Grown only in the tropics, the oil palm tree produces high-quality oil used for cooking in developing countries, but more notably, the oil also is used in food products, detergents, cosmetics, ice cream and even biofuel. Palm oil is an extremely productive crop, offering a far greater yield at a lower cost of production than other vegetable oils. Consequently, as global demand grows quickly, plantations are spreading across Asia, Africa and Latin America.
The means of expansion, however, presents numerous problems. For example, the $62 billion palm oil industry has been criticized because developing palm oil plantations has, in some cases, had an impact on the natural environment—including deforestation, increased greenhouse gas emissions and the loss of natural habitats, which has threatened critically endangered species such as the orangutan, and the Sumatran tiger, Sumatran elephant and Sumatran rhinoceros, the World Wildlife Federation explains. Additionally, some oil palm plantations have developed lands without consultation or compensation of the indigenous people occupying the land, resulting in social conflict, the International Labor Rights Forum explains. The exploitation of illegal immigrants and forced child labor in Indonesia has also raised alarming concerns about working conditions within the palm oil industry, Amnesty International reports.
All of this has not gone unnoticed. Over the past decade, consumer activist groups have pressed big palm oil buyers such as PepsiCo, Unilever and Nestle with supermarket boycotts and other protests over palm oil’s perceived links to deforestation and human rights abuses. As a recent Reuters article notes, PepsiCo last month suspended procurement from a palm oil supplier over claims of labor abuses on its Indonesian plantations.
There is good news too. In a move to boost industry transparency, consumer goods giant Unilever has exposed its entire palm oil supply chain, including all suppliers and mills. In a statement, the company said it is the first consumer goods company to publish such details, having disclosed the location of more than 1,400 mills and more than 300 direct suppliers of the oil used in products from snacks and soaps to cosmetics and biofuels. Palm oil supply chains are complex, the statement explains, as the fruit changes hands many times from farmers to agents before it reaches a mill. It’s then transported via traders to refineries for further processing, when the oil enters a company’s supply chain.
Marc Engel, Unilever’s chief supply chain officer, says the company hopes sharing the information will be the start of a new industry-wide movement toward supply chain transparency and achieving a fully traceable supply chain, which is necessary to address deforestation and human rights abuses.
“Unilever believes that complete transparency is needed for radical transformation,” Engel wrote in a statement posted on Unilever’s website. “This is a big step toward greater transparency, but we know there is more work to be done to achieve a truly sustainable palm oil industry and we will continue our efforts to make this a reality. We want this step to be the start of a new industry-wide movement.”
Having a fully traceable supply chain not only gives Unilever better visibility of where its palm oil comes from, it also enables the company to more proactively identify issues, and address them quickly and effectively, Engel notes. Furthermore, as a result of this data being available, Unilever is making it much easier for others to bring demonstrable challenges and insights to the company’s attention. This, in turn, enables Unilever to investigate and work to remedy the issues alongside suppliers, NGO partners, governments and other stakeholders, Engel explains.
What are your thoughts on promoting transparency within the palm oil supply chain? How many companies must endorse transparency for the industry to make significant improvements in ending deforestation and human rights abuses?