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DEFORESTATION
OUT OF THE
PALM OIL
SUPPLY CHAIN
COMPA N Y S CO R E C A R D
INTRODUCTION
This all presents a serious challenge to States. 5 Sutopo Purwo Nugroho, the head of
companies that source commodities Indonesia’s National Disaster Mitigation Agency
from Indonesia. They have promised their (BNPB), described the crisis as ‘a crime against
customers and other stakeholders that they humanity of extraordinary proportions’.6
will ensure the palm oil they buy is not linked
to deforestation. Yet our analysis shows that As public outcry over the scale of the
companies have yet to take control of their fires grew, Indonesia’s president Joko
supply chains and are unable to say with Widodo announced ambitious new plans
any confidence that the palm oil they use to mitigate against future fires by protecting
is not driving the destruction of rainforests, Indonesia’s peatlands.7 This includes a
threatening endangered species or contributing new Peat Restoration Agency tasked with
to social conflicts in Indonesia. enforcing a moratorium on further peatland
development, as well as the restoration of
In 2015, Indonesia was wracked by the worst land burned during the 2015 fires. However,
forest fires for almost twenty years. The many of the systemic barriers to corporate
disaster, the result of decades of forest and ‘no deforestation’ policies, such as the lack
peatland destruction, thrust Indonesia’s of public land tenure maps, also stand in the
plantation industries into the global spotlight. way of the government delivering its vision
The fires shrouded Southeast Asia in a thick, of peatland protection. Companies must
choking smoke that is expected to have lasting seize this opportunity to solve the problems
health impacts across the region and on many in their supply chain, by working with the
days in October and November emitted more Indonesian government on transparency
greenhouse gases than the entire United and legislative reform.
RESPONSIBLE TRANSPARENT
SOURCING REPORTING
REFORMING
INDUSTRY
ENDING RESPONSIBLE TRANSPARENT
SOURCING REPORTING
REFORMING
INDUSTRY
ENDING
DEFORESTATION DEFORESTATION
PROGRESS TOWARDS
DEFORESTATION-FREE
SUPPLY CHAINS IS SLOW
Transparency: Failing
Danone: Decent
Responsible sourcing:
St rong
Transparency: Failing
Danone, a French food company whose brands As a member of the POIG, Danone should
include Dannon and Cow & Gate, is making continue its role as an industry leader by
strong Responsible sourcing. Its palm oil disclosing a complete list of known suppliers
volumes are 100 per cent traceable to the mill, and sub-suppliers, including the location and
but not yet to the plantation. Its supply is 100 names of mills, plantations and refineries.
per cent RSPO Segregated. Some suppliers It should also publish a time-bound action
are audited, although this is not a requirement plan to have its suppliers third-party verified
of its policy. against best practice standards.
Transparency: Decent
Ferrero, the Italian manufacturer of Ferrero and sub-suppliers, including the location and
Rocher and Nutella, purchases palm oil names of mills, plantations and refineries.
volumes that are both fully traceable to
plantation level and fully RSPO Segregated. The next step is for Ferrero to publish a
It is a member of the POIG, with an explicit time-bound action plan to have its suppliers
commitment to the HCSA. Ferrero should third-party verified against a high standard,
disclose a complete list of known suppliers such as those contained in the POIG Charter.
Responsible sourcing:
D ecent
Transparency: Strong
General Mills, a US manufacturer whose General Mills publicly discloses its top three
brands include Betty Crocker and suppliers and we encourage it to go further by
Cascadian Farm, has near full traceability to disclosing a complete list of known suppliers and
mill, but does not trace oil to the plantation sub-suppliers, including the location and names
level. The majority of its RSPO-certified of mills, plantations and refineries. It participates
oil is Mass Balance, but its palm oil is not in a few initiatives to transform the industry, but
verified by an independent third-party to should take on additional leadership by requiring
best practice standards. compliance across suppliers’ entire operations.
Transparency: Failing
IKEA, a Swedish company that uses palm oil IKEA is a member of the UNDP Sustainable
in its candles and in some food products and Palm Oil Initiative, but needs to increase
snacks, has a near fully RSPO Segregated its support for industry transformation.
supply, and a phase-out strategy for the small We recommend it discloses a complete
remainder of palm oil covered by GreenPalm list of known suppliers and sub-suppliers,
certificates. IKEA should now focus on including the location and names of mills,
ensuring that its suppliers are going beyond plantations and refineries, and apply its
RSPO by obtaining credible, third-party ‘no deforestation’ policy to its suppliers’
verification to POIG or equivalent standards. entire operations.
Johnson & Johnson, a US manufacturer of Its policy explicitly references the HCS
personal care brands including Neutrogena and Approach and it participates in some
Aveeno, has little understanding of the risks initiatives to achieve wider sectoral
in its supply chain. Its traceability to the mill is reform. Johnson & Johnson does not
poor. Johnson & Johnson needs to accelerate publicly disclose its supplier list. It
its traceability programme and move beyond should disclose a complete list of known
the RSPO to meet its ‘no deforestation’ suppliers and sub-suppliers, including the
commitment. However, it has excluded a location and names of mills, plantations
supplier due to concerns over non-compliance. and refineries.
Transparency: Strong
Mars: Decent
Responsible sourcing:
D ecent
Transparency: Strong
Transparency: Failing
Nestlé: Strong
Responsible sourcing:
St rong
Transparency: Strong
Nestlé, the Swiss food and beverage giant suppliers and sub-suppliers, including the
whose brands include Dreyer’s and Toll House, location and names of mills, plantations
has substantial traceability of its palm oil to the and refineries, and ensure its policy is
plantation level, notable given its high volume applied across its suppliers’ operations.
of supply. It is participating in initiatives to Nestlé is working with implementation
reform the palm oil industry and publicly partners to determine whether its suppliers
discloses three of its suppliers. meet its palm oil policy. The next step is to
publish a time-bound action plan to have
Nestlé should show further leadership its suppliers verified by an independent
by disclosing a complete list of known third party.
Transparency: Decent
Orkla, the Norwegian consumer food Orkla also supports the HCS Approach
company that also owns global brands and references it in its sourcing policy.
such as MTR margarine in India, has The company should now publish a complete
relatively low traceability to mill, and a low list of known suppliers and sub-suppliers,
proportion of RSPO certified oil. However, including the location and names of mills,
it is proactively engaging its suppliers and plantations and refineries, and make progress
deselecting those without credible ‘no on obtaining independent third-party
deforestation’ policies. verification to best practice standards.
PepsiCo: Failing
Responsible sourcing:
Fa iling
Transparency: Decent
Transparency: Decent
Procter & Gamble, the US-based consumer Procter & Gamble should now ensure its
goods company whose brands include Head suppliers comply with its ‘no deforestation’
& Shoulders and Olay, has strong progress policy by obtaining third-party verification to
on traceability to the mill, though it has best practice standards. It should also publish
not yet begun plantation-level traceability. a complete list of known suppliers and sub-
It has an explicit commitment to the HCS suppliers, including the location and names of
Approach and has joined the HCS Approach mills, plantations and refineries, and report on
Steering Group. non-compliant supplier engagement.
Unilever: Decent
Responsible sourcing:
D ecent
Transparency: Decent
Unilever, the British-Dutch consumer goods suppliers are meeting its ‘no deforestation’
company whose brands include Dove commitments. It should publish a complete
soap and Flora margarine, remains reliant list of known suppliers and sub-suppliers,
on GreenPalm certificates and has low including the location and names of mills,
traceability to mill when compared with plantations and refineries, and apply its policy
other companies in its sector. However, it has across its suppliers’ operations. Unilever
recently built a fractionation plant in North actively supports the HCS Approach Steering
Sumatra to gain full traceability to plantation Group but has also supported the competing
of that supply. Sustainable Palm Oil Manifesto HCS Study. It
should therefore make clear that it expects
Unilever needs to rapidly phase out Greenpalm suppliers to use the HCS Approach when
and obtain third-party verification that its implementing its policy.
As we embarked upon our survey, it was clear supply chains, and we encourage companies
that the companies we spoke to had good to consider engaging consultants to help
intentions. Some are making a concerted them meet the goals that they have set.
effort to create change on the ground. At However, we still expect all companies to
the same time, major brands are still a long obtain independent third-party verification
way from being able to demonstrate that the to best practice standards, such as those
palm oil they buy is not driving deforestation contained in the POIG Charter, and report
in Indonesia. Most do not anticipate being transparently on their progress. In the coming
deforestation-free until 2020. This is nowhere months, we expect all companies to publish a
near urgent enough, given how rapidly clear protocol for tackling suppliers that are
Indonesia’s forests are being converted to unwilling to conform to these standards.
palm oil plantations.
Last year’s forest fires started a much-needed
This year must mark a turning point for the conversation about how Indonesia should
palm oil industry. So far, companies have manage its plantation sectors. President
been focusing on tracing the palm oil they Jokowi and senior government ministers have
buy to the mill and then to the plantation called for peatland protection and forest
where it was grown. That is just the first restoration as part of a package of measures
step towards addressing the problems in aimed at preventing another disaster. This will
companies’ palm oil supply chains. In 2016, only succeed if companies that buy palm oil
companies need to start actively monitoring are prepared to back these reforms and work
their suppliers for deforestation, peatland with the government to make the plantation
destruction, labour issues and social conflicts sector more transparent and accountable.
– and should take swift action against Thinking longer term, companies need to
persistent offenders. work together on a common vision for forest
restoration and best practice in peatland
Brands cannot do this alone. Working with management, and on special measures to
a second-party implementation partner can support smallholders and create incentives for
help a company understand the risks in its forest conservation.
Greenpeace International
Ottho Heldringstraat 5, 1066 AZ Amsterdam, The Netherlands
Phone: +31 (0) 20 718 20 00
Endnotes
1. Greenpeace mapping analysis. www. 5. Harris N, Minnemeyer S, Stolle F, Payne palm oil. www.poig.org
greenpeace.org/international/en/publica- OA (2015) Indonesia’s fire outbreaks pro- 9. highcarbonstock.org/the-hcs-approach-
tions/Campaign-reports/Forests-Reports/ ducing more daily emissions than entire toolkit/
Under-Fire/ US economy. World Resources Institute. 10. poig.org/the-poig-charter/
2. Ministry of Forestry (2014) Statistik Ke- www.wri.org/ blog/2015/10/indone- 11. www.carbonstockstudy.com/
menterian Kehutanan/Ministry of Forestry, sia%E2%80%99s-fire-outbreaksproduc- 12. www.un.org/climatechange/summit/
Indonesia 2013, Ministry of Forestry, July ing-more-daily-emissions-entire-us-econ- wp-content/uploads/sites/2/2014/07/
2014 and Ministry of Environment and For- omy New-York-Declaration-on-Forest-
estry (2014) Deforestasi Indonesia Tahun 6. www.theguardian.com/ %E2%80%93-Action-Statement-and-Ac-
2012-2013, Kementarian Lingkungan Hidup world/2015/oct/26/indone- tion-Plan.pdf
dan Kehutanan, 2014 sias-fires-crime-against-humanity-hun- 13. www.tfa2020.org/about-tfa/partners/
3. Margono et al., 2014. Primary forest cover dreds-of-thousands-suffer 14. THE UNDP SPO is a sustainable palm
loss in Indonesia over 2000–2012. Nature 7. See, for instance: Government to Stop oil initiative between consumer compa-
Climate Change. www.nature.com/ncli- Issuing New Licenses for Peatland Culti- nies and the government of Indonesian.
mate/journal/v4/n8/full/nclimate2277. vation. www.setneg.go.id/index.php?op- Greenpeace does not consider the stan-
html tion=com_content&task=view&lang=en&id dards they are working on strong enough
4. www.greenpeace.org/international/en/ =10067 but it is a model for industry to help the
publications/Campaign-reports/For- 8. The POIG is multi-stakeholder body de- Indonesian government normalise sus-
ests-Reports/Under-Fire/ signed to innovate on truly responsible tainable palm oil production