Transforming the palm oil industry

We are making good progress against our ambitious targets for use of sustainable palm oil.

Why do we need palm oil?

Sustainable palm oil is a versatile raw material that is the most land-use efficient vegetable oil. It is the source of livelihoods for millions of famers and communities across Indonesia and Malaysia, and is growing in importance in Africa and Latin America.

Palm oil is a vegetable oil that is a staple foodstuff for billions of people around the world. Palm oil and its derivatives are key ingredients for thousands of consumer products. It is extracted from the fruit pulp of the oil palm, which is a high-yielding and very productive plant.

While palm oil has many positive attributes, there is a strong link between the way in which it is grown and deforestation. Deforestation is a major contributor to climate change, accounting for up to 15% of global emissions. Forests also support a staggering 80% of terrestrial biodiversity, and many of the ecosystem services on which we depend, such as watershed protection and fertile soils. Over half of the world’s deforestation is linked to land conversion to produce agricultural raw materials such as palm oil.

As one of the world’s largest buyers of palm oil for use in products such as margarine, ice cream, soap and shampoo, Unilever purchases 0.5 million tonnes of crude palm and palm kernel oil, and a further 1 million tonnes of derivatives and fractions annually, which is nearly 3% of global production.  The majority of plantations where our palm oil is sourced from are in Malaysia and Indonesia.

By sourcing sustainably, we aim to reduce the impact of palm oil cultivation on forests, and drive positive economic and social impacts for smallholder farmers, indigenous people and forest communities.

Our commitment

As part of the Unilever Sustainable Living Plan, we have committed to source 100% of our agricultural raw materials sustainably by 2020. We are placing particular emphasis on the sustainable sourcing of commodities like palm oil, the cultivation of which can exacerbate deforestation if done unsustainably.

Knowing where our palm oil originates is an important pre-requisite for positive change, and for understanding the changes needed to transform Unilever’s palm oil supply chain. In 2014, we have made good progress, but also learned that the journey to drive traceability and transformation is not an easy one.  However, it has reinforced our determination to bring the industry on board to collectively commit to more transparent and sustainable supply chains for palm oil.  It was a defining year for shaping our ability to create a more transparent palm oil industry with the aim of transforming the wider industry.

A strong track record

Our commitment to sustainable palm oil builds on a strong track record. As far back as the mid-1990s, as part of our Sustainable Agriculture Programme, we started developing Good Agricultural Practice Guidelines for palm oil. In 2004, we became founding members of the Roundtable on Sustainable Palm Oil (RSPO). Building on RSPO’s Principles & Criteria (P&C) as a foundation, our Sustainable Palm Oil Sourcing Policy is designed to drive market transformation. It will do this by working with key suppliers and the wider industry to halt deforestation, protecting peat lands and driving positive economic and social impact for people and communities. These principles are vital to create a sustainable palm oil industry.

In 2012, we announced that we would reach our 2015 target to source 100% of our palm oil from sustainable sources three years ahead of schedule. We achieved this primarily through the purchase of GreenPalm certificates. GreenPalm is a trading programme that allows manufacturers and retailers to purchase one GreenPalm certificate from a grower certified by the RSPO for each tonne of palm oil used.

Whilst we believe that buying GreenPalm certificates makes a significant contribution to a more sustainable palm oil industry, we also recognised that this was only a first step. That is why in 2013 we announced our commitment that all palm oil bought will be traceable to known sources by the end of 2014, and will come from traceable sources certified as sustainable by 2020.

Our interim progress, announced in our Sustainable Palm Oil Progress Report (PDF | 3MB), showed that by September 2014 58% of the palm oil in our supply chain was traceable to known mills. By the end of 2014 this increased to 70%.

Our progress has been slower than we hoped and highlights that this journey to drive traceability and transformation is not an easy one. The palm oil supply chain is very complex and at the same time, opaque.  However, we are determined to bring the industry on board to achieve a more sustainable supply chain.  Traceability to known sources is an important milestone on the journey towards sustainability.  By the end of March 2015, all the palm oil we buy directly for our European Foods business was traceable to certified plantations.

* Our 2014 traceability programme covered 81% of our total volumes. Currently exclusions include the 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. These materials are processed by third-party manufacturers.

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