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How realistic are sustainable palm oil goals?

For many food and beverage companies 2020 was a target for sourcing 100% sustainable palm oil, but few have succeeded. What is holding them back?

Palm oil users are under pressure to reject unsustainable palm oil, or even to switch to other vegetable oils. However, when produced sustainably, palm oil is much more water- and land-efficient than other vegetable oils, yielding ten times more oil per hectare than soybeans, for instance. From a manufacturing perspective too, palm oil is prized for its low cost, long shelf life, and processing benefits, such as heat stability and solidity at room temperature.

Recent reports from WWF and Rainforest Action Network found only 15 out of 173 companies surveyed were performing well in reducing deforestation in their palm oil supply chains, despite dozens of major firms having made commitments to phase out unsustainable palm oil by this year.

Many food companies use the Roundtable on Sustainable Palm Oil (RSPO) as a benchmark for sustainability, but NGOs have criticised the organisation’s consensus approach to standard setting, which means all members have to agree before standards are implemented. This can lead to less strict criteria, they have argued.

WWF still urges companies to join the RSPO, but also to take other actions to push for policy change and speed progress. It says market leaders in sustainability tend to look beyond their own supply chains and invest in making the whole industry more responsible. But fewer than one in three of the companies it analysed exerted their influence over the supply chain by holding their suppliers accountable.

Major palm oil traders, on the other hand, like Cargill, Bunge Loders Croklaan, Wilmar and Golden Agri Resources, have cut ties with suppliers linked to unsustainable practices, which has helped increase global volumes of sustainable palm oil. However, progress remains slow, as production of unsustainable palm oil continues to grow at a faster rate than sustainable production. The RSPO estimates that 19% of the world’s palm oil is sustainably sourced, down from 21% in 2017, despite growing volumes and an increasing area dedicated to certified sustainable production.

Some major manufacturers do not rely solely on RSPO membership to ensure sustainable supply. Mondelez has blocked twelve palm oil producers from its supply chain as a result of deforestation, for instance, while other companies and organisations have said they will honour their commitments to sustainable palm oil by the end of 2020.

Italian chocolate and Nutella maker Ferrero scored higher than any other company in the WWF report, with more than 20 points out of a possible 22. Sustainably produced palm oil now accounts for 58% of the palm oil used by the companies in the WWF’s latest assessment, up from 29% in 2013. The NGO notes that supply of certified sustainable palm oil (CSPO) has grown more than 20% since its last scorecard was published in 2016, and says there is no excuse for any brand not to be using 100% CSPO today.