NGOs Urge Palm Oil Industry to Standardize and Improve Disclosures

Companies insist they are improving their disclosures related to the use of palm oil within their supply chains. But the evidence suggests the industry is still wreaking havoc on the environment worldwide.

One of the problems is that many of the companies that are the foundation of the global palm oil industry, such as Wilmar and Musim Mas, are privately owned. There is little incentive for these companies to disclose how palm oil’s environmental and human rights impacts could affect their long-term business (not to mention any current ecological or human rights issues resulting from their role in palm oil production).

This week, the sustainable leadership advocacy group Ceres issued a suggested set of guidelines that it urged the entire palm oil industry to use when sharing disclosure statements with stakeholders.

The 16-page document was issued with input from some of the world’s leading environmental NGOs, including CDP, Conservation International, Oxfam, Rainforest Action Network, Rainforest Alliance and the Union of Concerned Scientists. Green Century Capital Management, an investment management firm that applies strict sustainability criteria to the companies included within its index funds, was also consulted in the drafting of these new disclosure criteria.

One could best describe the new disclosure guidelines as a mini version of GRI (Global Reporting Initiative) reporting standards, only laser-focused on palm oil suppliers and manufacturers.

Growers, processors and traders, for example, would in general be held to a 21-point disclosure process. Beyond revealing basic information about the company’s scope (as in subsidiaries and joint ventures), companies are requested to disclose the percentage of the palm oil that they procure from traceable mills, estates and concessions.

Human rights are also central to these guidelines, and palm oil firms are instructed to publicly declare their efforts to monitor and support land tenure rights, as well as issue any grievances made against a company.

In addition, land use policies would also be public information. Not only should these firms disclose lands under their management that are devoted to palm oil cultivation, Ceres says, but they should also reveal the amount of acreage planned for palm oil growing in the upcoming year.

Furthermore, as a response to the wildfires that devastated many of Indonesia’s forests last year, Ceres and its partners think companies should be more specific about their land restoration policies, how the monitor and evaluate fires and deforestation, and the greenhouse gas emissions created by both palm oil production and land use change.

The NGOs also aim to hold palm oil manufacturers to an extensive disclosure plan. Traceability is key, as Ceres requests these companies report on the acreage and physical boundaries of each parcel, as well as the landowner's name.

Companies should also disclose how they support the smallholders (suppliers with land holdings smaller than 25 hectares) that are part of their supply chains, Ceres says, whether these programs include measures such as no-deforestation policies, crop rotation or certification.

Ceres also insists that retailers join the palm oil disclosure bandwagon. Similar to how growers and manufacturers would communicate with stakeholders, disclosure on this front is about names, names, names.

The reporting guidelines suggest retail firms name the traders in their supply chains, and share how exactly they assess and engage their suppliers. These companies are also asked to reveal the third-party certifications they use, as well as the percentage of product that can be verified by these systems.

According to at least one NGO, such a process goes beyond stating commitments and would spur these companies into action.

“For too long, companies that produce and use palm oil have gotten away with paper commitments that they are repeatedly found violating," Glenn Hurowitz, CEO of Mighty, told TriplePundit in an email.

"Now, these companies will finally have to report directly on the metrics that matter: the origins of their palm oil, how they are assessing responsible land development, and what deforestation, peatland clearance, or human rights abuses have been found in their supply chain and how are they dealing with it. More reporting will spur urgently needed action and accountability."

The big question is whether the world’s largest palm oil companies will pay any attention to these suggested guidelines.

Despite the growing outrage over the impact palm oil has on wildlife, forests and human rights, many of these companies still stubbornly refuse to be transparent. And in fact, some have pushed back hard – as in the IOI Group suing the Roundtable on Sustainable Palm Oil (RSPO) after it was kicked out of that group last year.

Nevertheless, the industry would be wise to clean up its act and be more open about its operations and global impact. After all, the recent controversy over Nutella’s use of palm oil places this ingredient in more consumers’ cross-hairs. And whether or not palm oil really causes cancer, this episode opens more eyes to palm oil’s reality: It has become a cancer on the planet.

Image credit: Rainforest Action Network/Flickr