Most companies fail to find origin of palm oil
Alok Gupta
A vast tract of palm oil crop residual was burned to pave the way for cultivation of the new crop in Central Kalimantan province, Indonesia, September 29, 2019. /VCG Photo

A vast tract of palm oil crop residual was burned to pave the way for cultivation of the new crop in Central Kalimantan province, Indonesia, September 29, 2019. /VCG Photo

A large number of companies remain clueless about the origin of palm oil used in their products despite making a strong sustainability commitment, revealed an analysis released on Tuesday.

Only 19 out of 83 companies reported that they could completely trace the raw materials arriving at their mills back to the plantation where it was grown, the Zoological Society of London (ZSL) found. 

Not a single company that sources palm oil from external suppliers was able to trace their supply back to the plantation. Strikingly, more than two-thirds, or 54 out of 83, of these companies have zero-deforestation commitments, and nearly half of the companies, or 55 out of 95, made firm commitments to respect the rights of local communities.

A majority of these companies either have no full understanding of the origin of all palm oil in their supply chain or a robust monitoring system in place to ensure palm oil meets their sustainability commitments, the analysis of 99 producers, processors and traders of palm oil found.

Used in a range of products including shampoos, biscuits, cooking oil and lipsticks, palm oil plantation has been linked to the destruction of wildlife in Malaysia, Indonesia and African countries. Burn crop residue from land clearing also caused choking air pollution in both countries.

"Problems further up the supply chain mean it's likely that unsustainable palm oil is making its way into products on supermarket shelves, providing risks to companies in meeting their sustainability commitments," said Michael Guindon, a technical advisor on palm oil with ZSL.

Globally, the production of palm oil is also displacing local communities as vast tracts of land are acquired by companies to cultivate palm trees. In recent years, palm oil production spiraled from 4.9 million tons in 1980 to over 77 million tons.

Environmental groups have been urging companies and policymakers to ensure the use of sustainable palm oil to mitigate catastrophic effects on the environment, wildlife and local communities.

The European Union, concerned over the massive ecological damage caused from cultivation to production, has decided to phase out palm oil imports by 2030 completely. In order to ensure sustainable palm oil plantation and production, a series of organizations have started issuing certification guaranteeing its sustainable production.

"Companies have a responsibility to ensure the products they're supplying are deforestation-free, preserve biodiversity and respect the rights of workers and local communities," Peter van der Werf, senior engagement specialist at Robeco, a Dutch financial institution.

The analysis also found that only 19 out of 80 companies publicly disclose the processes to assess risks within their supply chain. And only 21 out of 80 companies have programs to support their high-risk suppliers to become compliant with their policies.

"Companies should not only understand their supply chain thoroughly, they also need to use their buying power and work intensely to enforce the highest sustainability standards in every palm oil provider they do business with," Guindon added.