of our total palm oil purchased in 2018 was responsibly sourced
Palm oil is the most cost-competitive and versatile vegetable oil, and makes up the largest portion of global vegetable oil production. When produced responsibly, it can support millions of livelihoods globally and reduce pressure on forests and sensitive ecosystems. When not responsibly sourced, major environmental and social impacts occur. Nestlé is committed to using 100% responsibly sourced palm oil by 2020. Because effective management of risks requires industry-wide change, we are also committed to driving innovation and industry transformation.
Sourcing palm oil responsibly
Through our Responsible Sourcing Standard (pdf, 2Mb), we’re building environmental protection into our palm oil sourcing.
Our palm oil comes mostly from Malaysia and Indonesia, but also from within Latin America and West Africa.
Our category-specific requirements for palm oil require our suppliers to source oil from origins that:
- Comply with local laws and regulations.
- Do not come from areas cleared of natural forest after December 31, 2015.
- Respect the Free, Prior and Informed Consent (FPIC) of local and indigenous communities.
- Protect high carbon stock (HCS) land.
- 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 products.
The Nestlé Responsible Sourcing Standard makes explicit provisions for the protection of peatland and high carbon stock land, which are critical in combating deforestation, and for preventing social conflict arising from potential disputes over land rights and land acquisition.
* In 2018, the proportion of palm oil we purchased that was responsibly sourced was greater than the amount that was traceable. This is because some of the volume purchased was RSPO certified or came under ‘Action Plan palm oil’, but could not be traced back to specific coordinates on a plantation.
Supply chain challenges and solutions
To address challenges in our palm oil supply chains, we start by understanding where the palm oil comes from and how it is produced. We then partner with expert organizations and industry to address the challenges identified.
What we’re doing to tackle deforestation
Our ‘no deforestation’ commitment
In 2010, we made a ‘no deforestation’ commitment (pdf, 205Kb), stating that all of our products, globally, will not be associated with deforestation by 2020. We also support the Consumer Goods Forum’s ambition for zero net deforestation by 2020. Our commitment was the first of its kind by a food company and covers all the raw materials we use to make our packaging, as well as foods and beverages.
To address the challenge of deforestation, we are working with a range of stakeholders from many angles. We will conduct risk mapping to identify areas at risk of deforestation, map our supply chains to identify the origins of our ingredients, and conduct on-the-ground assessments, remote monitoring and/or hands-on projects to mitigate deforestation risk.
Pioneering satellite technology to combat deforestation
To accelerate this commitment in palm oil, we have partnered with Airbus and Earthworm Foundation to implement Starling, a satellite-based service, to monitor 100% of our global palm oil supply chains from 2019. Satellites provide highly detailed images of land across huge areas, so even small changes in tree coverage are clearly visible. Experts at Earthworm Foundation can then use software to build up a picture about compliance within the supply chain and share the findings with us to provide a clear, real-time view of emerging issues.
We have made available a "Transparency Dashboard" that uses Starling data to provide information on deforestation trends observed near the mills it sources from. This allows anybody to see the progress that is being made and the outstanding challenges that manufacturers like Nestlé still have to overcome in addressing deforestation risks.
Additionally, we are working with Earthworm Foundation and multiple suppliers sourcing palm oil in Aceh Tamiang, Indonesia, to address deforestation at a landscape level. The program aims to support and contribute to the government’s land use planning process, with the intention of creating resilient and thriving ecosystems and communities through a unified push toward transformation. Nestlé is supporting this pilot with an eye to using it as a future model for addressing deforestation.
Bringing smallholders into the fold
Smallholders account for 40% of global palm oil production. Given this, Earthworm Foundation and Nestlé are collaborating on seven smallholder initiatives under the Earthworm Foundation Rurality program in Indonesia, Malaysia, Ghana, Côte d’Ivoire, Ecuador, Brazil and Peru. The aim is to build smallholder inclusion into our supply chains, while developing smallholders’ resilience and their capability to produce responsibly. These projects aim to create value for everyone along the supply chain: smallholders, mill operators, dealers, suppliers and Nestlé. Depending on the area, these initiatives focus on efficiency, self-sufficiency, diversification, innovation and infrastructure.
Nestlé is also co-funding a project with our supplier Wilmar in Honduras, called the WISSH Project, which will support 5000 smallholders.
Promoting human rights
Working with the Danish Institute for Human Rights (DIHR), the Earthworm Foundation and Golden Agri-Resources (GAR), a key supplier, Nestlé carried out the industry’s first collaborative human rights impact assessment (HRIA) in its upstream supply chain in 2017, focusing specifically on the labor rights of workers. Over 200 people, including mill and plantation workers, smallholder farmers and members of local communities were interviewed by the DIHR and Earthworm Foundation teams.
The findings from this assessment are helping to inform our activities to promote and respect human rights and tackle any abuses. Based on the HRIA’s findings, we have developed the Nestlé Global Action Plan on Labor Rights in Palm Oil Supply Chains (pdf, 391Kb), focused on tackling labor rights issues in our supply chain. It focuses on addressing a number of labor issues, including labor rights abuses, health and safety in mills and on plantations, and child labor as described above.
Other activities in 2018 to address labor challenges included: sharing suppliers’ experiences, working with stakeholders to protect children, hosting workshops to strengthen employee rights, the Rurality initiative, helping protect land rights in Indonesia, responsible recruitment of palm oil workers and our first human rights impact assessment.
Sharing suppliers’ experiences
We co-funded a two-day ‘Pioneers Forum’, hosted by Earthworm Foundation. At this event, innovative suppliers exchanged their experiences of practices that address some of the most challenging human rights issues, including ending the withholding of workers’ passports. Following this, one mill operator took a leadership position in developing solutions to return passports to all of its workers – as shown in our video:
Working with stakeholders to protect children
Following a Nestlé-supported study on child labor in Sabah, Malaysia, we co-funded a ‘Strengthening Child Protection’ workshop led by Wilmar. The aim of this multistakeholder consultation was to gain insights from palm oil businesses and to produce a report documenting the challenges encountered by business in ensuring the wellbeing of children in plantations. Representatives from UNICEF, the International Labor Organization, Humana Child Aid Society Sabah, the Indonesian Consulate and other important players in the palm oil industry contributed to the discussion with valuable insights and good practices.
Hosting workshops to strengthen employee rights
We worked with several palm oil buyers, namely Colgate-Palmolive, Kellogg’s, Unilever and Wilmar, and Business for Social Responsibility (BSR) to conduct a series of supplier workshops in major palm oil producing regions in Sumatra and Kalimantan, Indonesia. Tailored for medium and small suppliers, the workshops were designed to heighten awareness on fair wages, robust employment contracts and the importance of grievance mechanisms. Representatives from government and civil society organizations were also invited to participate so that every actor in the supply chain had a voice at these engagements.
The Rurality initiative
Nestlé is working with partner Earthworm Foundation on a major initiative, Rurality. Rurality aims to connect key stakeholders in palm oil supply chains, share innovation and knowledge, and connect farmers with bodies such as research centers and schools and with consumers.
The initiative began with a ‘Rural Dynamics Diagnostic’ phase, in which Rurality field officers assessed farmers’ environments, their farming systems and household economics, and their challenges and needs. This phase was also important in building trust with the farmers. The information gathered enabled a transformation strategy to be designed to identify opportunities for change to improve the farmers’ situations and help them overcome their challenges.
Following this, five projects involving over 500 farmers have now begun, in Côte d’Ivoire, Ghana, Indonesia, Malaysia and Peru. Initial actions have included training on practical topics such as the use of appropriate tools, safety equipment and fertilizers, organizing field visits to success stories to share ideas, and building awareness of the importance of forest conservation. Supported by Nestlé’s funding, Rurality will continue to grow. As we gather more information, we will be able to implement more activities. These will include capacity building and developing good agricultural practices, improving access to tools and equipment, establishing farmers’ associations and developing KPIs to monitor performance.
Helping protect land rights in Indonesia
In Indonesia, our Rurality project addresses land tenure issues. In 2018, the project completed a land tenure study and participatory mapping of three villages from where palm oil is sourced, to understand the historical land usage and land tenure systems in the region and to provide an indication of the overlapping legal status of land. Using these facts, Rurality engaged with government agencies at all levels (district, provincial and national) to find solutions for legal land use status. As a pilot, the project has submitted 78 land plots owned by 55 farmers to the government of Indonesia for consideration for agrarian reform.
Responsible recruitment of palm oil workers
Through our membership with the Responsible Labor Initiative (RLI), some of our suppliers engaged RLI to participate in their ethical recruitment programs, either through training labor agents or building worker voice systems. Through Earthworm Foundation, we are supporting the development of a human rights-based due diligence tool on recruitment, including resources for companies to assess the cost of recruitment for both workers and the employer, for improved supplier transparency into recruitment processes.
The Elevate helpline example is also part of our responsible recruitment strategy as it is focused on worker voice for migrant workers.
We also participated in the Consumer Goods Forum (CGF)/Institute for Human Rights and Business (IHRB) 2018 Global Forum on Responsible Recruitment (pdf, 11Mb) in Singapore in June, speaking on the issue in the palm oil sector. This event culminated in the launch of a CGF call to action on forced labor and unethical recruitment. We also became a member of the IHRB’s Leadership Group on Responsible Recruitment.
Our first human rights impact assessment
In 2017, we completed our first human rights impact assessment in an upstream supply chain – our palm oil supply chain in Sumatra, Indonesia. Through this assessment, we developed a six-point action plan to ensure grievance mechanisms and remediation for those affected.
Our commitment to traceability and continuous improvement
To meet stakeholder and consumer interest in knowing where the palm oil we use comes from, we have published our Tier 1 suppliers and the list of mills (pdf, 8Mb) that supply us further upstream in the palm oil supply chain, each listed with their country of origin. These suppliers and mills supply 91% of the total volume of palm oil we source annually.
As with any traceability efforts, this is a snapshot that reflects our most recent supply chain-mapping update published in 2018, which is a mix of self-declaration and paper-based verification, and should not be taken as fully exhaustive nor fully accurate as supply chain flows evolve on a daily basis.
We drive our responsible sourcing operations with the objective of continuously improving the sustainability practices of our upstream supply chain suppliers, all the way up to smallholder farmers. This forms the basis of the time-bound Responsible Sourcing Action Plan, and contributes to transforming the industry. With this in mind, milestones and deadlines are set for our upstream supply chain suppliers to act upon opportunities for improvements identified during assessments.
We take decisive action in the event that a supplier does not comply with effectively managing identified risks or meeting agreed deadlines for action plans. To provide assurance of this, disclosed below are 10 upstream supply chain companies that were removed from the Nestlé supply chain by September 30, 2018:
- DTK Opportunity
- Korindo Group
- Olmeca (REPSA)
- PACIFIC INTER-LINK (HSA)
- PTT Green Plc
- Salim Group/Indofood
- Posco Daewoo
- Cilandri Anky Abadi
For the active suppliers and mills disclosed on this page, any identified risks are captured in the respective Action Plans and work is being undertaken to deliver against the improvement milestones set. We remain committed to closely monitoring, assisting and taking action as needed with all Nestlé suppliers in our supply chain. In the spirit of continued improvement, we are pleased to announce that the IOI Group has been invited back into our supply chain thanks to the thorough program of work it’s put into place, including monitoring and public disclosure to address the concerns we have had.
We thank investors, customers, consumers and civil society for taking an interest in this ongoing work, and look forward to providing regular updates on our progress in the future. We also welcome stakeholders to speak to us at any time, should they wish to deep dive into a specific supply chain of interest.
- Rural Development Framework, update 2015 (pdf, 2Mb)
- Commitment on Child Labour in Agricultural Supply Chains (pdf, 200Kb)
- Corporate Business Principles (pdf, 1Mb)
- Responsible Sourcing Standard (pdf, 2Mb)
- Commitment on Deforestation and Forest Stewardship (pdf, 300Kb)
- Commitment on Farm Animal Welfare (pdf, 1Mb)
- Natural Capital: Water in Agriculture (pdf, 6Mb)
- Natural Capital: Biodiversity (pdf, 4Mb)
- Nestlé Cocoa & Forests Initiative Action Plan (pdf, 860Kb)