Earlier this month, confectionery giant Mars announced that as part of its “Palm Positive Plan” it will reduce its number of palm oil suppliers, removing from the supply chain those that do not meet the required sustainability criteria. The firm is simplifying its supply chain, reducing the number of mills it uses from 1500 to fewer than 100 by 2021, and then aiming to halve that again in 2022.
Demand for palm oil has increased greatly in recent years. Having first been used principally in soaps, toothpaste and cosmetics, its major use now is in huge number of food products, where it has replaced animal fats and where it has a number of advantages. It is easier to use than other vegetable oils, is commercially attractive, and is also “trans fat-free”, so it plays well with the growing interest in health and diet.
Palm trees are indigenous to West Africa, but in recent years, to meet this growing demand, farmers and agri-business firms across Southeast Asia (and elsewhere) have been clearing bio-diversity rich rainforest to make room for new palm plantations. Palm oil production is now considered to be the largest cause of deforestation in Indonesia and other tropical countries.
That has a negative impact in a number of key areas; for example, Indonesia’s endangered orangutan population, which depends upon the rainforest, is estimated to have seen a reduction in numbers of some 50% in recent years. There have also been alleged human rights issues in terms of the workers on some plantations and in oil processing.
In 2003, some 200 commercial entities in the global supply chain met and established the Roundtable on Sustainable Palm Oil (RSPO) to promote the growth of palm oil in an environmentally friendly manner. RSPO works to develop definitions and criteria for the sustainable production of palm oil, while facilitating the adoption of more green-friendly practices throughout the industry. The group celebrated its first shipment of “sustainable palm oil” to Europe in 2008.
But Greenpeace International considers RSPO to be “little more than greenwash,” pointing out that at least one RSPO-certified producer—United Plantations, a supplier to Nestlé and Unilever—is deforesting Indonesia’s vulnerable peat land forests. And Sinar Mas, another major RSPO player, has cleared tropical rainforest all over the country for its palm oil plantations, and is still expanding rapidly. Greenpeace is calling for a moratorium on deforestation throughout Indonesia so that the RSPO and the government can take stock and then proceed accordingly.
Generally, the largest firms are looking to do the right things. But there are a number of problems. Clearing rainforest brings immediate economic benefits to people and governments (even if the long-term effects might be tragic). People who are living a subsistence existence quite rightly don’t appreciate rich westerners telling them what they can and can’t grow. There is also a major issue around understanding. Palm oil is so ubiquitous, it is hard to make consumers realise just how often they are potentially contributing to these issues.
But the alternatives also have their problems. Some environmental experts want us to use more palm oil, not less. Jane Hill, Professor of Biology at University of York, was quoted in the Times earlier this year saying , “Boycotting palm oil could have the opposite effect to that intended, resulting in forests still being lost and more decline for wildlife.”
That’s because in some ways, oil palm is an environmental wonder crop. It needs much less fertiliser or pesticide of other oil crops such as soya beans, and most importantly it requires up to ten times less land. To switch to soya or coconut oil could put more forest and wildlife at risk.
So it may be that the way forward will be driven by the big consumer firms such as Mars who are key users of palm oil. If they can drive the right behaviour down the supply chain, there may be a sustainable solution. Barry Parkin, Chief Procurement and Sustainability Officer at Mars, believes the transformation of its supply chain can be a blueprint and catalyst for sector-wide changes.
“For years, businesses have grappled with complex and opaque palm supply chains. It is now clear that this has not been enough to guarantee no deforestation or human rights issues. By radically simplifying our palm supply chain, partnering with a smaller cohort of suppliers and rigorously applying the three M’s of Mapping, Management and Monitoring we can eliminate deforestation and advance respect for human rights”.
Mars is using satellite mapping to keep an eye on land-use and an example of the simplification comes in its supply chain to its Asia-Pacific businesses. Mars is now sourcing from UniFuji (a partnership between United Plantations and Fuji Oil), which has reduced operations from 780 mills to just 1. Now palm is grown on one plantation, then processed through just one mill and one refinery before reaching Mars.
As always in these difficult issues, there are risks. Might the suppliers who have lost business be driven to work with less scrupulous buyers, who do not care about these issues in the manner that Mars, Unilever and other global firms clearly do? Could that make the situation worse for growers and workers who are now out of the Mars supply chain? That issue will need monitoring, but as more firms follow the sort of approach that Mars is taking, we can only hope that the overall position improves rapidly, before we wave goodbye to the orangutans forever.