
We have an ongoing commitment to increase traceability – through emerging technologies such as satellites, geolocation, blockchain and artificial intelligence – and are working with major technology firms and start-ups to develop new approaches from which the whole industry can benefit. For more details, see Technology-led traceability.
We are also strongly committed to supply chain transparency. We were the first major consumer goods company to publish our supplier and mill data: we have now identified around 1,570 of the palm oil mills in our ‘mill universe’ that includes our direct and extended supply chain.
What work is Unilever doing with smallholder farmers?
Globally, over 3 million smallholders produce approximately 40% of the world’s palm oil. The number of smallholders continues to increase despite low productivity, associated low incomes and the impact of palm cultivation on forests, soils, water and animal biodiversity. This means that smallholder inclusion in supply chains, support to improve practices and professionalisation are essential for the long-term sustainable future of the oil palm sector.
Unilever has established its Smallholder Inclusion Programme to promote equitable conditions for farmers, improving farming practices, turning small farms into professional legal businesses and promoting RSPO certification for greater market access. We’ve established several programmes with independent smallholder farmers for mapping, training and RSPO certification. At the end of 2019, we had included more than 10,000, and RSPO-certified more than 1,000 independent smallholder farmers and continue to be the largest buyer of RSPO independent smallholder farmer credits. Our ambition is to make sustainable palm oil commonplace – which means working with partners to support programmes that enable small-scale farmers to access knowledge and services to ensure they employ good agricultural and environmental practices, and safe labour practices.
Find out more about the importance of smallholders.
What is Unilever doing about deforestation & related fires & haze?
Unilever has been at the forefront of corporate efforts to tackle commodity-driven deforestation over the last two decades. This includes helping to establish the Roundtable on Sustainable Palm Oil (RSPO), Tropical Forest Alliance (TFA), and being the only corporate member of the multi-sectoral group that developed and launched the New York Declaration on Forests in 2014.
We have set out clear public commitments to implement ‘No deforestation, No development on peat and No exploitation’ (NDPE) which is documented in our Sustainable Palm Oil Sourcing Policy (PDF | 167KB) that we expect all of our suppliers to follow. We were one of the first major companies to make ‘no deforestation’ commitments, which were followed by many of the other large players operating in the industry.
We monitor our supply chain through various tools, including the Global Forest Watch of the World Resources Institute and regular ‘Deforestation and Burnt Area Reports’ through our partnership with Aidenvironment. We have already suspended sourcing from a number of suppliers linked to deforestation and forest fires.
Find out more about our approach to sustainable palm oil.