SUSTAINABILITY –
ZOOMING INTO PALM OIL
SUSTAINABILITY –
ZOOMING INTO
PALM OIL
MICHAEL DAY – Value Chain Solutions Director –
RECENTLY SPOKE AT THE WILLOWTON
GROUP SUSTAINABILITY CONFERENCE.
IN THIS INSIGHTS PIECE, WE HIGHLIGHT
THE MAIN POINTS SHARED IN HIS
PRESENTATION, ALONG WITH HELPFUL
GRAPHS.
MICHAEL DAY – Value Chain Solutions Director – RECENTLY SPOKE AT THE WILLOWTON GROUP SUSTAINABILITY CONFERENCE.
IN THIS INSIGHTS PIECE, WE HIGHLIGHT THE MAIN POINTS SHARED IN HIS PRESENTATION, ALONG WITH HELPFUL GRAPHS.
Published September 2022
AT A GLANCE
The demand for vegetable oils continues to grow along with the world population, which was at 5.26 billion in 1990 and 7.81 billion in 2021. The production of palm oil – the most widely used vegetable oil in the world – has increased rapidly over the past 50 years yet sustainable sourcing is an increasingly complex problem.
GLOBAL VEG OIL HISTORICAL SUPPLY BREAKDOWN
Oil palm plantations currently cover more than 29 million hectares of the earth’s surface. While it can be produced sustainably, its expansion in certain areas has led to deforestation, biodiversity loss, peatland destruction and potential human rights violations.
HISTORICAL HECTARAGE UNDER CROP: MAJOR OILSEEDS
UNDERSTANDING PALM OIL SUSTAINABILITY
No Deforestation, No
Peat and No Exploitation
is the base commitment.
Traceability is the route to verifying the commitment.
Sustainability is an all-encompassing buzzword, yet ‘fully traceable’ and ‘certification’ do not always mean ‘sustainable’.
Certification is the sustainability standard and the ‘rubber stamp’.
NO DEFORESTATION, NO PEAT AND NO EXPLOITATION
The major areas of concern for the palm oil industry, some of which we mentioned above, are as follows:
- Deforestation and its potential impact on rainforest and wildlife
- Peat land destruction and its potential impact on waterways and resources
- Burning of forests or peat areas and the impact it has on carbon emissions and habitat destruction
- Labour exploitation, particularly child labour
NDPE Commitments at Company/
Group Level
- NDPE policies and/or commitments are not always audited
- Commitments are often made at trader/processor level
- Underpinning the ability to enforce NDPE commitment is the ability to trace palm oil to production origin – traceability of palm oil supply chains is thus critical
SUSTAINABILITY
Sustainability is determined largely on the farm. The integrity of this sustainability is then either upheld or lost through the value chain.
CERTIFICATION BODIES
Each certification body defines sustainability differently. That is, each body has a different standard or principles and criteria.
CRITICAL CRITERIA
NO
DEFORESTATION
NO
NEW PLANTING
ON PEAT
ZERO
BURNING
NO EXPLOITATION
OF WORKERS AND
COMMUNITIES
TRACEABILITY TO
FARM
SUPPLY CHAIN
CERTIFICATION
SYSTEM (SCCS)
There are two major independent standards (RSPO and ISCC)
RSPO
Roundtable of Sustainable
Palm Oil.
ISCC
International Sustainability and
Carbon Certification.
and two major country standards (ISPO and MSPO).
ISPO
Indonesia Sustainable
Palm Oil.
MSPO
Malaysia Sustainable
Palm Oil.
Learn more about Malaysia as a country here.
DETERMINATION OF SUSTAINABILITY: FARM TO MILL
ROADMAP
The blurred line between sustainability, traceability and certification is often confusing.
That is why we need a roadmap.
THE SUSTAINABILITY JOURNEY AT A GLANCE:
DIAGNOSTICS & VALUE CHAIN VISUALISATION
We use our Virtuous Cycle (Our Approach) to unlock opportunities and value in the value chain. Three critical Lenses anchor and validate our recommendations, namely sustainability, competitiveness and risk. Step 1 of the Virtuous Cycle is Diagnostics & Value Chain Visualisation. The visualisation of the extended value chain’s key dynamics and diagnostics of relationships are the first two steps to unlock potential value for supply chain sustainability. We focus on establishing the fact base using our unique approach and toolsets.
Next, you have to make the NDPE decision.
Learn More About Diagnostics & Value Chain Visualisation here.
We use our Virtuous Cycle (Our Approach) to unlock opportunities and value in the value chain. Three critical Lenses anchor and validate our recommendations, namely sustainability, competitiveness and risk.
Step 1 of the Virtuous Cycle is Diagnostics & Value Chain Visualisation. The visualisation of the extended value chain’s key dynamics and diagnostics of relationships are the first two steps to unlock potential value for supply chain sustainability. We focus on establishing the fact base using our unique approach and toolsets.
Next, you have to make the NDPE decision.
Learn More About Diagnostics & Value Chain Visualisation here.
PRIORITISE TRACEABILITY
Covid-19 pressures on supply chains have been driving strategic partnerships and value chain traceability/visibility. While it is largely driven by the Risk Lens, a new age of collaboration has dawned – powered by big data and big data processing capability.
Here it is important to understand what is possible and suitable and to build your strategy on that.
This will enable you to best mitigate and monetise risks on the road to resilience.
THINK PPP + MARKET
PEOPLE, PLANET, PROFIT + MARKET
DEFINE SUSTAINABILITY
Once traceability has been sufficiently addressed, sustainability needs to be defined.
A balanced and consistent business wide definition is important.
Remember, ‘fully traceable’ and ‘certification’ do not necessarily mean ‘sustainable’.
Plus, traceability should be able to enforce the definition of sustainability where it applies.
CERTIFICATION – THE FINAL, NOT THE FIRST STEP
Finally, there is certification – fit for purpose confirmation that
reinforces value chain resilience.
DO YOU NEED HELP WITH
YOUR ROADMAP?
DO YOU NEED HELP
WITH YOUR ROADMAP?
