Transforming the palm oil industry
We are making good progress against our ambitious targets for 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. The 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.
We use palm oil in products such as our margarine, ice cream, soap and shampoo. We purchase 0.5 million tonnes of crude palm and palm kernel oil, and a further 1 million tonnes of derivatives and fractions annually. This is nearly 3% of global production.
The link between palm oil & deforestation
Whilst palm oil has many positive attributes, there is a strong link between the way in which it is grown and deforestation. The practice of clearing forests to make room for palm oil is a major contributor to climate change, accounting for over half of land conversion and up to 15% of global emissions. Forests also support 80% of land-based biodiversity, and many of the ecosystem services on which we depend, such as watershed protection and fertile soils.
We take our commitment to no deforestation in our supply chain very seriously. 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. In the long-term, the only way consumers will continue to enjoy products with palm oil as an ingredient, is if it is sustainably sourced. That is why we are using our influence to play a leading role in transforming the industry.
In 2009, Unilever was amongst the first companies to publicly commit to a long-term goal to source 100% of our palm oil sustainably. We built this into the Unilever Sustainable Living Plan which we launched in 2010, as part of our commitment to source 100% of our agricultural raw materials sustainably by 2020.
Sustainable sourcing means physically certified palm oil through mass balance, segregated, or equivalent sources. Since then, we have been working hard to make it a reality – in our own supply chain and across the entire sector. In the interim we will ensure that our palm oil is traceable to mills and continue to use GreenPalm certificates for those volumes that are not physically certified.
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 were founding members of the Roundtable on Sustainable Palm Oil (RSPO). Building on RSPO’s Principles & Criteria as a foundation, we launched our first Sustainable Palm Oil Sourcing Policy in 2013. This was designed to drive market transformation by working with key suppliers and the wider industry to halt deforestation, protect peat lands and have a positive economic and social impact on people and communities.
In early 2016, we re-launched our Sustainable Palm Oil Sourcing Policy with stronger commitments to human rights, adherence to national laws, smallholder inclusion and traceability implementation. We require our suppliers and their third-party suppliers to comply with the principles of our Policy.
In 2012, three years ahead of schedule, we reached our 2015 target to source 100% of our palm oil from sustainable sources. We achieved this primarily through the purchase of GreenPalm certificates. Whilst buying these certificates makes a significant contribution to a more sustainable palm oil industry, we acknowledge this as a first step.
In 2013, we announced our commitment to make all the palm oil we buy traceable to known sources by the end of 2014, and traceable and certified as sustainable by 2020. Knowing where our palm oil originates is an important prerequisite for understanding what is needed to transform Unilever’s palm oil supply chain.
As of December 2015, we were able to report that:
- Unilever is one of the largest end users of physically certified palm oil in the consumer goods industry.
- About 19% of our palm oil comes from physically certified sources (RSPO Mass Balance and Segregated and up from 9% in 2014).
- We have implemented a robust traceability and risk verification system on the ground with the Global Forest Watch tool to enable us to track deforestation risks. We did this in partnership with the World Resources Institute, as well as our other partners Proforest and Daemeter.
- 73% of our volume can be traced back at least to the mill in the country of origin. We have visibility of 2,064 mills, which is estimated to be around three-quarters of the entire sector.
- 50% of these mills have been risk assessed and the mill data cleaned and validated. We are working to complete this for the remaining mills.
- 100% of the palm oil for our new Sei Mangkei factory in North Sumatra, Indonesia, is traceable to mills, and potentially links to 5,000 independent smallholders in the surrounding area.
Since March 2015, all the palm oil we buy directly for our European and Australian and New Zealand foods businesses has been RSPO segregated. We have also started sourcing RSPO certified mass balance volumes for our North American and Latin American markets, and for our brand Dove. The remaining volume is covered by GreenPalm certificates. Over 2015-2020, Unilever will phase out GreenPalm.
Influencing industry to source palm oil sustainably
Our scale is an opportunity for us to influence the rest of the industry. We actively encourage other consumer goods companies on their no deforestation commitments through collaborations such as the Consumer Goods Forum, Tropical Forest Alliance, RSPO, New York Declaration on Forests, Banking Environment Initiative and the World Business Council for Sustainable Development. This commitment helped raise the bar for many others who followed suit, and these companies have been recognised in the recent Global Canopy Forests 500 ranking.
As a result of these efforts, over 90% of globally traded palm oil is now covered by sustainability commitments. We are making progress, but as an industry we need to do more starting with turning all ‘no deforestation pledges’ into action. Commitments on paper are critical to align our shared objectives. But it is actions taken on the ground and at scale that will transform markets to eliminate deforestation.
A new sourcing approach to help eliminate deforestation
In December 2015, we took the next step and joined a group of consumer goods companies, acting individually, to signal a willingness to prioritise commodity sourcing from areas that are pursuing comprehensive forest climate programmes.
Together, we are supporting a ‘production protection’ model of rural development, also known as ‘jurisdictional forest, climate and agriculture approaches’ and ‘place-based multi-stakeholder partnerships’. These approaches enable agricultural production and human development goals through increased productivity, better spatial planning and land restoration, whilst protecting and restoring natural forests.
The new approach allows improved allocation and management of land across a landscape from a production or protection standpoint. It delivers productivity gains within land-use sectors, and enables net positive environmental impacts and improved smallholder farmer livelihoods. It also manages medium to long-term business risks and costs, building supply-chain security within targeted landscapes and promoting consumer confidence. It will create greater simplicity in monitoring and verifying environmental impacts and livelihood benefits, compared to monitoring on a plantation-by-plantation basis.
“Many global companies, including our own, have made unprecedented commitments to eliminate deforestation from their supply chains,” said Unilever CEO Paul Polman and former Marks & Spencer CEO Marc Bolland, co-chairs of the Sustainability Committee of the Consumer Goods Forum. “We are taking action but the private sector cannot succeed alone. We applaud the new political will governments are showing on forests.” We need the support of governments to enforce strong forest protection policies.