There’s an ingredient that features in almost half of everything you buy from the grocery store. It’s invisible, you can’t taste or smell it, but it has magic properties. It’s used to pre-cook your instant noodles, to make your ice cream smooth, to stop chocolate from melting, to make your shampoo foam, to keep your lipstick solid.
It’s called palm oil ― and in addition to being a wonder ingredient to which the world has become increasingly addicted, it’s incredibly destructive.
For decades, palm oil production has been a driver of deforestation in tropical rainforests in countries such as Indonesia and Malaysia. While estimates vary, Indonesia lost about 289,000 acres of forest to palm oil production every year between 1995 and 2015, according to a 2017 study. The same study estimated that between 1990 and 2010, palm oil plantations in Indonesia and Malaysia quadrupled, from about 8.6 million acres to about 31.9 million acres.
Clearing land and burning peatlands to make room for oil palm trees is a huge source of carbon emissions and air pollution, and has contributed to devastating forest fires in Indonesia. It also destroys the habitat of many of the world’s most critically endangered species, including elephants and orangutans.
Beyond the environmental impact, labor and human rights abuses abound in the industry. Producers seize land unlawfully from local people and exploit small landholders as well as those who work on the large palm oil plantations. Cases of unfair working conditions and pay, exploitative labor practices and child labor are common.
The last few years have seen burgeoning pressure from nonprofits, activists, some consumers and even certain governments for companies to be held accountable. Businesses started to listen. They made commitments to clean up their act. They set goals and specific timelines. And then: crickets.
This was supposed to be the big year for transformation in the industry. Dozens of popular consumer brands ― including Kellogg’s, Nestlé and Mondelez, which makes Oreos ― set 2020 as the deadline for eliminating deforestation within their palm oil supply chains. But 2020 is here (and stranger than we ever imagined) and these big companies look to be failing in their commitments. While some may be able to fulfill pledges by the end of the year, many more will fall short, said Michael Guindon, senior engagement manager for palm oil at the World Wildlife Fund (WWF).
The world has reached a point of reckoning with palm oil. We seem unable to throw off our dependence on the oil and unable to make the industry less environmentally devastating. Experts say there is a path forward but cleaning up palm oil will require the wholesale transformation of the industry on both the supply side ― with producers adopting genuinely sustainable practices ― and the demand side ― with brands and consumers asking for sustainable options. The question is, are we ready to do it?
More than 100 companies made pledges to use only certified sustainable palm oil by the end of 2020, according to the WWF’s Palm Oil Buyers Scorecard report. Sustainable palm oil is produced following guidelines intended to limit environmental destruction and human rights abuse and is certified by the Roundtable on Sustainable Palm Oil (RSPO).
The WWF scorecard ranks companies based on whether they have made commitments and taken actions to end deforestation and environmental destruction by their own suppliers and throughout the industry. Even the highest-scoring companies did not receive the best marks, with the top five getting 19 out of 22 points or more (that’s a solid B grade).
Only 18 out of 173 companies contacted for the survey reported tracing their supply chain all the way back to the palm oil mill and plantation, a necessity for determining whether the palm oil they use is truly produced in a sustainable, nonexploitative and deforestation-free way.
The analysis includes food giants like Kellogg’s, Nestlé and Mondelez. Nestlé, which has set 2023 as its target date for sourcing palm oil sustainably, scored 17 out of 22 points. Kellogg’s scored 13 out of 22 points. Even though the company reported that all of the palm oil it used in 2018 was certified sustainable, its deforestation-free policy does not extend to all of its suppliers. Mondelez fared the worst of the three, scoring 12.6 points. Despite having committed to sourcing only certified sustainable palm oil by 2020, the company has not met this goal, according to the scorecard.
A spokesperson for Nestlé reiterated the company’s commitment to sustainability and pointed to a webpage that stated 60% of the company’s palm oil was certified deforestation-free in 2019. Kellogg’s and Mondelez had not provided comment at the time of publication.
While all companies have room to improve, said the WWF’s Guindon, some have made progress. In the last six months, Nestlé announced new efforts to expand deforestation monitoring and Pepsico put in place a ban on suppliers that contribute to deforestation.
But COVID-19 could very well derail progress, as it upends the world. How it will affect the palm oil industry is still an open question. If the pandemic undermines efforts to reduce deforestation, it would be a setback not just for those ecosystems but potentially for the management of future disease outbreaks. Environmental destruction is one of the factors experts link to the spread of zoonotic diseases like the coronavirus.
The current picture is certainly not rosy. “What we’re seeing on the ground is that community rights continue to be trampled, forests are going down, and climate change is ever increasing,” said Robin Averbeck, agribusiness campaign director for the Rainforest Action Network (RAN).
How We Got Here
Palm oil constitutes about 35% of all vegetable oil on the planet. Its unique chemical structure makes it incredibly versatile ― it’s used as a cooking oil, to keep food from melting and to improve the “mouth feel” of processed foods like cookies, butter or crackers. It can serve as a biofuel. In other words, it is everywhere.
The cheap and multi-talented oil crept into our lives over the last few decades and lodged itself there. And we didn’t really wake up to its problems until palm oil looked pretty much irreplaceable.
The industry has grown exponentially. From 1980 to 2014, global production ramped up from 4.5 million to 70 million metric tons a year, according to the International Union for Conservation of Nature. Production is expected to reach 107.5 million metric tons by 2024.
Palm oil can only be grown in countries around the equator, concentrating the damaging effects of its cultivation in a handful of mostly developing nations. The vast majority, about 85%, is grown in Indonesia and Malaysia. Other tropical countries, such as Thailand, Nigeria and Colombia, have smaller but expanding industries.
Even as the world begins to see the destruction the palm oil industry causes, there is no sign that demand is falling and there has been scant progress toward cleaning up the knotted global supply chain.
An Opaque Industry
The palm oil industry is incredibly difficult to monitor. While laws and regulations exist to curtail its environmental and social impact in countries that produce the oil, enforcement is extremely lax or nonexistent, said Jeff Conant, director of the international forests program at Friends of the Earth.
This means consumer-facing brands ― like Nestlé or Unilever ― and global commodities traders ― like Golden Agri-Resources, a major supplier of the world’s palm oil ― must police all the farms, mills and other businesses that feed into their products on their own.
Given the convoluted nature of palm oil supply chains, this is no small task. One company buying palm oil for use in commercial products has a supply chain that includes commodities traders, oil producers and as many as 1,000 palm oil mills fed by many thousands of plantations and small farms, said Anne Rosenbarger, Southeast Asia commodities manager for the Global Forest Watch project at the World Resources Institute.
“Visibility all the way to the initial production point is a challenge,” she said. What’s more, enforcing sustainability on the ground means reaching not just big plantations, but the small-scale farmers that in Indonesia manage up to 40% of palm oil plantations.
Even though certified sustainable palm oil has been around since the early 2000s, it still represents just 19% of the global palm oil market. And even that percentage includes an oversupply of sustainable palm oil that companies aren’t buying, said Dan Strechay, director of outreach and engagement at the RSPO. The demand for this oil just isn’t there yet, he said.
There is currently little financial reward in embracing sustainable practices, Rosenbarger noted. Sustainable palm oil is more expensive to produce, she said, and there isn’t enough market incentive to encourage many producers to make the switch.
Environmentalists also doubt that all the palm oil sold under the RSPO label is actually up to the certification body’s standards. “What we’ve found is, in fact, many of the certified plantations are not producing sustainable palm oil,” said Averbeck. RAN and other nonprofits have reported significant deforestation and human rights abuses on the plantations of RSPO member companies, she said.
Thus far, the RSPO has lacked the teeth to punish members for defying its standards, she added.
The Quest For An Alternative
When it comes to tackling palm oil’s environmental and social problems, Averbeck said that simply switching to another oil-producing vegetable is not a viable option.
For a start, palm oil — which comes from the fruit of the oil palm tree — has unique properties. Oil made from other common crops like sunflower, rapeseed, or soy would have to be significantly reformulated to have the same versatility, said Sophie Parsons, a lecturer in the department of mechanical engineering at the U.K.’s University of Bath. “There’s nothing similar to it really on the crop oil side of things,” she said.
It’s also very easy to produce a lot of palm oil very cheaply. If you compare oil palm fruit to other crops grown to produce vegetable oils, it’s a more efficient use of the land, which means palm oil actually causes less habitat destruction than comparable amounts of alternative plant oils, said Rosenbarger.
If companies switched over to soybeans or sunflowers or coconuts, the swap would likely just move land degradation and deforestation to another part of the world, potentially making it even worse. “That’s not necessarily going to solve our issues, just displace them,” Rosenbarger said.
Technology could offer some solutions. Experimental alternatives, like oils produced by single-celled organisms such as microalgae or yeasts that are similar to oil palm, are being developed in labs around the world. Lab-grown oils would, at least in theory, take up less land and require far less habitat destruction than traditional crops. But they are still a long way from being economically viable at the scale needed, said Parsons.
In a recent study of palm oil alternatives published in the online journal Nature Sustainability, Parsons and her colleagues at the University of Bath concluded that the best short- and medium-term option for cleaning up the palm oil sector is to focus on improving the sustainability of palm oil itself.
“There is nothing inherently wrong with palm oil itself as a crop,” said Averbeck. “What is wrong is the way that it is being produced.”
The Way Forward
Experts have a few ideas about how to clean up the supply chain. For one thing, the level of transparency needs to get radically better. This is already starting to happen with improved satellite monitoring of deforestation, which has caught the attention of big multinational companies as a way to track their supply chain, said Rosenbarger. She and her team at the World Resources Institute are currently working with 10 palm oil producer and buyer companies to create a shared platform to monitor deforestation and shed more light on the palm oil supply chain.
The RSPO also needs to provide stronger auditing, actual enforcement of its standards and real consequences for violators, said Averbeck. While the organization has an auditing system that is supposed to monitor companies to ensure they are actually producing sustainable palm oil, so far Averbeck said the system hasn’t held companies truly accountable.
“Nobody has yet made a robust effort to pass some goddamn laws about this.”
Efforts to address social issues, like labor abuses and the exploitation of indigenous peoples, have even further to go. Social auditing under the current RSPO system is weak and needs to be rapidly improved, said Marcus Colchester, founder of the Forest Peoples Programme, which advocates for the rights of local and indigenous people around the world. Having auditors that are truly independent would help, he said, and social solutions need to go hand in hand with environmental ones.
There also must be a transformation on the demand side of the equation. Companies need to clearly demonstrate that they want and will purchase sustainable palm oil from growers and mills, said Averbeck. Right now, even though many are committed in principle, they aren’t always willing to pay for it, she said.
Consumers have a role to play too, said Strechay, by demanding sustainable palm oil in the products they buy. But around the world, many people have no idea just how many products include palm oil or how little sustainable palm oil eventually makes it into those products. The RSPO has a seal that is supposed to alert consumers to products with sustainable oils, but most people probably never see the seal.
Consumer awareness needs to increase not just in the U.S. and Europe, but also in countries like India, China and Indonesia, which represent the majority of the world’s palm oil consumption, said Strechay.
Some advocates argue that only legislation can force real change. “Every possible voluntary mechanism and rhetorical statement and high-level stakeholder engagement process have been attempted but nobody has yet made a robust effort to pass some goddamn laws about this, if I can be blunt,” Conant said.
His organization, Friends of the Earth, is currently working on such a campaign, with a California bill currently proposed by state Assemblymember Ash Kalra and plans to propose legislation in New York state. California’s bill would require companies to certify that their products do not contribute to the destruction of tropical forests or peatlands if those companies want to contract with the state.
While there may not be consensus on the best strategy to clean up palm oil, what experts do agree on is that they are fed up with the status quo. Even if companies can’t meet their 2020 commitments, the time for action is still now, before these sensitive landscapes are further destroyed.
“If companies were being clear and being straightforward in saying, ‘We need independently verified palm oil, we need to guarantee to customers we are meeting our own policies and not contributing to further deforestation and rights abuses,’ there would be a massive response to that,” said Averbeck. “But companies are not asking for that ... because they don’t actually want to pay for it.”
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