- 1.Note from the CIO: This Is Why We Have Principles
- 2.Sustainability Story: Wilmar International
- 3.4th Quarter Market Review: Why Should You Diversify?
World’s largest palm oil trader releases plan to eliminate deforestation among its suppliers.
Palm oil is one of those ubiquitous commodities that can be found in a wide range of household products, from baked goods and fried foods to shampoo and soap. In fact, global palm oil production more than doubled between 2000 and 2012, and about a third of all vegetable oil used worldwide is palm oil. Unfortunately, palm oil production is also a major contributor to global climate change since carbon-rich tropical forests are often cut down to make room for palm tree plantations. In addition to the environmental impacts, palm oil producers frequently employ forced or child labor – making this a human rights concern as well.
The world’s largest palm oil trader is called Wilmar International, which supplies more than 40% of the world’s palm oil to major consumer brands such as Nestle, Unilever, and Procter & Gamble. In an effort to address some of the social and environmental concerns around palm oil production, Wilmar adopted a “No Deforestation, No Peat, No Exploitation” (NDPE) policy in 2013, and all other major palm oil traders followed suit and adopted similar policies in 2014. However, these policies have been difficult to enforce because traders and their customers lack the maps needed to monitor activity on the ground.
Therefore, on December 10th, Wilmar published a new action plan which commits the company to map the entire landbank used to grow palm trees by the end of 2019, and to monitor more effectively its suppliers and to crack down on those that fail to comply with its ethical standards. More specifically, the plan lays out a number of action items that will allow Wilmar to make good on its NDPE commitment:
- Wilmar will require all suppliers to sign a written confirmation of their commitment to the NDPE policy by Q1 2019. The firm will also begin enforcing a new grievance model of “Suspend the Engage” for all suppliers found to violate their commitment, starting in January of 2019.
- Together with an NGO called Aidenvironment, Wilmar will identify and map all land used to grow palm trees, allowing the firm to monitor its suppliers using high-resolution satellite imagery.
- Wilmar will provide recovery plans to support non-compliant suppliers in their efforts to restore the natural habitats they have damaged.
- The mapping process will specifically identify smallholder plantations to ensure they aren’t negatively impacted by Wilmar’s efforts to fight deforestation.
Wilmar will make its “Grievance List” public, which will apply additional pressure on suppliers to comply with its standards in order to avoid public shaming.
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