Unilever, Wilmar International ink palm oil supply chain deal

One of the world’s largest agri-businesses has pledged to end deforestation throughout its supply chain, in a move that represents a major step forward for companies seeking to source sustainable palm oil, soya beans and sugar.

Wilmar International yesterday signed a deal with consumer goods giant Unilever, which has promised that 100 percent of the palm oil used in its supply chain would by fully traceable by the end of 2014.

As Wilmar controls 45 percent of the world’s palm oil market, supplying other household brands such as Procter and Gamble, Mondelez and Reckitt Benckiser, it has faced huge pressure from NGOs and businesses to develop more environmentally and socially sustainable practices.

The company has already taken steps to preserve high conservation value forests and peatland on its own concessions, although campaigners have been quick to point out that deal covers just a sliver of the palm oil it trades.

A report by Greenpeace earlier this year accused Wilmar of trading with companies that deforest areas illegally, set fire to peatland and clear areas known to be used as habitats for tigers.

But the new policy aims to establish mechanisms to help Wilmar monitor activities among its subsidies and third-party suppliers, to ensure it can halt deforestation across the supply chain.

“We believe that the palm oil industry can provide a sustainable and affordable source of vegetable oil to meet rising global demand for responsible products,” said Wilmar chairman and chief executive Kuok Khoon Hong, in a statement.

“We can produce palm oil in a way that protects forests, clean air and local communities, all while contributing to development and prosperity in palm oil growing regions. We know from our customers and other stakeholders that there is a strong and rapidly growing demand for traceable, deforestation-free palm oil, and we intend to meet it as a core element of our growth strategy.”

Luigi Sigismondi, Unilever’s chief supply chain officer, said he was truly impressed by the commitment and urged other suppliers to follow suit.

“Unilever firmly believes that it is only through constructive dialogue and close cooperation that we can lead the transformation of the industry,” he said.

“Wilmar, as our strategic partner in palm oil, is clearly committed – with us – to accelerating the much-needed sustainable market transformation and to helping us achieve transparent, traceable and certified palm oil supply chains.”

The policies were developed with consultancy The Forest Trust (TFT), which already works with a number of agri-businesses to help them reduce the environmental impact of their operations and supply chains, such as Asia Pulp and Paper as well as consumer facing businesses like Nestle.

TFT executive director Scott Poynton said he expected the new deal to transform the palm oil industry.

“Few companies dominate their sectors the way Wilmar dominates palm oil,” he said.

“[This] announcement… dwarfs in ambition any previous joint commitment in the sector and raises the bar for responsible global agricultural production. We commend Wilmar for its strong new policy, and now is the time for transparent and verifiable implementation.”

Image of palm fruits by tristan tan via Shutterstock