Spotlight on palm oil — how well do major companies perform?

Helen Bellfield

Forest clearing for palm oil threatens the survival of the orangutan

The latest campaign from Greenpeace throws a welcome spotlight on how global demand for palm oil is still driving tropical deforestation — despite significant efforts to address this problem over the last 15 years.

As Greenpeace highlight forests are still being cut down to make way for palm oil plantations in Indonesia and Malaysia. And in Peru and Colombia, in Liberia and the Congo, where palm oil is expanding rapidly. Too often, this expansion comes at a cost, with communities and wildlife paying the price.

For concerned consumers — and who would want their chocolate or soap to be contributing to the extinction of iconic species such as the orang-utan? — the news is frustrating. Because palm oil is found in around half of packaged products on supermarket shelves. How can we know where the palm oil in the products we buy has come from?

Ranking the companies

The good news is that a number of big names in the palm oil industry have committed to ‘no deforestation’ policies, suggesting the intention for change.

Global Canopy’s Forest 500 project ranks palm oil companies for their palm oil policies. The annual assessment looks at the biggest companies involved in sourcing or supplying the commodities linked to tropical deforestation: palm oil, soy, cattle, timber, and pulp and paper.

In 2017 we assessed 165 companies involved in buying or supplying palm oil. Two thirds of those companies had a policy in place to source sustainable palm oil — the rest did not.

Scrolling down the list of companies assessed, it is clear that while many well-known brands such as Mars, Danone, L’Oreal and Nestle have introduced policies to source their palm oil sustainably, others, including the French dairy company, Groupe Lactalis, and the Indian toiletries manufacturer, VVF, do not yet have policies in place.

But for those companies that have introduced commitments, the strength varies. Forest 500 evaluates companies’ palm oil commitments according to the protection they give to forests and peatlands, but we also score companies for the presence of traceability systems, and requirements for timebound action because these suggest that companies are intent on putting policies into practice.

Two fifths of companies with palm oil commitments scored four or lower in our assessment — meaning that their commitments did not include one or more of these critical elements.

Forest 500 assessment of company palm oil policies — % of companies scoring 0–5

Spotlight on the financiers

Forest 500 also assesses the financial institutions that provide investments and lending to these companies, and ranks them on their investment and lending policies. In 2017 we assessed 150 financial institutions, 30 of which had a palm oil specific policy.

Forest 500 awards full points if a financial institution has a policy to only invest in or lend to sustainably managed commodity operations, or if it has a policy with the goal of reducing deforestation from such a commodity.

While banks such as BNP Parisbas, HSBC and Deutsche Bank have policies in place, others including Santander, the Royal Bank of Canada and the California Public Employees’ Retirement System (CalPERS) fund do not appear to screen for whether their investments and loans are being used to finance palm oil related deforestation.

Going beyond policies

The bad news is that having a policy in place does not guarantee that a company is using sustainable palm oil. In fact, most of the Forest 500 companies assessed rely on palm oil certification to show sustainable sourcing, obtained through the Roundtable on Sustainable Palm Oil (RSPO).

But certification does not guarantee zero deforestation — only that the palm oil was not produced in areas of high conservation value (HCV) or primary forest. And certified palm oil is only available in limited quantities — around 19% of global supplies are certified.

Countries will need to look beyond certification to implement their zero deforestation policies — and in complex palm oil supply chains, this can be difficult.

Wilmar, one of the world’s largest palm oil traders, boasts a No Deforestation, No Peat, and No Exploitation policy. This is designed to ensure that none of its palm oil supplies are sourced from recently cleared forest or peatland, or from plantations established without the consent of local communities. Yet Wilmar failed to apply its policies across the board — a Greenpeace expose found that Wilmar executives were running a palm oil business that was clearing forest in two concessions in Papua, Indonesia.

Increasing transparency, increasing accountability

As levels of transparency increase, including through supply chain mapping initiatives such as Trase, companies will find it harder to ignore evidence of deforestation in their supply chains — and perhaps will do more to make sure that deforestation doesn’t happen at all.

In the meantime, we can all check the ranking of the companies we buy from — and encourage them to do the right thing. Greenpeace is asking people to write to the chief executives and ask them to stop palm oil destroying rainforests. Add your voice.

Like what you read? Give Global Canopy a round of applause.

From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.