Palm oil is used in many consumer products, from cosmetics, and washing powder, to icecream, and crackers. But the development of new oilpalm plantations is destroying areas rich in biodiversity. The Roundtable for Sustainable Palm Oil’s global standards aim to address the issues.
What is palm oil?
Palm oil is the world’s most widely produced edible oil. Oilpalm trees flourish wherever there is an abundance of heat and rainfall, and provide high yields, are easy to cultivate, and bear fruit all year round.
Driven by ever increasing global demand for edible oils, the past few decades have seen rapid expansion in the production of palm oil, mostly in Malaysia and Indonesia. These two countries are now the world’s largest palm oil producers, and are expected to expand production by nearly 45% (combined) by 2020.
Whilst palm oil contributes to the economic development of the producer countries, as well as to the diets of millions of people, it is the cause of deforestation, regretfully mostly in areas with a high conservation value. Plantations in some areas can even threaten the existence of endangered species. The expansion of oilpalm plantations has also given rise to social conflicts between local and sometimes indigenous communities and growers.
Triodos Bank follows the scientific consensus that protection of biodiversity is of the highest importance. Furthermore, Triodos Bank believes that local communities should not be denied access to basic human needs, for example through the loss of income or access to resources caused by the establishment of plantations. Since Palm oil is used in so many products, Triodos Bank actively seeks out acceptable standards that improve the contribution of palm-oil production to sustainability.
The Roundtable on Sustainable Palm Oil
Sustainable palm oil is seen as one way to supply the world with its increasing demands for vegetable oil without harming the planet and its people. In response to the increasing concerns the Roundtable on Sustainable Palm Oil (RSPO) (www.rspo.org ) was initiated in 2004 by NGOs, governments and producerswith the aim of advancing the sustainable production of palm oil. It is a global, multi-stakeholder initiative and members and participants come from many different backgrounds and countries, including producers, processors, manufacturers, retailers, investors and environmental non-governmental organisations.
The RSPO develops global standards for the entire supply chain of sustainable palm oil. It also certifies producers through a strict verification of the production process. The certified sustainable palm oil (RSPO Oil) is traceable through the supply chain by certification of each facility.
Case study: Henkel
Henkel, manufacturer of brands such as Persil and Purex, uses palm kernel oil as the active ingredient (surfactant) in its laundry detergents and household cleaners. The company has been involved with the RSPO since the first Roundtable Meeting, and has actively contributed to the development of the concept of sustainable palm oil.
By October 2008, Henkel was already using the palm oil certification system, which had been expanded to include palm kernel oil. It was the world’s first company to ensure that sustainable palm kernel oil could enter the supply chain for the production of surfacants. In January 2012, Henkel announced that it would now purchase certificates for its entire range of laundry and home care products, its largest product category using surfactants. Henkel’s goal is that by 2015, all palm oil and palm kernel oil used in its products should be covered by RSPO certificates for sustainably cultivated palm oil.
Henkel is selected for investment in the Triodos Sustainable Investment Universe.
Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.