There is always a temptation to overstate good news and the momentousness of events at the end of the year. As the year turns, we are looking and hoping for reasons to be optimistic, and Christmas is after all the season of happy tidings and hope for the future.
However, the upbeat response to the most recent announcement concerning the sustainability of palm oil owes little to such cultural pre-programming or seasonal hyperbole. The commitment to the sustainable production and sourcing of palm oil made by Wilmar International is, quite simply, extremely good news.
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The primary reason to be cheerful is that Wilmar is a huge player in this sector. With most sustainability struggles – whether in relation to environmental or social harm – the real challenge is always moving to scale.
Singapore-listed Wilmar International controls around 45% of the global production of and trade in palm oil. Unilever, with whom Wilmar has signed its Memorandum of Understanding, buys around 1.5m metric tonnes of palm oil annually, representing 3% of global production, for use in brands such as Flora and Ben & Jerry’s ice cream. It has committed to source only palm oil that is traceable to known sources by the end of 2014.
In the Memorandum of Understanding, Wilmar has committed to “ensure that both Wilmar’s own plantations and companies from which Wilmar sources will only provide products that are free from links to deforestation”. Wilmar also announced that it would become a member of The Forest Trust.
The good news was compounded by an announcement by Green Century Capital Management, a coalition of 40 institutional investors with around US$270bn in assets under management, that it has written letters to 40 major palm oil producers, financiers and users urging them to adopt policies that would “ensure palm oil development does not contribute to deforestation, development on peatlands, or human rights violations”.
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By GlobalDataHowever, it is the Wilmar announcement that could define this December as a landmark month in the palm oil campaign. Wilmar is not only a massive player but a company that has been the subject of direct criticism on a raft of environmental issues for years. As Greenpeace states in its response to the move: “Over the last seven years, Greenpeace has repeatedly exposed Wilmar’s role in gross acts of forest destruction, sourcing from national parks, destroying prime tiger habitat, sourcing from suppliers linked to orang-utan ‘graveyards’ or this year’s forest fire crisis in Sumatra, to name a few.”
Looking at this development from a wider perspective, the Wilmar announcement also shows how the dynamics of a fierce inter-stakeholder debate can eventually bring about change. Companies like Wilmar are invisible to the public. Public pressure, whether directly from consumers or more often from campaigners like Greenpeace which can ensure that embarrassing information is reported, has far greater impact on consumer-facing companies.
As environmental responsibility has become a more important priority for companies, food manufacturers have committed to improve water and energy efficiency and reduce emissions in their production plants. This is the easy stuff. There is often a direct cost benefit even if the dividend may be a relatively long-term one, and these interventions concern activities under the companies’ direct control.
Working on the environmental impact in supply chains is an immeasurably tougher challenge, not least as it involves the cooperation of partners. Responsibility can sometimes be transferred up the supply chain, logistical difficulties in bringing disparate suppliers onside blamed for a lack of progress. Whatever reasons are cited, it is clearly a far more complex process. However, it is in agricultural supply chains that the greatest environmental impacts – and the most pressing concerns – are often to be found.
According to Greenpeace, the palm oil industry is “the greatest single cause of deforestation in Indonesia”. The campaign organisation cites Ministry of Forestry maps which show that Indonesia lost some 620,000ha of rainforest every year between 2009 and 2011. “Palm oil’s expansion into New Guinea and Africa is already threatening forests, sparking controversy and conflict with local communities,” Greenpeace states.
In a recent Sustainability Watch profile, Archer Daniels Midland, a giant supplier of agricultural commodities to food companies, said it feels the public pressure in exactly the same way as consumer-facing companies, just one step removed. In other words, the branded company feels the pressure in the marketplace, translates that to its supplier which in turn responds by improving its sustainability standards.
That sounds very simple in principle but if it were really that straightforward in practice, the struggles to address urgent concerns over products such as palm oil, soy and cocoa would have been consigned to history many Christmases ago. They have not been. Rather, they have been extremely protracted, and one of the problems often cited by campaigners is that large companies operating in the field not only have direct responsibility for the bulk of production, but are less motivated to move swiftly because they are under less public pressure.
To see one of the faceless giants of agricultural production make such a significant move shows that, while the transmission of pressure upstream along the supply chain may be, as that metaphor suggests, a long, hard slog, it can eventually bear fruit.
Often such announcements are greeted with only the most guarded and cautious optimism, often bordering on scepticism, by campaigners. Greenpeace, for example, has been critical of the Roundtable on Sustainable Palm Oil (RSPO) which it dismisses as a “so-called sustainability body”.
However, while its response to Wilmar’s move stresses that the company will be judged by its actions rather than words, it positively welcomes the announcement as “great news for forests and tigers” with “the potential to transform the controversial palm oil industry”.
Sharon Smith, palm oil campaign manager for the US-based Union of Concerned Scientists, which was an informal advisor to the process that led to Wilmar’s announcement, said the move could be a “game-changer for the industry”.
Recent years have been marked by plenty of positive announcements by food companies and other players on palm oil. In any sector, there are the good, the bad and the downright ugly. The ‘good guys’ – and Unilever is arguably a good example – suffer slightly because their positive steps are less newsworthy. There is an expectation that these companies will do the right thing and make progress. The news – and for that matter the greater impact – may well be found on the rare occasion that a laggard company takes a significant step forward.
It is fair to say that Wilmar has been cast by campaigners as one of the worst offenders on deforestation, so it is no surprise to find its decision so widely celebrated. It would appear that in sustainability too there is more rejoicing in heaven over one sinner who repents than over ninety-nine righteous persons who do not need to.
