How committed are companies to making palm oil sustainable?

by ZSL on

Unsustainable palm oil production has devastating impacts on communities, wildlife, and the environment, but how committed are companies to making palm oil sustainable? Alexis Hatto, ZSL's Business and Biodiversity Engagement Manager,​ has been investigating.

Burned, cleared and intact forest in Sumatra
Burned, cleared and intact forest in Sumatra

From bread, biscuits and chocolate, to cosmetics and detergents – half of all packaged products in supermarkets contain some form of palm oil, the world’s most widely used vegetable oil. 

Today, around 85% of palm oil is produced in just two countries: Indonesia and Malaysia. In many cases, production takes place on land previously occupied by tropical rainforests and peatlands, which are important habitats for tigers, elephants and orangutans. 

The impacts of palm oil production

Scientific research by ZSL shows that oil palm plantations typically contain less than a fifth of the animal species supported by natural forests.

Over four million hectares of forest – equivalent to more than five million football fields – were lost between 1990 and 2005 in Indonesia alone due to palm oil production.

Clearing land for the development of palm oil plantations can destroy vital habitats and contribute to toxic pollution and carbon emissions. Local communities have also been threatened or forced off their land.

These issues can create risks for producers such as damage to reputation, which can lead to loss of business. Therefore, many companies are now working towards producing and using palm oil more sustainably.

Removal of rainforest for palm oil plantations has decimated orangutan habitat

What can companies do?

Sustainable plantations need to follow strict policies to maintain conservation areas and protect endangered species. Responsible companies should also commit to stopping deforestation and to respecting human rights. While many companies have made these commitments, there is still a need for companies to better communicate their progress to a wide range of stakeholders, including their investors and buyers. 

Better transparency, by making corporate information available for public monitoring and scrutiny, allows producers to demonstrate that they are tackling the environmental and social impacts of palm oil production, and reducing risks. In turn, transparency allows investors and stakeholders to consider any potential risks of doing business with palm oil companies.

ZSL's toolkit for change

ZSL’s Sustainability Policy Transparency Toolkit (SPOTT) is a free, online resource that scores palm oil producers on transparency: displaying how open they are about improving their practices, tracking where their palm oil comes from, and adopting rigorous procedures to end deforestation. 

ZSL has also worked with various organisations, led by Ceres, to develop clear and specific guidelines to support companies to report clearly and consistently on their commitments to sustainable palm oil production and sourcing. This practical guidance provides ‘better practice’ reporting recommendations on a variety of topics including land development, complaints processes, and human rights issues.

With more financial institutions looking to invest in responsible companies, palm oil producers must communicate their policies and practices in an effective and transparent way. 

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