What is Nestlé doing to improve palm oil sourcing?

responsible palm oil sourcing

How much palm oil does Nestlé buy each year and what do you use it for?

We bought around 420 000 tonnes of palm oil in 2016, around 1% of the global production, from a number of processing companies that source it from Malaysia, Indonesia and elsewhere. We mainly use palm oil as a cooking oil and as an ingredient in our foods.

What is Nestlé doing to improve palm oil sourcing?

We’re working to increase the amount of responsibly sourced palm oil in our supply chain and to ensure that our suppliers comply with our Responsible Sourcing Guideline (pdf, 1Mb). They must either meet this guideline or have an action plan in place to do so.

With our partner The Forest Trust (TFT), we’re currently mapping our palm oil supply chain. We can now trace more than 90% of the palm oil we source back to the mill of origin and almost half back to the plantation level. Our ambition is to raise this figure to 100% by 2020, back to plantation.

Nestlé is also focusing on technical assistance programmes for smallholder farmers, including TFT's 'Rurality' initiative. This focus on smallholders is a direct way to improve our responsible sourcing of palm oil, and of making a real difference to the livelihoods of farmers who supply us.

In 2010, you pledged to end deforestation in your palm oil supply chain by 2015. Why was this target missed?

Our ambition has always been to end deforestation in our palm oil supply chain. How we are going to achieve this has evolved over time as we understand even more about how the supply chain works and collaborate with suppliers to improve practices.

In 2013, we adjusted our strategy to focus on improving traceability and four years later, we can now trace over 90% of the palm oil we source back to the mill of origin and almost half back to the plantation level. Our ambition is to raise this figure to 100% by 2020, back to plantation.

Using this data, we are continuously increasing the proportion of our palm oil that is responsibly sourced. This is palm oil that we source from suppliers fully compliant with our Responsible Sourcing Guideline and Supplier Code, which explicitly prohibit deforestation in our supply chain. Our goal is that by the end of 2020 all of the palm oil that we use will be both traceable and responsibly sourced.

What are you doing to stop deforestation caused by palm oil cultivation?

Nestlé is committed to ensuring that no deforestation takes place where we source our ingredients and packaging materials by 2020. We made this commitment in 2010, and it was the first of its kind made by a food company.

In addition, we support the Consumer Goods Forum commitment to achieving zero net deforestation by 2020. We’ve signed the New York Declaration on Forests (pdf, 1Mb), and are an active member of Tropical Forest Alliance 2020, a global partnership dedicated to ending deforestation in palm oil.

What rules must your palm oil suppliers follow to ensure sustainability?

  • All our suppliers must follow our Responsible Sourcing Guideline (pdf, 1Mb)
  • They must comply with local laws and regulations
  • Not cultivate palm or source it from areas cleared of natural forest after November 2005
  • Respect the free, prior and informed consent of local and indigenous communities
  • Protect high-carbon-value forests
  • Protect peatlands
  • Comply with the principles and criteria of the Roundtable on Sustainable Palm Oil (RSPO), the industry-wide certification body that promotes the growth and use of sustainable palm oil.

What is Nestlé doing to stop your palm oil coming from companies involved in the destruction of rainforests in Indonesia’s Leuser ecosystem?

We are very concerned by allegations that palm oil companies are engaged in deforestation in Indonesia’s Leuser ecosystem. One of the companies identified in recent campaigns on this issue, PT. Agra Bumi Niaga, was a sub-supplier to Wilmar, which in turn supplies palm oil to Nestle.

Nestlé is working closely with Wilmar to investigate these allegations, and Wilmar immediately stopped sourcing palm oil from PT. Agra Bumi Niaga when these allegations were published.

Wilmar has contacted all of its suppliers operating within 50 km of the Leuser Ecosystem to reinforce its No Deforestation, No Peat and No Exploitation Policy (pdf, 1Mb). This obligation reflects Nestlé’s own commitment to end deforestation in our palm oil supply chain.

In addition, Wilmar has organised several workshops in the region to raise awareness of the importance of the Leuser Ecosystem and the need for collective action to protect it.

We are working closely with Wilmar and our other suppliers on sustainability initiatives to address problems such as deforestation in Northern Sumatra, Indonesia (including the Leuser ecosystem). This will help us identify where deforestation is a risk in our supply chain, and take strong action.

How do you respond to the Amnesty International report on palm oil?

Amnesty International’s report, ‘Indonesia, The Great Palm Oil Scandal’, identified alleged labour abuses taking place in Indonesia that have no place in our palm oil supply chain. These were linked to Singapore-based Wilmar, one of our suppliers.

Nestlé engaged extensively with Amnesty during the drafting of its report, and provided detailed information on our relationship with Wilmar.

We’re working closely with Wilmar to improve traceability. We’ll discuss the serious allegations in this report with the company, to identify what it will do to ensure that illegal practices end.

For six years we’ve worked with partners, including The Forest Trust, to improve transparency, traceability and supplier behavior in the palm oil industry. Our Supplier Code includes strict rules on labour rights. We will suspend any suppliers that do not meet these requirements.

Human rights abuses have no place in our business and supply chain. We’re committed to tackling them proactively wherever we find them.

Read our full response to the Amnesty report.

Do you source palm oil from REPSA in Guatemala?

We have decided to stop our sourcing of palm oil from REPSA. We will honour existing contracts with the company, however these will not be renewed and we expect to cease commercial ties by September 2018 at the latest.

Does Nestlé source palm oil from IOI Group?

Following IOI’s suspension from the Roundtable on Sustainable Palm Oil (RSPO) in March, Nestlé immediately stopped sourcing palm oil from the plantations where concerns were raised.

We were able to do this because of the robust traceability systems we have in place. We also asked our partner organisation The Forest Trust (TFT) to look into how IOI responded to the issues raised.

Alongside TFT, we carried out an assessment of IOI’s action plan. Our conclusion was that it did not go far enough in tackling the issues raised. As a consequence, Nestle will not award any new business to IOI group. We have also phased-out all existing contracts.

What is Nestlé's response to concerns about the sourcing of palm oil by Indofood?

Nestlé participates in a joint venture with Indofood Group in Indonesia. For the Nestlé products manufactured under this joint venture, the amount of palm oil used is around 50 tons per year. It was agreed in December 2016 by both companies that Nestlé take over the sourcing of this oil.

The transition started in January 2017, with the ambition of ensuring that all of the palm oil purchased is fully traceable backed to responsibily managed plantations that comply with High Conservation Value (HCV), High Carbon Stock (HCS) and Free, Prior and Informed Consent (FPIC) standards.

This work remains ongoing and is expected to be completed at the latest by February 2018.

For the palm oil that Indofood procures itself, indpendently of Nestlé, we continue to share best practices with the company in order to contribute to wider industry knowledge sharing and transformation.

Nestlé can also confirm that palm oil from IndoAgri does not enter our supply chain indirectly. We have instructed our global palm oil suppliers not to source from IndoAgri.

Read more Read more about responsible sourcing of palm oil

Read more Read the Nestlé Responsible Sourcing Guideline (pdf, 1Mb)

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