Palm oil is a highly sought-after ingredient used throughout supply chains in the food/beverage, personal care, pharmaceutical, industrial, biofuel/energy, and cosmetics/beauty industries, among several others. Derived from certain types of rainforest trees, such as the African oil palm, this vegetable oil is consumed on a global scale, and is used in a huge range of products — from chocolate to shampoo to toothpaste.
Around the world, rainforests are being chopped down to create room for palm oil plantations, and ecosystems are beginning to suffer the consequences. In fact, palm oil plantations are currently the leading cause of deforestation in Indonesia and Malaysia, leading to a loss of biodiversity and increased CO2 emissions. Endangered plants and animals — including orangutans and Sumatran tigers — are becoming increasingly vulnerable. The Centre for Orangutan Protection (COP) reported that in 2006 alone, at least 1,500 orangutans were clubbed to death by workers on palm oil plantations.
Is palm oil really necessary? What does it even do? One of its main draws is that it prolongs the shelf life of products. It also has a high melting point, allowing food products — like margarine — to be smooth and easy to spread. And it’s affordable and accessible, making it an attractive option for businesses of all kinds.
Companies Taking Action
Some companies, like Nestlé, are looking for ways to improve the situation, ramping up sustainability initiatives and taking greater responsibility for the origins of products. The company recently announced that they would be implementing satellite monitoring services to keep track of forest cover disturbances and shifts in land cover related to palm oil harvesting. The goal is to have 100% of the company’s palm oil supply chain under continuous monitoring by the end of the year, with a 2020 goal of ensuring all Nestlé products are deforestation-free. Right now, 63% of the company’s products meet that criterion.
Danone, too, committed to sourcing 100% sustainable palm oil by 2015 and has carried through with that promise, according to the World Wildlife Fund (WWF), which has a scoring system in place to gauge companies’ progress toward greater sustainability. Other companies, including PepsiCo, General Mills, Mars, Kraft Heinz, and Hershey are also making moves toward increased sustainability based on the WWF’s scoring system.
Aside from enhanced monitoring and the push toward sustainable sourcing, a few alternatives to palm oil are available. Algae, for instance, produces about 70,000 pounds of oil per acre, compared to palm oil’s 4,465. While some alternatives are more expensive, many of them are much more sustainable, and would allow for highly efficient supply chain operations — not to mention boosted brand reputation among today’s increasingly eco-conscious consumers.
The Benefits of Implementing Deforestation-Free Practices
Below are a few of the main draws for companies considering implementing deforestation-free regulations and eco-friendly alternatives to standard palm oil practices.
- Companies who participate in deforestation risk tarnishing their brand. As people become more and more concerned with the origins of their products — and 33% of consumers reporting that they buy from brands based on their environmental and social impact — establishing a reputation as an eco-conscious, environmentally and socially responsible company is more important than ever.
- Businesses with boosted reputations stemming from eco-friendly initiatives stand to boost revenue significantly, as consumers are increasingly making their voices heard through their dollars. Taking a vested interest in sustainability isn’t just good for the planet, it’s good for profits as well.
- Deforestation-free policies can bring about more transparent, traceable, and streamlined supply chain operations. Illegal deforestation can lead to various financial and legal repercussions, not to mention dips in sales due to tarnished brand reputation. More beneficial supplier agreements and longer-term contracts may follow suit, as farmers are given greater peace of mind that their investments will be ethical, sustainable, and profitable.
Sustainable Supply Chains for a Stronger Future
Palm oil in the supply chain isn’t going away anytime soon, but deforestation-free efforts and other eco-conscious business initiatives can be hugely effective in shifting the current course.
Working to implement environmentally responsible practices into the supply chain not only allows businesses to seriously boost their reputations, it can also bring about increased profits, more beneficial supplier relations, and, of course, a brighter future for all of tomorrow’s future innovators, professionals, and industry workers.
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