Mondelēz International latest to enhance tracing of palm oil sourcing

Globally, the production of palm oil severely contributes to deforestation around the world. According to the World Wildlife Fund, palm oil is an ingredient in nearly 50 percent of packaged products—everything from food to animal feed to cosmetics and household goods. But sourcing it involves destroying the habitats of endangered species and increases the risk of forced labor and child labor.

Recognizing these risks, while at the same time recognizing the global abundance of the product and the economic value it brings to small farms and the communities that produce it, consumer-goods companies are tasked with coming up with innovative solutions to more responsibly source palm oil.

On Thursday, Mondelēz International, makers of snacks like Oreo cookies, Ritz crackers, and Triscuits, announced it is making strides in this regard with its new supplier requirements, including “traceability to plantation and satellite monitoring covering all palm oil concessions supplying mills attributed to the company, against the deforestation criteria set out in its Palm Oil Action Plan.” Published in 2014, Mondelēz’s Palm Oil Action Plan is its long-term roadmap to achieve sustainable palm oil supply.

“We have a unique opportunity to help create a future where sustainable practices are universal across the palm oil sector,” said Mondelēz International Chief Procurement Officer Quentin Roach. “As a company we are continuing to pioneer partnership and action with our suppliers to ensure they share and actively support not only our commitment, but the larger collective commitment to realize a forest positive future where a highly efficient ingredient like palm oil is sustainably sourced across the sector.”

Under the company’s new requirements, suppliers of Mondelēz International must:

• Take full responsibility for eliminating deforestation in their own operation and upstream supply chain by providing traceability to plantation and satellite monitoring covering all palm oil concessions supplying mills attributed to the company;
• Improve traceability and transparency by identifying all mills attributed to the company on Global Forest Watch, with no active grievances against concessions in their direct supply, or operated by the same producer groups elsewhere;
• Demonstrate implementation of supplier progress via third-party assurance of their monitoring process and systems;
• Act against exploitation of workers in the palm oil supply chain by strengthening our supplier expectations on Human Rights, spelling out the due diligence steps we expect them to follow to identify and mitigate risks in their own operations and supply chain.

Several suppliers expressed their support of the initiative, including Swedish-Danish company AAK, a producer of vegetable oils and fats. “AAK is delighted that Mondelēz International has enhanced its commitment to sustainable palm oil and is committed to working with Mondelēz International to achieve its goals,” said AAK Vice President Jan Lenferink. “Sustainability is key to AAK’s future, including palm oil sustainability, in particular.”

“It is critical that representatives along the supply chain join forces to continue the momentum towards a fully sustainable palm oil industry,” Lenferink added. “As one of the key leaders in the market, Mondelēz International sends a strong message with its new announcement, joining AAK as a catalyst for change.”

Bunge Loders Croklaan, a global producer and supplier of sustainable plant-based specialty oils and fats for the food manufacturing industry, who supplies traceable palm oil to Mondelēz International, similarly expressed its support. “We share the belief that close engagement with our customers and suppliers is key, as our sustainability goals can only be achieved through the commitment and collaboration of all stakeholders,” said Ben Vreeburg, senior director of sustainability for Tropical Oils, Bunge Loders Croklaan.

Mondelēz International said it expects 80 percent of its palm oil, with the support of its suppliers, will meet these enhanced expectations by the first quarter of 2021. “The enhanced sourcing requirements will improve transparency across the sector by requiring suppliers to confirm sustainable sourcing practices across their entire supply chain by 2025, not just the portion supplied to Mondelēz International,” the company said.

Suppliers whose palm oil production practices do not align with the company’s practices will face consequences. In 2019, Mondelēz International suspended 89 mills for this reason. The company said its new traceability requirements form just one part of its “long-term ambition to eliminate deforestation and forced labor in the palm oil supply chain and support the aims of the Consumer Goods Forum #Forestpositive Coalition.”

Industry trend

Mondelēz International is just one company among many that are looking to source palm oil in a more sustainable way. Unilever, for example, was a founding member of the Roundtable on Sustainable Palm Oil (RSPO) in 2004, which is a globally recognized certification standard to drive sustainable palm production. The RSPO is made up of representatives from growers and buyers, commodity traders, non-profit environmental and social groups, and other influential organizations.

“For Unilever, traceability ultimately means following the palm oil and derivatives that we purchase back to the land area that is associated with a mill, including dedicated plantations, plasma smallholders and independent smallholders,” the company said. “We have an ongoing commitment to increase traceability—through emerging technologies such as satellites, geolocation, blockchain and artificial intelligence—and are working with major technology firms and start-ups to develop new approaches from which the whole industry can benefit.”

Kellogg’s is another company that has revamped its Global Palm Oil Policy to improve traceability in its palm supply chain. “Today, all of the palm oil we use is 100 percent sustainably sourced through a combination of RSPO credits, mass balance, and segregated supply,” the company said. “Through our updated global palm oil policy and goal, we are committed to working with the industry to improve accessibility and adoption of certification in the future, toward 100 percent physically certified palm oil (RSPO Mass Balance or Segregated) by the end of 2025.”

“We recognize the ongoing challenges associated with deforestation and peatland development and the necessity to uphold and protect the rights of workers and indigenous people,” Kellogg’s added. “This is why we expect our suppliers to report publicly on traceability to mill and plantation, and identify all grievances, including action plans and outcomes. And we continue to strengthen our engagement and support for our supply partners, and for their supply chains, to achieve full adherence to these requirements.”

Despite strides in the industry as it concerns the sourcing of palm oil, recent analysis conducted by sustainability risk analysis firm Chain Reaction Research found that many companies still have contracts with palm oil plantations that are some of the worst offenders of deforestation. So, while progress continues to be made, consumer goods companies, in totality, have a long way to go.