Nestlé responds to RSPO suspension: “approach is not conducive to achieving urgent transformation levels”

29 Jun 2018 --- Swiss food giant Nestlé has responded to being suspended from the Roundtable on Sustainable Palm Oil for breaching its code of conduct by claiming the organization’s approach “is not conducive to achieving the levels of industry transparency and transformation the sector so urgently needs.”

In a statement from Nestlé Global Head of Responsible Sourcing, Benjamin Ware, and sent to FoodIngredientsFirst, the company comprehensively details its response to the membership suspension. 

Although the company shares RSPO’s ambition for improving the social and environmental performance of the palm oil sector, “our approaches to this do differ.”

“Nestlé is fully committed to the responsible sourcing of palm oil, and we are working hard to achieve our ambition of 100 percent responsibly sourced palm oil by 2020. We have always viewed the RSPO certification as one tool in achieving that ambition, but it is not the only tool,” he says. 

“We respect the RSPO board decision and recognize that there are fundamental differences in the theory of change that Nestlé and RSPO are employing to realize the ambition of a wholly sustainable palm oil industry. We believe in achieving traceability to plantations and transforming supply chain practices through interventionist activities instead of solely relying on audits or certificates.”

“We also believe that to achieve genuine industry change and we need to embed the true cost of sustainable production into supply chain procurement practices, rather than focusing on premium mechanisms only.”

Nestlé’s responsible sourcing strategy has so far led to the company tracing 50 percent of the palm oil it buys back to the plantations and 92 percent back to the mills. In addition, 58 percent of Nestlé’s palm oil is today “responsibly sourced,” and it has achieved the status of 63 percent deforestation-free, across commodities.

“This work has been delivered with a great focus on smallholders, and by establishing a fine balance between certification, third-party verification and capacity building projects, all under third-party scrutiny, ultimately creating shared value for the farmers we source from,” adds Ware. 

“While we respect the decision of RSPO to consider only action plans focused on moving towards 100 percent certification, we believe that this approach is not conducive to achieving the levels of industry transparency and transformation the sector so urgently needs. We will continue to provide full transparency to our clients and consumers with progress against our commitments.”

A Nestlé spokesperson also tells FoodIngredientsFirst: “We respect the RSPO board’s decision regarding Nestlé’s membership. We will continue our dialogue with RSPO and hope to re-qualify in the near future.”

What does the suspension mean? 
The RSPO, the world’s largest palm oil certification organization, keeps track of its members’ efforts to promote sustainable palm oil and expects yearly progress reports from members.

But according to the RSPO, Nestlé committed breaches to the RSPO’s code of conduct and has failed to pay its €2,000 (US$2,317) membership fee and so was suspended following an RSPO Board of Governors meeting on Wednesday, June 27. 

The suspension means that Nestlé runs the risk of not being able to use claims about certified sustainable palm oil claim on its products. 

An RSPO statement reads: “We regret to inform you that membership of Nestlé with the Roundtable on Sustainable Palm Oil (RSPO) has been suspended, in accordance to Clause 5.5 of the RSPO Code of Conduct for Members 2017, and as approved by the RSPO Board of Governors at its meeting on 27 June 2018.”

“The reason for this suspension is due to breaches of the RSPO Statutes and Code of Conduct for Members 2017, outlined as follows: Nestlé has not submitted the ACOP report for 2016, and for 2017 submitted the ACOP report without a time-bound plan.”

The RSPO’s code of conduct 
It is compulsory for members to communicate their commitment by submitting the ACOP reports annually as required under the Code of Conduct for Members 2017 as follows:

Clause 2.2 - Members are required to report annually on progress against this Code.

Clause 3.6 - In the required Annual Communication on Progress, existing RSPO members are required to specify steps taken last year, specific steps intended for the coming year and for the long term in the form of a time-bound plan of working towards producing or buying certified sustainable palm oil, applying any or a combination of the RSPO approved supply chain mechanism and relevant to the scope of the member's operations (e.g., specifying volume or percentage targets, or a commitment to above-average proportions of trade or investment volumes in comparison to production or demand trends).

Clause 3.8 - Subsequently, members need to report progress against the time-bound plan annually as part of the mandatory progress report.

The RSPO also says that despite being given the opportunity to complete its ACOP report for 2017, Nestlé “declined to submit a time-bound plan.” 

“We would also like to notify that Nestlé has unpaid overdue membership fee of €2,000 and non-payment of membership fees is a breach of the RSPO Statutes as per Clause 8(b)(ii) of the RSPO Statutes 2017.

The RSPO has granted Nestlé 30 days (from June 27) to communicate its suspension to its customers, thus allowing them to seek alternatives. 

“After this 30 day period, Nestlé certificates will automatically cease to be valid and trading of CSPO will no longer be available via PalmTrace,” adds the RSPO. 

Only when the RSPO is satisfied with Nestlé’s efforts to comply will the suspension be lifted. 

Privileges revoked 
As a result of this suspension, the RSPO several privileges shall be revoked including voting rights at RSPO General Assemblies, becoming or to continue being members of any Task Forces or Working Groups in RSPO and claiming of membership and use of certified sustainable palm oil.

“As several of Nestlé facilities are RSPO Supply Chain certified, membership suspension will result in suspension of certification. This certification suspension extends to all its subsidiaries and covers all facilities as per RSPO records as follows: Nestlé Australia (up for renewal in November 2018) and CPUK Bromborough (up for renewal in September 2019),” says the RSPO. 

“We hereby request that Nestlé fully comply and commit to the RSPO Statutes and Code of Conduct for Members 2017 by 20 July 2018. The suspension will only be lifted and certification reinstated once RSPO is satisfied that this has been fulfilled. Failure to comply will result in membership with the RSPO being terminated.”

By Gaynor Selby