Mondelez Toughens Up Palm Oil Sourcing Policies

11 Nov 2016 --- Mondelez International is issuing a stern warning to suppliers of palm oil - stop using deforestation practices or we will not work with you. The confectionery giant is updating its sustainable palm oil action plan to build on the progress made since 2014. The revised plan requires suppliers to improve practices across entire operations with an increased focus on risk assessment and engagement of third-party supplier to drive accountability for traded oil.

Like other companies, environmental campaigners and the RSPO, Mondelez International wants sustainable palm oil to be the mainstream option based on the principles that production should be on legally held land, not lead to deforestation or loss of peatland; respect human rights, including land rights, and not use forced or child labor.  

Its latest statistics show that by the end of 2015, 90 percent of the palm oil sourced by the company was traceable to the mill and 91 percent was purchased from suppliers with published policies that are aligned with Mondelez International principles. 

But Mondelez International recognizes it can do more and is pledging to make progress and even stop working with suppliers who do not immediately stop deforestation practices. 

We'll exclude suppliers who don't immediately cease deforestation in their own concessions or exclude deforestation in their third-party supply, says Walter Nobles, vice president, global raw materials. 

"Our suppliers have done great work to align their policies and make their palm oil more traceable. But more is needed to drive real progress on the ground, so we're asking them to improve practices across their entire operations and engage their third-party suppliers — who supply much of the oil they trade — to implement the same practices."

A sustainable global supply 

Momentum is growing in the palm oil supply chain for companies to improve sustainable practices and create milestones so suppliers can source the commodity without damaging the ecosystem with controversial deforestation or use forced or child labor. 

Much of this work stems from the Roundtable on Sustainable Palm Oil (RSPO), the industry  watchdog which is advancing the production, procurement, finance and use of sustainable palm oil products around the world. Just yesterday, FoodIngredientsFirst reported how RSPO is encouraging NGOs, policy makers and academics to closely collaborate to achieve a sustainable palm oil ecosystem for now and the future.

This generally means global companies need to be more transparent about sourcing practices and closely monitor the methods all third-party supplier use in palm oil sourcing, insisting on  close scrutiny at all times. 

This is against a backdrop of consumers becoming more aware of the problems associated with sourcing palm oil and demanding the industry clean up its act. 

It is becoming increasingly common for companies to adopt, revise and strengthened their sustainable palm oil sourcing policies, however Mondelez International was the first multinational consumer goods company to require suppliers to track oil sourced from third-party suppliers as well as their own farms, and claims this was a critical step in catalyzing systemic change in sustainable palm oil.

The updated palm oil action plan complements Mondelez International's wider commitment to sustainably source key agricultural commodities. In 2013, the company achieved RSPO coverage for 100 percent of the palm oil it bought, two years ahead of its commitment.

Another example of a key player revising its palm oil policy lately is IOI Loders Croklaan after it was accused of bad practices which culminated in a suspension by the RSPO, concerning  three subsidiaries that allegedly violated a raft of RSPO standards that are meant to prevent rainforest destruction, social conflict and some laws. 

However, thanks to the company’s new sustainability policy things, Loders Croklaan claims huge changes have been made. The suspension has been lifted and IOI has pledged a stronger commitment and is even calling on fellow industry players “to come together and reach agreement on solutions that will lead to a truly sustainable supply of one of the world’s most commonly used commodities.”

Even though significant inroads are being made to transform this industry into a sustainable one, RSPO data shows that just 17 percent of global palm oil is certified by the body which covers an area of 2.29 million hectares and 11.45 million tons of palm oil. The RSPO has more than 3,000 members and has issued 428 trademark licenses. Currently RSPO-certified palm oil comes from Indonesia (51 percent), Malaysia (42 percent), Papua New Guinea (5 percent), Colombia (1 percent) and Brazil (1 percent). 

The various sectors of the palm oil industry - palm producers, processors or traders, consumer goods manufacturers, retailers banks/investors and environmental and social non-governmental organization, need to continue to progress the global standards for sustainable palm oil. 

by Gaynor Selby