Research by CDP, an environmental non-profit and investment research provider, is showing that while palm oil was the commodity most blamed for deforestation, other commodities were posing a growing risk to the focus of deforestation efforts and substituting palm oil with other types of vegetable oil could inadvertently lead to further deforestation.
“Palm oil has been the focus of deforestation efforts but risks from other commodities like soybean, cattle, and paper have grown under the radar, with the potential to disrupt global supply chains, risks from other commodities like soybean, cattle, and paper have grown under the radar,” CDP said in a summary of its report on Consumer Deforestation Report ’No Wood for the Trees.”
The report, which analyses 22 companies in the consumer goods sector, said that substituting palm oil “could inadvertently” lead to further deforestation. The companies analyzed included food manufacturers, personal & household goods manufacturers and fast food retailers.
Oil Palm is to date the most productive oil-producing crop per hectare and its nearest rivals, including soybean, would necessitate about ten times the land to produce the same amount of oil. Oil palm can be harvested throughout the year and has a productive age of about 25-30 years.
“Companies need to look at ways to eliminate deforestation from their supply chains through a combination of traceability, certification, and engagement with all supply chain actors to mainstream sustainable agriculture practices,” CDP said in the summary.
The CDP report said that current sustainability certification levels and traceability were not effectively tackling deforestation and urgent action was required by consumer good giants upstream.
“Despite the net-zero deforestation target for 2020 set by the Board of the Consumer Goods Forum, only eight companies were found to be deploying comprehensive forest and land-use management practices (including regenerative agriculture and soil management),” it said. It added that this was happening at a time when consumer trends were changing, with a greater focus on transparency on sourcing.
CDP’s research shows that just three companies achieved 100 percent certification in palm oil and just one in timber.
Whilst companies’ ambitious targets indicate they understand the need for action on deforestation, none are taking concrete steps to significantly reduce deforestation risk in their supply chains.
European companies Nestle, Unilever, and L’Oreal, with larger reported revenue and supply risks related to Forest Risk Commodities (FRCs), focus on sustainable production innovations and have more robust governance of deforestation-related risks.
But certified volumes of palm oil still only accounted for 20 percent of global production.
“As we approach our planetary boundaries much more needs to be done upstream. These companies are well placed in the value chain to act and fast,” Head of CDP investor Research Carole Ferguson said. Due to their proximity to the consumer, these companies faced reputational risks from commodities linked to deforestation with potential risks to revenues.
Calls for shared responsibility in making sustainability the norm in the palm oil sector, especially for the downstream sector to absorb more sustainable palm oil, marked the 2019 Roundtable Annual Conference on Sustainable Palm Oil convened by the multi-stakeholder Roundtable on Sustainable Palm Oil (RSPO) earlier this month. Many said that more purchase of sustainable palm oil was needed to motivate producers, especially smallholders who account for about 40 percent of global production, to go on the sustainable path or remain on it.
Ferguson said that the consumer goods companies could also start with “full and deep transparency of supply chains for companies to hold producers to account and provide consumers with full sourcing and product visibility.”
Subscribe to our newsletter
Stay on top of the industry's news because your informed opinion matters to the palm oil industry.