Can FMCG majors' tech help clean up palm oil's bad image?

London: Some of the world’s major palm oil users, including Nestle, Unilever, and Mondelez, are trying out new satellite technology to track deforestation, as pressure grows on them to source the ingredient responsibly.

They say the monitoring systems allow them to target people felling trees in producing countries like Malaysia and Indonesia, where forests are shrinking, more efficiently than policing supply chains on the ground.

“They say you’re Big Brother,” said Benjamin Ware, global head of responsible sourcing at Nestle. “It’s not Big Brother - its today’s reality...there is nothing secret anymore.”

Interviews with leading brands, commodity traders and plantation owners show the systems have limitations and opinions on them vary, reflecting tension within the industry over how to tackle an issue with no easy answer.

Some say the technology is not enough to stop deforestation that monitoring is not preventing. Others worry boycotting unsustainably made palm oil just drives badly practices elsewhere.

“Dividing the supply chain into the good versus the bad fundamentally does not solve deforestation,” said John Hartmann, global sustainability lead for agricultural supply chains at commodities trader Cargill, which sells palm oil to firms like Nestle and Unilever.

Palm oil buyers have toyed with satellite imagery for years, but have now ramped up their use as they rush to meet a pledge of zero net deforestation by 2020, set by global umbrella body the consumer goods forum.

The oil is in nearly half of all packaged goods from chocolate to soap, and is also used as a cooking oil and in biofuel.

As sustainability becomes more of a buzzword, multinational brands are trying to keep shoppers from switching to independent start-up brands, which often tout green credentials.

“There’s more awareness,” said consumer analyst Robert Waldschmit from Liberum. “People want a sustainably-sourced product.”

Palm oil contributes less to deforestation than beef or soy, which are responsible for much of the destruction in the Brazilian Amazon. But it has garnered attention because it thrives in biodiverse regions, threatening endangered species and exacerbating global warming.

The big players, including consumer brands, commodity traders like Cargill and Wilmar International and plantation operators and processors, have supply chains that span millions of smallholder farmers as well as many middlemen.

“They are trying to take it into their own hands on how it’s monitored ...Because they haven’t gotten their supply chains under control at this time,” said Phil Aikman, campaign director at environmental pressure group Mighty Earth.

Nestle, target of a 2010 video by Greenpeace International depicting a stick of KitKat bar as an orangutan finger, was briefly suspended by the Roundtable on Sustainable Palm Oil (RSPO) last year for not sharing time-bound plans for how it would boost purchases of certified palm oil.

The RSPO, which is backed by the World Wildlife Fund and other NGOs, sets varying levels of sustainability criteria that members must meet to certify their oil; the most stringent level involves ensuring it is separated from the rest and can be traced to a single certified source.

— Reuters