Palm oil buyers accused of failing to police zero-deforestation pledges

Over half of the world's most significant palm oil consuming companies are failing to publicly assess their suppliers' commitments to sustainability and zero-deforestation, a new assessment by ZSL has found.

Published today ZSL's annual Sustainability Policy Transparency Toolkit (SPOTT) ranking of palm oil producers, processors and traders found that while 39 per cent of companies report a clear process to assess suppliers, the remaining 61 per cent have limited or no public commitments for evaluating the risk of their suppliers being associated with habitat destruction and biodiversity loss. 

The analysis also found only 58 per cent of the companies assessed have a public zero-deforestation commitment that applies to all their suppliers, and just 12 per cent have disclosed a time-bound action plan for suppliers to become compliant with sustainable palm oil sourcing commitments.    

Eleanor Spencer, ZSL's Sustainable Business Specialist for Asia, said it was possible to source palm oil that adheres to sustainability standards, but many firms are failing to adequately demonstrate that they are adhering to these best practices.

"Palm oil can be a difficult topic due to unsustainable practices linked to the industry, such as deforestation, being some of the biggest contributors to habitat and biodiversity loss across the tropics - but it doesn't have to be that way," she said. "As demand for palm oil continues to increase, ZSL is calling for the industry to provide stronger transparency on its assessment of and support for suppliers at all levels of the supply chain, to guarantee that they are complying with key social and environmental commitments - and legal requirements - needed to play their part in addressing the biodiversity and climate crises. 

"Without transparent supplier evaluations and support, it's impossible to know whether supply chains are avoiding environmentally damaging practices. Risk assessments are vital to improve sustainability in palm oil production and prevent greenwashing."

The analysis reveals that only 11 companies report having a programme to support high-risk mills in ensuring compliance with their sourcing policies, presenting another opportunity for palm oil that is linked to deforestation to enter the supply chain.   

Spencer warned that palm oil purchasing firms that fail to adequately disclose how they are ensuring agricultural commodities have been produced in line with sustainability standards could soon face significant legal risks.

"The current lack of support in these areas may become a bigger issue for some businesses when the EU Deforestation Regulation (EUDR) comes into force next year," she said. "This will require that palm oil and related products sold in the EU are produced without causing deforestation and human rights abuses. Without clear processes for assessing and engaging with suppliers on compliance, it is hard to see how some companies will meet these requirements."

However, she stressed that the industry's focus should be on the adoption and effective management of sustainability standards, rather than a full blown phase out of palm oil.

"Palm oil is one of the most efficient vegetable oils to grow in terms of yield per hectare and so a complete rejection of its use could have unintended negative impacts - as a less efficient alternative may be adopted in its place," she said. "ZSL believes one of the fundamental steps to achieving sustainability is through increased transparency and commitments, which is why it's concerning that so many companies continue to score so low in our assessment."

Peter van der Werf, executive director for active ownership at asset management company Robeco, said investors also wanted to see assurances from firms that they are adhering to effective sustainable palm oil policies.

"We have a shared responsibility to halt deforestation," he said. "To address biodiversity loss, palm oil companies need to provide clear sustainability expectations towards their suppliers and empower them to move towards efficient and conversion-free planting and harvesting practices that allow for both food security and environmental resilience."