Consumer goods giant Unilever has begun directly purchasing palm oil for its processing facility in Indonesia from nearby independent mills to improve standards, it has announced.
Unilever said the move will increase supplies of traceable, sustainable and deforestation-free palm oil, as well improving the livelihoods of the people it is working with.
Palm oil is a key ingredient in many food, home and personal care products, but deforestation risks in palm oil supply chains have presented persistent problems for buyers.
Unilever said it is seeking to drive “real change” in palm oil production by engaging with segments that have “traditionally been left out” of sustainability discussions.
It said: “Purchasing directly from mills creates demand for sustainably produced palm oil which gives smallholders, mills and suppliers an incentive to change their processes to pursue higher levels of sustainability.
“It also means that more of the profits go straight to the people growing and processing the oil palm fruit. This builds the smallholders’ ability to increase the income available from their existing crops, which can lessen the incentive for more forests to be cleared for farmable land.”
Unilever is currently working with 12 independent mills, as well as investing in programmes to help them improve their sourcing practices. These include smallholder mapping, which helps processors to monitor, report and verify deforestation in their supply base.
The Roundtable on Sustainable Palm Oil (RSPO) – which implements global standards for producing and sourcing certified sustainable palm oil – told Supply Management that smallholder inclusion is a “critical issue” due to the recently adopted European Union Deforestation-free Products Regulation, which requires due diligence for full traceability along the supply chain of physical palm oil imports to EU member states.
The spokesperson said: “The RSPO is pleased to see Unilever’s continued commitment to supporting sustainable palm oil production and inclusive palm oil production by involving smallholders.
“RSPO encourages more companies to support smallholders to adopt sustainable agricultural practices through capacity building towards certification, financial assistance including through the purchase of ISH Credits, and high-quality training through the Smallholder Training Academy.”
Unilever said it is aiming for the mills, and smallholder supply bases of these mills, to achieve RSPO certification or Indonesia Sustainable Palm Oil certification, which is Indonesia’s national sustainability certification scheme for palm oil. Without support, it added, these facilities do not have the resources to pursue sustainability.
Independent mills and smallholder farms in Malaysia and Indonesia alone represent roughly 40% of the world’s total area for palm oil production, making them “the most important stewards of the land”.
Unilever has currently mapped 20,000 smallholder farmers, representing 55,000 hectares but it is aiming to double this number. Further, 13,000 farmers have already been trained in better agriculture practices, and 4,865 farmers with almost 9,500 hectares of farmland have received RSPO certification.
Beverage giant PepsiCo recently cut ties with Indonesia’s second-largest palm oil supplier, AAL, in March after it was accused of environmental and human rights violations.
Environmental agencies also criticised the UK government’s decision to eliminate import tariffs on palm oil from Malaysia in exchange for joining the Comprehensive and Progressive Trans-Pacific Partnership, arguing it could lead to greater levels of deforestation-linked products entering UK supply chains.
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