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.
58% of our total palm oil purchased in 2017 was responsibly sourced
48% of our total palm oil purchased in 2017 was traceable to its source
Sourcing palm oil responsibly
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 November 2005;
- Respect the Free, Prior and Informed Consent (FPIC) of local and indigenous communities;
- Protect high carbon stock (HCS) lands;
- Protect peatlands; and
- 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 Guideline (RSG) also goes beyond the RSPO standard. The RSG 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.
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 organisations and industry to address challenges identified.
In 2010, Nestlé made a ‘no deforestation’ commitment, stating that all 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. Deforestation is a complicated issue driven by many stakeholders and forces. To address this challenge, we are working with a range of stakeholders and 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.
To implement this commitment in palm oil, we have partnered with Airbus and TFT to pilot the Starling satellite initiative. We now have a partnership to expand this pilot across new regions and suppliers in 2018.
Additionally, we are working with TFT and multiple suppliers sourcing in Aceh Tamiang, Indonesia, to address deforestation at a landscape level. The programme 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 towards transformation. Nestle is supporting this pilot with an eye to using this as a future model of approaching deforestation.
Read more about our commitment to eliminate deforestation from our supply chain.
Smallholders account for 40% of global palm oil production. Given this, TFT and Nestlé are collaborating on five smallholder initiatives under the TFT Rurality programme in Indonesia, Malaysia, Ghana, Côte d’Ivoire 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.
Nestle is also co-funding a project with our supplier Wilmar in Honduras, called the WISSH Project, that will support 5000 smallholders. A newly released video showcases the WISSH project over the past two years.
Promoting human rights
Our first Human Rights Impact Assessment (HRIA) in an upstream supply chain was conducted in 2017, with the Danish Institute for Human Rights, TFT and Golden Agri-Resources (GAR), a Nestlé supplier. More than 200 stakeholders, including employees of the supplier and members of local communities, were interviewed. The findings will help inform our activities to promote and respect human rights and tackle any abuses. Based on the HRIA's findings, we are developing a Human Rights Action Plan for palm oil, including targeted activities with our suppliers, which will be published in 2018.
Among other activities in 2017 to address labour challenges:
- We co-funded a two-day ‘Pioneers Forum’, hosted by TFT. At this event, innovative suppliers exchanged their experiences of practices that address some of the most challenging sustainability 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 their workers – as shown in this video.
- Following a Nestle-supported study on child labour in Sabah, Malaysia, we co-funded a Wilmar-led ‘Strengthening Child Protection’ workshop. The aim of this multi-stakeholder consultation was to gain insights from palm oil businesses and to produce a report documenting the challenges encountered by business in ensuring the well-being of children in plantations. Representatives from UNICEF, the International Labour 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.
- We worked with palm oil buyers 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 organisations 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 TFT 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 centres 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 strengthen the farmers 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 use of appropriate tools, safety equipment and fertilisers, organising 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 in 2018. 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 key performance indicators (KPIs) to monitor performance.
Our commitment to traceability
To meet stakeholder and consumer interest in knowing where the palm oil we source comes from, we have made available for download a list disclosing our Tier 1 supplier’s names and a list of mills further upstream [with their country of origin], representing 91% of the total volume we source annually:
As with any traceability efforts, this is a snapshot that reflects our supply chain-mapping refresh of November 2017, 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 evolves on a daily basis.