Starbucks Corp., Seattle, already uses sustainable palm oil certified by the R.S.P.O. in its products in the United States and Europe. The company has committed to extend use of the palm oil to 100% of its products globally by 2015. The global goal addressed a shareholder resolution filed by the Green Century Balance Fund, a mutual fund.
“Shareholders needed Starbucks to address the business risks associated with sourcing conventional palm oil, and it has delivered,” said Leslie Samuelrich, senior vice-president for Green Century Capital Management. “As an environmentally-responsible investment advisory firm, we believe that improving the environmental practices of the companies in which we invest may make them better long-term investments.”
In its next corporate social responsibility report scheduled for the second quarter of 2013, Dunkin’ Brands Group, Inc., Canton, Mass., plans to set a target date for sourcing 100% sustainable palm oil or for purchasing GreenPalm certificates covering 100% of sourced palm oil.
The R.S.P.O. has a trademark that may be placed on products with certified sustainable palm oil. It also has GreenPalm certificates that are an interim measure designed to bridge the transition from non-sustainable to sustainable palm oil. Companies may purchase GreenPalm certificates to support sustainable production.
The commitment from Dunkin’ Brands pleased Thomas P. DiNapoli, comptroller for the state of New York. He withdrew a shareholder resolution that asked the company to address the social and environmental concerns associated with palm oil production.
“Dunkin’ Brands should be commended for taking the necessary steps to use only sustainably harvested palm oil in its products,” Mr. DiNapoli said. “Consumers may not realize that many of the foods and cosmetics they eat and use contain palm oil that has been harvested in ways that are severely detrimental to the environment. Shareholder value is enhanced when companies take steps to address the risks associated with environmental practices that promote climate change.”
The R.S.P.O., formed in 2004 and based in Kuala Lumpur, Malaysia, seeks to promote the growth and use of sustainable palm oil products through global standards, including those designed to rein in deforestation and improve worker safety. Annual supply of certified sustainable palm oil rose to 6,724,236 tonnes in 2012 from 163,364 tonnes in 2008, according to the R.S.P.O. Indonesia accounts for 47% of the supply, and Malaysia accounts for 45%. Annual production capacity for R.S.P.O. palm oil reached 14% of global crude palm oil in 2012.
Increasing worldwide demand for palm oil, which is used in personal care products as well as food products, has led to the development of new plantations, according to the World Wildlife Fund. The development, according to the W.W.F., is endangering forests and threatening the survival of species such as orangutans, Sumatran tigers, rhinos and elephants.
R.S.P.O. members include oil palm growers, palm oil processors and traders, consumer goods manufacturers, non-government organizations, banks/investors and retailers. Supplier members include AarhusKarlshamn, Archer Daniels Midland Co., Bunge, Cargill, Ciranda and IOI Group are R.S.P.O. members.
Cargill has made a commitment that the palm oil products (excluding palm kernel oil products) supplied to its customers in Europe, the United States, Canada, Australia and New Zealand by 2015 will be certified by the R.S.P.O. and/or originated from small land holder growers, those with roughly 123 acres or less. Mohit Gupta, tropical oils product line manager for Minneapolis-based Cargill, said the company is on target to meet the 2015 goal.
Small land holders may have a tougher time becoming certified, he said, but Cargill wants to keep them as suppliers since their livelihood may depend on palm income. For example, small land holders may have trouble with costs for worker safety and for treating wastewater, he said.
The R.S.P.O. offers a support fund for small land holders in which they receive 10% of the income generated from the trading of certified sustainable palm oil. The R.S.P.O. also will channel 50% of any remaining surplus of income within the financial year to the fund.
Activity in Europe
Europeans are aware of sustainable palm oil. Nestle S.A., Vevey, Switzerland, should achieve 100% certified palm oil by the end of this year, or two years ahead of its initial public commitment, Paul Bulcke, chief executive officer, said in March.
All palm oil in Unilever products now are covered by GreenPalm certificates, the London-based company said April 2. Unilever is working toward a goal of 100% certified sustainable palm oil that is traceable back to the plantations on which it is grown.
The Norwegian Government Pension Fund Global recently sold stakes in 23 companies that, in its view, produced palm oil unsustainably. The fund placed weight on whether companies had committed to the R.S.P.O.
The R.S.P.O. in a March 14 statement pointed out the Norwegian government pension fund continued to hold $450 million in the sector and has increased its holdings in some R.S.P.O members and other palm oil companies that the fund believes has progressive environmental practices.
According to the R.S.P.O., the fund’s actions will encourage palm oil companies to shift to sustainable practices.
“On the other hand, the companies the G.P.F.G. has divested from also include R.S.P.O. member organizations that have begun certification and continue to make commitments to fully certify all their mills over a stipulated time frame, which is a requirement by the R.S.P.O,” the R.S.P.O. said.
Suppliers offer several options
IOI Loders Croklaan Europe in 2013 plans to increase its volumes of certified palm oil to 30% of total sales. The IOI Group in Malaysia primarily produces the sustainable palm oil. The IOI Group expects to have the last of its plantations certified according to the standards of the R.S.P.O. by the end of 2013.
Loders Croklaan North America, Channahon, Ill., also offers sustainable palm oil, said Gerald P. McNeill, Ph.D., vice-president of research and development.
“IOI Loders Croklaan Americas has fully implemented its plans to offer its customers a full range of certified sustainable finished palm and palm kernel oil products in mass balance form, using oils that are fully segregated up to the Channahon and Rexdale (Ont.) refineries,” he said.
Mass balance refers to the controlled mixing of certified and non-certified palm oil. The R.S.P.O. views it as a stepping stone toward 100% certified sustainable palm oil.
Bunge offers palm for sale in North America using Utz certificates or mass balance-approved material from the company’s origination points in Malaysia, said John Jansen, senior vice-president of R.Q.I. (Regulatory, Quality and Innovation) for Bunge Oils, St. Louis.
“Bunge’s two largest palm-producing facilities in the U.S. have been audited by R.S.P.O. and approved for certified palm with traceability assured from origination through to end use delivery,” he said. “Palm continues to be an important and expanding portion of our business, and we are committed to meeting our customers’ needs for safe, sustainable product.”
ADM has processing facilities in Lincoln, Neb.; Quincy, Ill.; and Valdosta, Ga., that offer certified palm oil, said Glenn Ginalick, senior marketing manager for ADM Oils in Decatur. The company also offers the certified oil through its ex-tank program in New Orleans.
“ADM has seen an increasing number of inquiries for sustainable palm oil from companies who have a short time line for switching to sustainable palm oil,” Mr. Ginalick said.
Mr. Gupta said food and beverage companies, including some Cargill customers, have begun work to hit their 2015 goals for the use of sustainable palm oil.
“It’s not going to be like turning on a faucet on Dec. 31, 2014,” he said.