Majority of palm oil industry falls short on deforestation reporting, warns ZSL

10 Nov 2020 --- Most palm oil companies still do not report basic information on how they are monitoring deforestation in either their own or their suppliers’ operations, according to reports by the international conservation charity Zoological Society of London (ZSL).

The organization recently concluded its annual assessment of 100 producers, processors and traders of palm oil published by ZSL’s SPOTT team – an initiative developed by ZSL to incentivize the transparency of reporting and best practices.

The analysis found that while 71 percent (56 out of 79) of the companies assessed have made a clear and robust commitment to zero deforestation, just 42 percent (33 out of 79) provide detailed information on how they are actually monitoring deforestation in their own operations.

Complexities of supply chains
“Much of the difficulty stems from the length and complexity of palm oil supply chains, which can span across multiple actors and countries,” Eleanor Spencer, ZSL’s palm oil technical advisor, tells FoodIngredientsFirst.

ZSL flags that there are still prominent gaps that lie ahead of this ambition, with large international banks lacking environmental and social standards on palm oil.“Downstream companies in the supply chain – such as traders, consumer goods manufacturers and retailers – are usually buying large volumes of palm oil or palm oil products, which may have been aggregated across hundreds or even thousands of different suppliers.” 

Many producers and processors do not provide clear data on the names and locations of their mills and plantations, and without this information downstream companies can struggle to determine the origin of all the palm oil/palm oil products they buy, Spencer adds.

“The large number of smallholder suppliers in the palm oil industry, along with local or national regulations regarding the disclosure of company spatial data, complicates this issue further.”

Environmentally responsible financing
At a minimum, ZSL underscores that financial institutions lending money to palm oil businesses should commit them to No Deforestation, No Peat and No Exploitation (NDPE). 

The group flags that there are still prominent gaps that lie ahead of this ambition, with large international banks lacking environmental and social standards on palm oil or other soft commodities. 

“SPOTT helps us directly in assessing sustainability performance across soft commodities, and particularly in palm oil. It is also a tool that we reference in our engagements, for banks and corporates alike to consult,” says Nina Roth, director in the Responsible Investment team of BMO Global Asset Management.

“Banks that aim to push the palm oil industry to improve its sustainability should also join the Roundtable on Sustainable Palm Oil (RSPO) to represent the financial sector and take their share of the responsibility to work towards deforestation-free palm oil,” adds Spencer.

RSPO recently piloted new rules of its Shared Responsibility (SR) concept that are expected to help boost agricultural transparency. 

Industry giants lead the charge, but more can be done
Palm oil is regarded as one of the most efficient vegetable oil crops in terms of yield per hectare, with ZSL stressing that a complete rejection of the product would only likely shift demand to less-efficient alternatives and lead to greater habitat destruction.

Indeed, FoodIngredientsFirst has previously reported how soy and other commodities are linked to deforestation. Last month a CDP’s new Investor Research report entitled “Zeroing-in on Deforestation” said more needs to be done to fulfill net zero deforestation targets, and many in the consumer goods sector are unlikely to meet their goals.

Companies across the palm oil supply chain have committed to zero deforestation by 2020, through the Consumer Goods Forum pledge or through their own targets. 

Last month, Mars revealed that its Palm Positive Plan has delivered a deforestation-free palm oil supply chain.

All in all, only 20 percent (14 out of 70) of companies assessed reported on the implementation of the NDPE commitment.In its deforestation crackdown, Unilever is also using geospatial analytics in a move touted by the company as bringing a “new level of sophistication to traceability” – one that has the potential to work on a massive scale.

Meanwhile, UK industry’s heavyweights have banded together to urge the government to strengthen its anti-deforestation policy. The 21 companies include Nestlé, Unilever, Tesco, Lidl, Asda, Aldi and Nando’s.

In spite of these efforts, ZSL flags there is still much more work to be done. Only 55 percent of its assessed companies (54 out of 98) apply clear zero-deforestation commitments to their suppliers, while only 10 percent (10 out of 98) are able to comprehensively report on how they are monitoring this.

Less than a quarter of companies implement NDPE
SPOTT’s analysis found that 72 percent (57 out of 79) of its assessed companies provide comprehensive commitments to no planting on peat.

Meanwhile, 75 percent of companies (59 out of 79) committed to zero burning, and only 54 percent (43 out of 79) disclosed details of fire management and monitoring practices.

All in all, only 20 percent (14 out of 70) of companies assessed reported on the implementation of the NDPE commitment.

The CDP’s new Investor Research report “Zeroing-in on Deforestation” recently echoed that many in the consumer goods sector are unlikely to meet their goals, unless more action is enforced.

“2020 has been a wake-up call, with many realizing the impact of human consumption and behavior on the planet,” urges Eleanor Spencer, ZSL’s palm oil technical advisor. 

“While progress has been made by palm oil companies in setting clear commitments to tackle deforestation, it is now certain that many 2020 zero-deforestation targets will not be met,” she stresses.

“These deadlines cannot be extended any further if we are to meaningfully tackle the climate and biodiversity crises.”

Transparency is a theme that will continue to steer consumer demand into the coming years. “Transparency Triumphs” was recently crowned as Innova Market Insights’ Top Trend for 2021, with a renewed interest in technologies like invisible barcodes and near-field communication devices that help boost product traceability significantly.

By Benjamin Ferrer