Palm oil is a cost-competitive, versatile and widely produced vegetable oil. When produced responsibly, it can support millions of livelihoods and reduce pressure on forests and sensitive ecosystems.
We use palm oil as an ingredient in a number of Nestlé products.
To address sustainability challenges in our palm oil supply chains, we start by understanding where the palm oil comes from and how it is produced. We buy from processing companies that source palm oil in Malaysia, Indonesia, Latin America and West Africa. And we work with expert organizations and the industry to continually improve the environmental and social practices.
Our approach to sourcing palm oil that is sustainable and deforestation-free
We work with our suppliers and partners to continuously improve the sustainability practices of our upstream supply chain for palm oil, including assessing and addressing deforestation risks.
For the last 10 years, we have been using a combination of tools, including supply chain mapping, certiﬁcation, satellite monitoring and on-the-ground assessments, to ensure that the key forest-risk commodities we buy - including palm oil - are not linked to deforestation.
Ensuring our supply chain is deforestation-free is the foundation of our Forest Positive strategy – where forest-related risks become opportunities to create sustainable landscapes and livelihoods. This will contribute to delivering our Net Zero Roadmap (pdf, 8.1Mb).
Pioneering satellite technology
We partnered with Airbus and Earthworm Foundation to implement Starling, a satellite-based service to monitor 100% of our global palm oil supply chains. Starling provides highly detailed optical and radar images of land across huge areas. We monitor over 8 000 farm boundaries, as well as the area surrounding more than 1 700 mills, to determine whether origins are verifiably deforestation-free and whether further supplier engagement and investigation are needed.
Using data gathered through Starling, we have created a palm oil transparency dashboard to update stakeholders on our progress in achieving deforestation-free palm oil, and to share our learnings.
Sustainable production cannot be achieved through action only within the sites in our supply chain. We must address sustainability challenges and opportunities at the landscape level and view the farms, communities, and processing facilities that are connected to our supply chain as an integrated part of that broader landscape. To that end, we are increasing our focus on ‘landscape initiatives’, meaning integrated, multi-stakeholder efforts that work across industries at a jurisdictional level to address the root causes of the issues we work to address.
To take just two examples: in Indonesia we work alongside the Earthworm Foundation and several other companies to support landscape initiatives such as in Aceh Tamiang, where multi-stakeholder sustainable land use planning and support for local communities are being used to help end deforestation. In Mexico, the Mexico Palm Oil Holistic Program is a collaborative effort between Nestlé, PepsiCo, Oleopalma, RSPO, Proforest, and Femexpalma to support the sustainable development of the Mexican palm oil sector. This program was launched in 2017, and Nestlé joined in 2018 with the objective of increasing smallholders’ resilience to market changes and developing new tools that will help conserve forests while improving livelihoods. The program’s goals are to help drive sustainability in the Mexican palm oil sector, build the business case for including smallholders in responsible supply chains, and implement best practices to help prevent deforestation and human rights risks.
In addition to addressing deforestation risks, we also support the conservation and restoration of forests and other important ecosystems. In 2021, we scaled up our investment for conservation and restoration around our palm oil supply chain. These initiatives embrace new models of conservation financing, collaboration, and action to drive positive impacts for people, climate and nature.
In 2020, Nestlé Malaysia announced a commitment to plant three million trees over the next three years under Project RELeaf, a reforestation initiative in palm oil producing landscapes in Sabah and Peninsular Malaysia. The focus will be to restore riparian zones and forest ecosystems. The aim is to contribute to establishing wildlife corridors and mitigating human-animal conflict, and to protect critical water supplies. Planting is being accelerated after delays due to Covid-19 movement restrictions.
We work together with our direct suppliers to continuously improve the sustainability practices of our upstream supply chain, all the way up to smallholder farmers. We also work with partners to conduct supplier assessments and identify gaps. This informs the development of action plans with defined milestones and deadlines to act upon risks and identified opportunities for improvement.
When a supplier fails to effectively manage identified risks or meet agreed deadlines, we take decisive action. To provide assurance of this, we have removed the following 14 upstream supply chain companies from the Nestlé supply chain since 2018:
- Respect the Nestlé Responsible Sourcing Standard
- Comply with local laws and regulations
- Not use areas cleared of natural forest after December 31, 2015
- Respect local and indigenous communities’ rights to free, prior and informed consent
- Protect HCS land
- Protect peatlands
- DTK Opportunity
- Korindo Group
- PACIFIC INTER-LINK (HSA)
- PTT Green Plc
- Salim Group/Indofood
- Posco Daewoo
- Cilandri Anky Abadi
- PT. Indo Sawit Perkasa
- PT. Kallista Alam
- PT. Laot Bangko
- PT. Surya Panen Subur
Providing supply chain disclosure
In total, 97% of the palm oil we source annually is directly traceable to the mill. However, assessing and monitoring conditions on the ground requires us to go further upstream, which is why we are also focusing on traceability to plantation.
To hold our suppliers and ourselves accountable and drive industry-wide transparency, we have published a list of our Tier 1 palm oil suppliers, their country of origin and the mills in our supply chain.
Protecting the livelihoods and human rights of workers and children
Assessing the challenges
In the past we worked with the Danish Institute for Human Rights and the Earthworm Foundation to conduct a labor rights assessment of Nestlé’s Indonesian palm oil supply chain and develop our first comprehensive Action Plan on Labor Rights in Palm Oil Supply Chains.
To further enact change, we formed a partnership with human rights specialists Verité to conduct a Management Systems Assessment. We found that our actions were not reaching the entire supply chain and therefore introduced a new Program Assurance Framework (PAF) and upgraded our Labor Rights Action Plan for Palm Oil (pdf, 372Kb) to increase the reach and impact of our labor rights work. We are working to include more of our suppliers in our PAF and are continuously improving our approach.
Giving workers a voice
In 2018, we partnered with our supplier, Sime Darby Plantation, to create a helpline for palm oil workers in Malaysia to report human and labor rights abuses. This third-party worker support line enables workers to safely report on working conditions, recruitment, safety and other rights abuses. In 2021, the helpline coverage was extended to cover all Sime Darby Plantations operations, or about 35 000 workers. More than 4 500 workers have participated in in-person training, and many more have received informational posters, videos, and other forms of outreach.
Nestlé has supported several key initiatives to promote responsible recruitment, including funding the development of a human rights-based due diligence tool that supports palm oil producers in establishing transparency in their recruitment practices and identifying risks. A performance matrix allows suppliers to track and measure progress in their recruitment practices.
We have also invested in training assessors to identify forced labor risks associated with migrant workers’ recruitment, as well as supporting research (conducted by Earthworm) into recruitment practices and costs among small and medium-sized third-party suppliers.
Helping to protect children living on plantations
The presence of children on plantations is a risk in some parts of our palm oil supply chains. Thousands of children may live on palm oil plantations, often undocumented and without access to basic services such as education and schooling.
Child Risk Assessment Framework
Working with Earthworm, a Child Risk Assessment Framework has been developed to support palm grower companies. The Framework covers topics such as education, childcare, maternity protection, healthcare, nutrition, birth registration and child sexual exploitation prevention. A training model on the use of the Framework has also been developed and rolled out.
Wilmar Child Protection Policy
We continue to support a program developed by our supplier Wilmar to protect children living on plantations, in collaboration with Business for Social Responsibility. It included holding a series of stakeholder consultation workshops on Implementing Wilmar’s Child Protection Policy for Indonesian plantation companies, government representatives, trade unions and industry associations. Following the workshops, Wilmar published its Child Protection Policy Implementation Manual which is being further refined for potential use outside of Wilmar’s supplier base.
In East Kalimantan, Indonesia, we support Earthworm in its multi-stakeholder engagements with the government and suppliers on two themes: children on plantations and fair employment for casual workers. These consultations included a workshop for 54 representatives from palm oil companies, the government, civil society organizations and labor unions.