Asian companies trail in sustainable palm oil adoption

Asian firms are the least likely buyers of sustainable palm oil, but globally companies are also struggling to raise the bar of an industry showing limited progress to weed out deforestation, forest fires and human rights abuses from complex supply chains, a WWF reports finds.

A palm oil plantation in Indonesia
A palm oil plantation in Indonesia, where 85 per cent of the world's most widely consumed edible oil is produced. Companies using palm oil are not doing enough to prevent the crop from damaging people and planet, according to WWF's new report. Image: Adrian81Wong/

Efforts by businesses to switch to purchasing sustainable palm oil are falling short of what is needed to reduce the harmful impacts of the cash crop on people and the planet, with Asian firms the slowest to take action, a report from World Wide Fund for Nature (WWF) has indicated.

The WWF Palm Oil Buyers Scorecard critiqued 227 major retailers, manufacturers and hospitality companies in Australia, Singapore, Indonesia and Malaysia, the United States, Canada, and Europe on the progress they have made in the past year on sustainability metrics such as sourcing forest-friendly palm oil and pushing the industry towards better practices.

While some progress has been made since the first scorecard was launched in 2009, with many palm oil-linked companies making zero-deforestation commitments in recent years, some of the same issues remain. Buyers are still sourcing palm oil from suppliers linked to deforestation, nature loss and human rights abuses, the report found. 

Tropical rainforests continue to disappear at a rate of one football pitch every six seconds, according to data from monitoring service Global Forest Watch, with palm oil a major driver of forest loss in key sourcing countries.

More than a third of the firms WWF approached did not provide any information on their palm oil use nor their efforts to improve their palm oil supply chains.

Only half of survey respondents declared that all their palm oil purchases are certified by the Roundtable on Sustainable Palm Oil (RSPO), the industry’s lead eco certifier. 

Of the 9.7 million tonnes of palm oil reported by the study’s respondents, only 67 per cent is certified, which the report’s authors said was “inexcusable” considering the ready supply of RSPO-certified oil.

Though RSPO has received ongoing criticism for being ineffective in limiting deforestation, it was deemed better than most forest-risk certifiers in a study earlier this year.

Asian respondent companies have the lowest uptake of RSPO-certified palm oil (CSPO), with only 22 per cent of their reported palm oil volumes being certified. This is much lower than respondents headquartered in Africa, Europe and North America, who are 47 per cent, 65 per cent and 83 per cent RSPO-certified, respectively.

This is partly because of less pressure on Asian firms to use sustainably source materials, and the perception that sustainable palm oil is more expensive, commented WWF-Singapore’s head of market transformation Stefanie Beitien. The price difference between certified and non-certified palm oil is actually negligible, she told Eco-Business.

Most palm oil is cultivated in Asia, with 85 per cent of production in Indonesia and Malaysia. More than half of the world’s palm oil is consumed in Asia, with India being the world’s biggest consumer of an ingredient found in half of all supermarket products.

Of the 46 Asian firms in WWF’s study, Singapore-headquartered food and beverage company Fraser and Neave and Denis Asia Pacific, the maker of Ayam Brand, scored the highest, but were classed as “middle of the pack” performers, compared to the report’s top performers — retailer Coop Switzerland, chocolatier Ferrero, furniture retailer IKEA, British department store, John Lewis and confectioner Mars.

These companies are part of the Consumer Goods Forum, an industry body made up of hundreds of major palm oil buyers that pledged in 2010 to be deforestation-free by 2020, but failed to meet this target due to links to errant palm oil suppliers.

The palm oil industry’s slow progress is dealing with reputation-wrecking problems like deforestation has prompted buyers to take bolder action. Mars announced last year it was deforestation-free by removing hundreds of mills from its supply chainCritics said this approach leaves suppliers behind to continue with destructive practices.

Some brands are removing palm oil from their products altogether. Australian confectioner Darrell Lea announced  last year that its products were palm-oil free with an advertisement featuring a drum-playing orangutan, an animal whose plight is widely associated with palm oil expansion. Industry-watchers said Darrell Lea was walking away from the problem rather than helping to fix it.

Despite the industry’s bad reputation, demand for palm oil is expected to increase four to six times by 2050, as companies continue to demand a cheap, efficient oil that is an important ingredient in products ranging from soap to chocolate.

According to WWF’s report: “This exponential growth raises concerns that palm oil development and expansion in Southeast Asia and other parts of the world including Africa, Latin America and Papua New Guinea could exacerbate the environmental and social impacts that have already been experienced to date.”

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