Supply Chain
New Reporting Guidelines Aiming to Shed Further Light on Palm Oil Industry

With rainforest destruction and forced labor still urgent concerns in palm oil cultivation, a diverse group of NGOs and investor organizations, organized by Ceres, today released shared guidance for corporate reporting on company commitments towards responsible palm oil sourcing and production.

Collaboratively developed by over 18 organizations including Oxfam, Rainforest Alliance, CDP and Rainforest Action Network, with input from companies, the guidance document aims to inform corporate reporting and supply chain engagement. The diverse group, which encompasses a range of perspectives on the palm oil challenge, came together to develop the guidance to create consistency and clarity for companies in the palm oil value chain on reporting.

“Numerous companies are putting resources towards sustainable palm oil, yet deforestation, land conflicts, and labor issues persist,” said Noah Klein-Markman, Senior Associate for Sustainable Agriculture at Ceres. “Transparency on supply chain practices is critical for all stakeholders – investors, civil society groups, and businesses - to understand and address the implementation gap.”

Palm oil is the world’s most abundant vegetable oil and a common ingredient in many food and household products. In Indonesia, where nearly half of the world’s palm oil is produced, forests and carbon-rich peatlands are being cleared faster than in any tropical nation, accounting for as much as 79 percent of the country’s greenhouse gas footprint. Much of this impact is caused by the expansion of the palm oil industry. Forced and child labor, as well as land rights violations, are also widespread in the industry.

Many companies are actively working to address these issues and are beginning to communicate progress to a wide range of stakeholders. The document was collaboratively developed by the following organizations:

• Ceres (coordinator)
• The Consensus Building Institute (facilitator)
• CDP
• Conservation International
• Daemeter
• Forest Heroes
• Forest Trends
• Global Forest Watch
• Green Century Capital Management
• Interfaith Center for Corporate Responsibility
• International Labor Rights Forum
• Mighty
• Oxfam
• The Packard Foundation
• Rainforest Action Network
• Rainforest Alliance
• Seventh Generation Interfaith Coalition for Responsible Investment
• Union of Concerned Scientists
• Zoological Society of London

“M&S recognizes the value of transparency as part of supply chain management and is working with industry partners to measure and compare performance of growers, processors and traders in our supply chain,” said Fiona Wheatley, Sustainable Development Manager at Marks & Spencer. “This document guides companies towards reporting that is most meaningful and material to a wide range of stakeholders and contributes towards our collective goal of making palm oil production sustainable and deforestation free.”

The guidance document offers recommendations for growers, processors and traders; manufacturers; and retailers. It covers topics including supply chain transparency, effective grievance processes, forced labor, smallholder engagement, and responsible land expansion.

“Corporate actions and commitments must go hand in hand with meaningful transparency in order to facilitate implementation. We hope this guidance spurs greater transparency in the sector, ultimately contributing to sector transformation,” said Aditi Sen, a Senior Policy Advisor for Oxfam.

“The razing of rainforests and prevalent use of child labor in the palm oil sector create regulatory risks and hinder companies’ social license to operate, which can threaten access to raw materials, production, and overall brand equity. Companies need to be transparent about how they are managing these risks so that we, as investors, can identify and measure them effectively,” said Kate Kroll, Shareholder Advocate at Green Century Capital Management.

Companies are encouraged to report the information outlined in the guidance document through existing vehicles, such as the Roundtable on Sustainable Palm Oil (RSPO) Annual Communication on Progress, CDP or sustainability reports and dashboards.

Conservation International, Daemeter and Rainforest Alliance are also part of a partnership between 20 of the world’s largest commodity producers, traders, manufacturers, consultants and retailers launched last week at the World Economic Forum in Davos, aimed at monitoring deforestation and managing sustainability from farm to customer, led by the World Resources Institute. The coalition is working to develop a global decision-support tool to increase transparency and traceability across supply chains.

Meanwhile, back in November, the High Carbon Stock Convergence Working Group – made up of NGOs, CPG companies and palm oil traders - announced that they had reached agreement on a single, coherent set of rules for implementation of companies’ commitments to “no deforestation” in their palm oil operations and supply chains. The members of the Group worked together for over a year to develop a roadmap for addressing the issues that remain related to deforestation; here’s hoping another set of rules emerges that addresses the human rights violations that persist in the palm oil industry.