Sorry, you need to enable JavaScript to visit this website.

Our palm oil transparency dashboard


This transparency dashboard aims to update stakeholders about our progress in achieving a verified deforestation-free palm oil supply chain and to share the learnings and challenges we face along the way. Much of the information is based on data gathered through Starling, the satellite-based system that we use to monitor our entire palm oil supply chain, and subsequent investigations conducted with our partners and suppliers.

Since 2017, Starling has been helping us better understand the complex deforestation patterns in palm oil producing areas, including where deforestation occurs, what are its key drivers and who is involved. Since the beginning of 2019, our use of Starling covers our global palm oil supply chains.

We’ve been using Starling data to identify deforestation risks and cases around the mills we source from (pdf, 8Mb), and to prioritize actions within our supply chain. This has also led us to refine our no-deforestation strategy.

 

How are we using Starling data?

Supplier engagement: When we receive alerts through our Starling dashboard, we start by engaging our direct suppliers linked to the mill around which the alert was detected. This helps us understand if the alert is linked to our supply chain, what measures companies in our supply chain are taking to address deforestation risk and to constructively discuss collaboration to accelerate progress.

Engaging our suppliers with factual and granular data is effective. We are getting relevant information more quickly, including concession information (i.e. area allocated by a government or other body for industrial-scale oil palm plantations). Our suppliers are more engaged as they see the benefit of being able to verify their no-deforestation commitment. In addition, this process helps us identify where we need to add resources on the ground to address deforestation risks.

On-the-ground investigation: When necessary, together with our partner Earthworm Foundation and/or with our supplier, we send boots on the ground to verify what satellite imagery is showing us and how this links to specific mills in our supply chain. This allows us to inform our decision making, including whether we need to suspend companies.

Prioritizing Action: We also use Starling to identify priority locations for forest conservation within projects we support. These include engaging smallholders located on the boundaries of at-risk forest areas for conservation planning, getting plantation companies with landbanks at risk of encroachment to commit to no deforestation, and engaging local governments in integrated land use planning.

Engaging our suppliers

We use the data provided by Starling to engage our suppliers on deforestation risks.

Our palm oil supplier engagement process
Click to enlarge

What are we learning through Starling data?

Despite decreased deforestation rates in some regions, forest ecosystems are still under threat.

Deforestation can have various drivers, including shifting agriculture, mining, palm oil or rubber plantations, and urban development. Analyzing Starling data at a more granular level has helped us better understand the scale and patterns of deforestation in palm oil producing areas. Here is what we’ve learned and why it matters:

Deforestation is still occurring in palm oil producing regions (pdf, 100Kb) where we source and barriers to supply chain transparency and traceability are slowing down effective responses.
Deforestation linked to the expansion of palm oil production continues to be a reality. In 2019, there were 388,047 Starling alerts globally for deforestation within 50km of the mills we source from – representing 472,513 hectares of forest loss.

An alert does not mean that deforestation was carried out by actors in our supply chain or by the palm oil industry. This is why we engage our suppliers to investigate. However, challenges exist to verify deforestation events, including getting access to full sourcing boundaries and traceability to plantation for all the mills in our supply chains, in particular small and medium mills sourcing from independent smallholder farmers, but also larger companies that do not disclose their traceability information.

Benjamin Ware, Global Head of Responsible Sourcing explains Starling
 

Benjamin Ware, Nestlé's Head of Responsible Sourcing, explains how we use Starling to monitor deforestation risk in our global palm oil supply chain.

Deforestation frontiers are dynamic.
Looking at the geographical location of Starling alerts since 2016, we are seeing areas where there has been significant increase in deforestation over the past few years (pdf, 100 Kb). Starling allows us to identify these trends as they happen and to act quickly where it happens. This complements analyses looking at a range of factors, including mills commitments to No Deforestation, No Peat, No Exploitation (NDPE) policies, civil society and local government engagement in forest protection, relevant legislations and policies and development of new infrastructure, such as roads and processing facilities.

Deforestation is increasingly occurring outside of concessions.
We are seeing that, where we have concession boundary information, there is limited deforestation occurring within these boundaries compared to outside them. Only 5% of total forest area lost occurred within concessions integrated into Starling. Since we do not yet have 100% of concession boundaries for our entire supply chain, the extent of this trend cannot be confirmed at present, but we are working to strengthen this analysis for a more complete picture of the situation.

Deforestation increasingly occurs in small-scale patches.
We are observing that forest loss is increasingly linked to small-scale deforestation: since January 2016, 57% of total forest loss in palm oil producing countries has been caused by clearance events of less than five-hectares at a time. An example of the acceleration of small-scale deforestation over time can be seen here. This is indicative of (1) an increase in deforestation led by small-scale farming for palm oil cultivation, other crops or non-agricultural activities and (2) a decrease in deforestation led by large-scale plantation companies. It emphasizes the importance of understanding drivers of small-scale clearance as part of our no-deforestation strategy and developing intervention strategies that specifically address those drivers. We have seen through our work to date that the strategies for large scale clearance in the past do not successfully translate to the small-scale clearance of the future. You can read more on how we are analyzing this challenging task in the content box.

Starling


This animation shows an example of increasing small-scale deforestation over time. In this case, this shows deforestation around a mill in our supply chain in Sarawak, Indonesia from Q1 2016 and Q4 2019.

Investigating deforestation drivers

In 2019 we supported Earthworm Foundation to conduct an investigation into small-scale clearance in Sabah, Malaysia, where 88% of forest loss since the first quarter of 2016 was in patches of five hectares or less.

The study focused on three regions in Sabah and differentiated deforestation alerts into seven categories of land use change to determine if the deforestation was likely to be linked to the palm oil industry or to another driver. 1,645 alerts covering 6,993 hectares of forest loss were analyzed.

The conclusion of the analysis was that deforestation in one of the three regions was likely linked to palm oil development, but not in the other two study regions.

What are we doing about it?

We aim to contribute to a forest-positive future: one that contributes to both sustainable livelihoods for communities that depend on forests and that protects precious forests and ecosystems.

We have been using the data from Starling and the learnings from our engagement with suppliers to refine our no-deforestation strategy and to help develop or strengthen tools.

Key steps include:

  • Scaling-up resources for data collection and analysis as well as field verification to act more rapidly and consistently on Starling alerts.
  • Raising awareness of small and medium-size mills about importance of traceability to plantation and building their capacity to implement robust systems to record Fresh Fruit Bunch (FFB).
  • Integrating or strengthening the forest protection component in all our smallholder projects.
  • Supporting landscape initiatives and reforestation efforts.

Beyond what can be achieved by a single company, we also aim to drive transformative change by calling for more traceability and transparency, more support for smallholder farmers’ inclusion and resilience and increased collective action.

 

Supply chain transparency

Supply chain transparency is key to holding all supply chain actors accountable and to demonstrate progress. Transparency is required at several levels:

Transparent information about the names and locations of the suppliers involved in palm oil production and about ownership structures between refineries, mills and concessions are required to ensure traceability and leverage. Today this information is often not available or may even sometimes be obscured by the use of shadow companies. We’ve publicly disclosed our the mills we source from (pdf, 8Mb) and expect all actors in the supply chain to do the same.

While much progress has been made to achieve traceability to mill, it is essential to know in which plantation the Fresh Fruit Bunch (FFB) was grown, including the general locations of independent smallholders. We ask all our suppliers to map their entire supply chain all the way to plantation, including for third-party mills they source from. Today we stand at 62% traceability to plantation and it will take the whole industry’s commitment to increase this number.

Delivering on deforestation-free commitments requires a common progress reporting framework. This is why we’ve been supporting the development of the NDPE Implementation Framework, a reporting framework designed to help companies understand and track progress in delivering NDPE commitments in their palm oil supply chains. This will be crucial to monitor progress, identify gaps and drive improvement effectively as an industry.

Support for smallholder farmers’ inclusion and resiliency

Smallholder farmers play an important role in the palm oil supply chain. They produce an estimated 40% of global palm oil volumes. No palm oil forest conservation strategy can therefore be complete without addressing smallholders’ livelihoods and forest protection.

Smallholders face specific challenges, including low yields, ageing oil palm trees, and lack of access to finance. These factors can lead to low incomes and vulnerability to climate and market shocks, which in turn are major drivers of expansion into forests. While these challenges require specific solutions, the sheer number of smallholders and their often-remote location make it difficult to effectively reach them. We believe there is a need to incentivize mills, refiners and traders to work together with smallholders and their communities to promote sustainable livelihoods while ensuring forest protection. Palm oil buyers need to develop and have in place strategies to address this challenge and need to convey this message to palm oil producers. Listen to a podcast on our work with smallholders in North Sumatra.

 

Collective action and engagement

Effective collective action and collaboration on the ground as well as engagement with governments at national and regional levels are key to drive the system change needed to halt deforestation.

More action-oriented collaboration among supply chain actors, including buyers like Nestlé, would help address some of the collective challenges the palm oil industry is facing. Other aspects of these challenges and potential solutions are not under the direct influence of the private sector. Transparently sharing our journey, our progress and the roadblocks we face and advocating for the environment needed to achieve deforestation-free supply chains is crucial.

Being able to trace and monitor the full supply chain, from the production of raw materials to the product on the shelf, is key to enable companies to locate and address deforestation risks. Small and medium-size mills should be enabled and incentivized to implement FFB control systems and commit not to accept FFB from unknown origin.

There are many drivers of deforestation, beyond a single company, a single raw material, or a single industry. While ensuring deforestation-free supply chains is important, we need cross-industry and multi-stakeholder collaboration at landscape level to accelerate progress. Equally important is for these initiatives to be inclusive of the stakeholders required to protect and restore forest landscapes, such as local and indigenous communities. Read more about the landscape project that we support in Aceh Tamiang, Sumatra, Indonesia.

While stopping deforestation is a shared responsibility, palm oil buyers can use their collective voice to:

  • Send clear messages to supply chain actors about their expectations for no deforestation, inside and outside concessions, and their willingness to support overcoming key challenges like smallholder inclusion
  • Help strengthen certification schemes
  • Engage producing country governments to share transparent data and information about the trends they observe and develop solutions for sustainable land use planning and development
  • Engage consumer country governments to help them understand of the root causes of deforestation and on-going solutions tailored to local contexts.
  • Call for appropriate regulatory and non-regulatory measures, including mandatory human rights and environmental due diligence.

Preserving ecosystems and communities in La Encrucijada Biosphere Reserve

Among the different projects we are involved in to support smallholders to produce sustainable palm oil, we are working in La Encrucijada region in Mexico to support smallholders to produce sustainable palm oil. This multi-stakeholder project looks at developing and implementing a sustainable land use plan. This involves clarifying boundaries designating areas where smallholders can grow palm and areas need to be protected as they are part of the biosphere reserve. as well as building farmers’ resilience through providing assistance with integrated farm planning (including on-farm diversification) and savings and loans programs.

Moving beyond 2020

As of April 2020, 70 percent of the palm oil that we bought was verified deforestation-free (pdf, 200 Kb). While it may take more time than originally expected to achieve our No-Deforestation commitment, we will continue to work with smallholder farmers and large suppliers alike to be close to 100% within the next three years.

To support our aim, we will continue to work on several fronts:

  • Supporting the development of an engagement process for small and medium-size mills for the implementation of traceability and FFB control systems to achieve no deforestation.
  • Expanding our supply chain grievance system to a group-level grievance system.
  • Use Starling data to anticipate mills more at risk of engaging in deforestation.
  • Continuing to collaborate in industry and multi-stakeholder groups to share our learnings and shape the conversation around forest protection. These include the Consumers Good Forum's Forest Positive Coalition of Action, the Palm Oil Collaboration Group, and the Palm Oil Transparency Coalition.

Complementing our work to protect forests, we are also scaling up the deployment of nature-based solutions, like agroforestry and restoration of degraded ecosystems, to absorb more carbon, improve soil health and enhance biodiversity. This is part of our plan to achieve zero net greenhouse gas emissions by 2050. We have already announced reforestation projects in key sourcing locations in the Americas. Combining these two approaches – conservation and reforestation – aims at transforming the way we source raw materials, while mitigating our carbon emissions.



You may also be interested in

Download our Creating Shared Value Progress Report