Unilever Severs Ties with Major Palm Oil Supplier

Mae West once said that "too much of a good thing is wonderful."

In the case of palm oil producers, the world's increased demand for palm oil may have resulted in wonderful profits, but it has also caused many an environmental disaster. The demand for biofuels in Europe and the worldwide switch from hydrogenated oils to palm oil in food products and consumer packaged goods have led to a massive deforestation problem.

In turn, the industry has tried to change course. For over 10 years, certifications set by the Roundtable for Sustainable Palm Oil (RSPO) have become the global standard for sustainable palm oil production. As we have pointed out on TriplePundit, the process is a “messy” one that does not completely satisfy all stakeholders interested in the palm oil industry. Nevertheless, companies that did not made such commitments have found themselves targeted by a bevy of environmental activist groups, including Greenpeace and Aidenvironment.

And it was Aidenvironment that launched an investigation last year into the businesses practices of Malaysia-based IOI Group, one of the largest suppliers of palm oil on the planet. In turn, the findings that the company was responsible for the destruction of peatlands and forests in Indonesia led to its suspension by the RSPO.

This is not the first time IOI Group has run afoul of the RSPO as other organizations have thrown shade on the company’s purported sustainable palm oil efforts. Five years ago, several NGOs raised concerns that the company was involved in land-grab disputes and deforestation in both Indonesia and Malaysia, by far the world’s two largest suppliers of palm oil. The suspension of IOI Group is a huge embarrassment for the company, which was a founding member of RSPO and has claimed that it “integrates sustainability into every aspect of its operations.” But this notice will also prove to be a headache for many food companies, which spent years revamping their supply chains in transitioning away from hydrogenated oils — only to find that palm oil has created its own environmental and social crises.

Unilever, one of the world’s largest food and personal care product companies, has already reacted to IOI Group’s suspension. In a terse statement issued last week, the company said the RSPO suspension put IOI Group “in breach” of its recently updated palm oil suppliers’ policy, and said it will phase out the company’s palm oil from its products over next three months.

As for IOI Group itself, the company has little to say. It responded that its suspension “is a very serious matter and has given rise to new challenges for us.” To its credit, the company has not tried to deny Aidenviornment’s findings or the RSPO’s ruling, but has said that it is now undergoing a “comprehensive action plan.”

Meanwhile, more companies, environmental groups and producers will likely question whether RSPO certifications are anywhere close to preventing continued deforestation and land disputes worldwide.

Doubts over whether enough is done to stem the flood of “conflict palm oil” nudged the RSPO to remove over 100 organizations from its membership rolls last year. Even Greenpeace, hardly the friend of corporations, acknowledged that companies including the like of Mondelez and Mars have stricter standards than those of the RSPO.

But as long as more news over environmental catastrophes linked to palm oil emerge worldwide, companies will have to work even harder to prove that their palm oil sourcing policies have teeth — and consumers will need to be educated about the impacts their purchases can have on poorer countries many time zones away.

Image credit: Flickr/Wakx