Nestle’s position on palm oil shows corporate ethics needed beyond “certificates”
What just happened? The RSPO suspended Nestle in late June for “failure to pay its membership dues of $2350 and submit progress reports.” ACOP stands for Annual Communications of Progress and is a fairly simple document to create. Nestle’s suspension is one of the shortest ones in the RSPO’s history as it has been reinstated as of July 16 2018.
The noteworthy point about their new ACOP is the delay to use 100% responsibly sourced palm oil from its earlier target date of 2020 to 2023. One has to question why Nestle opted to risk suspension instead of complying with its simple membership requirements. In an email response to CSPO Watch, a Nestle spokesperson replied:
" Our commitment to achieve 100% responsibly sourced palm oil by 2020 relates to 100% supplier compliance with our Responsible Sourcing Standard. The commitment we have made to RSPO by 2023 relates to the purchasing of certified RSPO palm oil. Because of the volumes of palm oil we buy and our desire to achieve full traceability across our palm oil supply chain, we are focusing on buying segregated palm oil. To achieve a fully traceable supply chain from a primarily segregated supply chain takes time, which is why we have set a deadline for 2023.
Industry collaboration. We believe that RSPO has an important role to play in driving industry change towards sustainable palm oil. We therefore recognize the importance of maintaining our membership and sharing our experiences to help make this happen. In recognizing and reaffirming this role, we have committed to using 100% RSPO certified our palm oil by 2023. This commitment builds on, and does not replace, our ongoing responsible sourcing activities, including working with other partners to achieve transformation in the regions where it sources palm oil."
The corporate goodspeak seems to indicate that for now, Nestle has reconciled itself to what it saw as weaknesses in the RSPO’s certification. In a dynamite response to the RSPO’s press statement on their suspension, Nestle issued its own press statement ( which has since been removed from its website but can be accessed by clicking on this link.) which spoke volumes about how the company felt about certification. In stating a “fundamental difference in the theory of change between the company and the RSPO” the company touched on several points that challenges how the RSPO works. Quoting from the press statement:
"We believe in achieving traceability to plantations and transforming supply chain practices through interventionist activities instead of solely relying on audits or certificates. We also believe that in order to achieve genuine industry change, we need to embed the true cost of sustainable production into supply chain procurement practices, rather than focusing on premium mechanisms only."
"Whilst we respect the decision of RSPO to consider only action plans focused on moving towards 100 per cent certification, we believe that this approach is not conducive to achieving the levels of industry transparency and transformation the sector so urgently needs. We will continue to provide full transparency to our clients and consumers with progress against our commitments."
The underscored statements show Nestle’s approach as a bold move towards relying on real actions rather than words alone. In a corporate environment where it is much cheaper and easier to simply pass responsibility on to third party certification schemes and suppliers to meet codes of conduct, Nestle’s investments into tracing its source of palm oil should be copied by other food and beverage companies. The statement below outlines their approach and raises a question on the value of paper certifications.
"We have time-bound plans in place for Responsibly Sourced palm oil, against which we annually report on progress and provide third party assurance on. Notification of these plans and relevant online links were submitted to RSPO as part of the ACOP 2017 submission process. However, as Nestle's goal is not to achieve 100 per cent RSPO certification of palm oil, we were asked by RSPO to remove our response and re-submit that we have 'No Action Plan'.
Where certificates are weak, corporate ethics must be strong
The underscored statement is a troubling look behind the claims of RSPO members whose policies and ACOPs pledge to use “100% certified sustainable palm oil” by relying on the Book and Claim scheme. Take a look at Mondelez for example. Mondelez has “met its goals” towards using 100% RSPO certified sustainable palm oil by using a heavy reliance on the Book and Claim supply chain and further states that there are no plans to move towards the use of physical supply chains. The reason they gave for not moving towards physical supply chains was simply that it was “not determined nor required.” Not required?
Where is the outrage for Mondelez’s failure to buy actual certified palm oil? Why aren’t the zoos pulling Mondelez products off their shelves as they did for Nestle when the latter was suspended? This position is completely unacceptable as the Book and Claim supply chain is the most dubious one among the RSPO’s supply chains.
Nestle, in its newly filed ACOP, has committed to using 65% of its projected use of 460,000 tons palm oil as Segregated, meaning its source is certified and physical, by 2023. Mondelez on the other hand uses a paltry less than 2% of its 294,000+ tons as segregated while relying on paper certificates to claim a 100% use of certified palm oil. This is a big drop from the more than ten percent of Segregated palm oil it reported under its 2016 ACOP. Can Mondelez say with confidence that their “certified palm oil” clearly had nothing to do with the recent reports of tainted certified palm oil?
As this recent report from a coalition of Indonesiam NGOs shows, mere reliance on certification schemes is not enough to prevent corporate supplies from being tainted with bad palm oil. Named are some of the biggest palm oil producer members of the RSPO including Wilmar and Golden Agri Resources. This report follows on the heel of another report by Greenpeace that labelled Wilmar as a rogue trader of palm oil whose palm oil is accused of deforestation.
Both cases reinforce Nestle’s efforts to identify their sources independently. The urgency to transform the sector will benefit from a ramping up of tracing sources by buyers like Nestle and producers like Golden Agri Resources which is testing GPS-based solutions towards removing dubious sources of palm oil from their supply chain.
The inclusion of deforestation for oil palm plantations is undeniable for the development of countries like Indonesia and should be acceptable if done legally with an aspiration for sustainability. However, illegal plantations that not only cause deforestation but violate national laws protecting forests are unacceptable. The best means of avoiding the risk of using illegal palm oil is through the use of Segregated certified palm oil. Even if Nestle has delayed the use of 100% physical certified palm oil to 2025, this commitment shows good corporate ethics when compared to the dismal position taken by Mondelez.
What just happened? The RSPO suspended Nestle in late June for “failure to pay its membership dues of $2350 and submit progress reports.” ACOP stands for Annual Communications of Progress and is a fairly simple document to create. Nestle’s suspension is one of the shortest ones in the RSPO’s history as it has been reinstated as of July 16 2018.
The noteworthy point about their new ACOP is the delay to use 100% responsibly sourced palm oil from its earlier target date of 2020 to 2023. One has to question why Nestle opted to risk suspension instead of complying with its simple membership requirements. In an email response to CSPO Watch, a Nestle spokesperson replied:
" Our commitment to achieve 100% responsibly sourced palm oil by 2020 relates to 100% supplier compliance with our Responsible Sourcing Standard. The commitment we have made to RSPO by 2023 relates to the purchasing of certified RSPO palm oil. Because of the volumes of palm oil we buy and our desire to achieve full traceability across our palm oil supply chain, we are focusing on buying segregated palm oil. To achieve a fully traceable supply chain from a primarily segregated supply chain takes time, which is why we have set a deadline for 2023.
Industry collaboration. We believe that RSPO has an important role to play in driving industry change towards sustainable palm oil. We therefore recognize the importance of maintaining our membership and sharing our experiences to help make this happen. In recognizing and reaffirming this role, we have committed to using 100% RSPO certified our palm oil by 2023. This commitment builds on, and does not replace, our ongoing responsible sourcing activities, including working with other partners to achieve transformation in the regions where it sources palm oil."
The corporate goodspeak seems to indicate that for now, Nestle has reconciled itself to what it saw as weaknesses in the RSPO’s certification. In a dynamite response to the RSPO’s press statement on their suspension, Nestle issued its own press statement ( which has since been removed from its website but can be accessed by clicking on this link.) which spoke volumes about how the company felt about certification. In stating a “fundamental difference in the theory of change between the company and the RSPO” the company touched on several points that challenges how the RSPO works. Quoting from the press statement:
"We believe in achieving traceability to plantations and transforming supply chain practices through interventionist activities instead of solely relying on audits or certificates. We also believe that in order to achieve genuine industry change, we need to embed the true cost of sustainable production into supply chain procurement practices, rather than focusing on premium mechanisms only."
"Whilst we respect the decision of RSPO to consider only action plans focused on moving towards 100 per cent certification, we believe that this approach is not conducive to achieving the levels of industry transparency and transformation the sector so urgently needs. We will continue to provide full transparency to our clients and consumers with progress against our commitments."
The underscored statements show Nestle’s approach as a bold move towards relying on real actions rather than words alone. In a corporate environment where it is much cheaper and easier to simply pass responsibility on to third party certification schemes and suppliers to meet codes of conduct, Nestle’s investments into tracing its source of palm oil should be copied by other food and beverage companies. The statement below outlines their approach and raises a question on the value of paper certifications.
"We have time-bound plans in place for Responsibly Sourced palm oil, against which we annually report on progress and provide third party assurance on. Notification of these plans and relevant online links were submitted to RSPO as part of the ACOP 2017 submission process. However, as Nestle's goal is not to achieve 100 per cent RSPO certification of palm oil, we were asked by RSPO to remove our response and re-submit that we have 'No Action Plan'.
Where certificates are weak, corporate ethics must be strong
The underscored statement is a troubling look behind the claims of RSPO members whose policies and ACOPs pledge to use “100% certified sustainable palm oil” by relying on the Book and Claim scheme. Take a look at Mondelez for example. Mondelez has “met its goals” towards using 100% RSPO certified sustainable palm oil by using a heavy reliance on the Book and Claim supply chain and further states that there are no plans to move towards the use of physical supply chains. The reason they gave for not moving towards physical supply chains was simply that it was “not determined nor required.” Not required?
Where is the outrage for Mondelez’s failure to buy actual certified palm oil? Why aren’t the zoos pulling Mondelez products off their shelves as they did for Nestle when the latter was suspended? This position is completely unacceptable as the Book and Claim supply chain is the most dubious one among the RSPO’s supply chains.
Nestle, in its newly filed ACOP, has committed to using 65% of its projected use of 460,000 tons palm oil as Segregated, meaning its source is certified and physical, by 2023. Mondelez on the other hand uses a paltry less than 2% of its 294,000+ tons as segregated while relying on paper certificates to claim a 100% use of certified palm oil. This is a big drop from the more than ten percent of Segregated palm oil it reported under its 2016 ACOP. Can Mondelez say with confidence that their “certified palm oil” clearly had nothing to do with the recent reports of tainted certified palm oil?
As this recent report from a coalition of Indonesiam NGOs shows, mere reliance on certification schemes is not enough to prevent corporate supplies from being tainted with bad palm oil. Named are some of the biggest palm oil producer members of the RSPO including Wilmar and Golden Agri Resources. This report follows on the heel of another report by Greenpeace that labelled Wilmar as a rogue trader of palm oil whose palm oil is accused of deforestation.
Both cases reinforce Nestle’s efforts to identify their sources independently. The urgency to transform the sector will benefit from a ramping up of tracing sources by buyers like Nestle and producers like Golden Agri Resources which is testing GPS-based solutions towards removing dubious sources of palm oil from their supply chain.
The inclusion of deforestation for oil palm plantations is undeniable for the development of countries like Indonesia and should be acceptable if done legally with an aspiration for sustainability. However, illegal plantations that not only cause deforestation but violate national laws protecting forests are unacceptable. The best means of avoiding the risk of using illegal palm oil is through the use of Segregated certified palm oil. Even if Nestle has delayed the use of 100% physical certified palm oil to 2025, this commitment shows good corporate ethics when compared to the dismal position taken by Mondelez.