How much progress has really been made on sustainable palm oil production?

Half of all consumer goods use palm oil. It’s a hugely versatile commodity with qualities such as shelf stability, a lack of odour, and colour and temperature resistance, making it a key ingredient for confectioners.

It’s no wonder then that palm oil production has increased significantly over the past 50 years.

Indeed, between 1970 and 2020, global palm oil production grew approximately 40 times, from two million tonnes to around 80 million tonnes, with most of the world’s farms found in Malaysia and Indonesia.

Despite being a very efficient crop (providing 40% of the world’s vegetable oil on 6% of the land used to farm oil crops), it has been associated with high levels of deforestation, human rights abuses and the destruction of the habitats of endangered species such as the orangutan and pygmy elephant.

And it’s not just environmental campaigners who are taking note. Consumers care deeply about the issues too. In the UK, for example, 41% of UK shoppers identified palm oil as the least environmentally friendly vegetable oil and many are now looking for products that are palm oil free.

Responsible palm oil sourcing​

As a consequence, manufacturers who rely on the ingredient have been scrambling to source sustainable alternatives and in 2004, the Roundtable on Sustainable Palm Oil (RSPO) was established to allow certification of palm oil that was responsibly farmed.

Notable for its success in this area has been, Ferrero, the global chocolatier behind household brands such as Ferrero Rocher, Kinder and Thorntons, which last month published its latest efforts on sustainable palm oil production in Malaysia including its  Ferrero Palm Oil Charter,​ which goes beyond certification and earned the firm second place in the 2024 WWF Palm Oil Buyers Scorecard​, which evaluates global companies for supporting sustainable palm oil.

“At Ferrero, we are committed to sourcing Roundtable on Sustainable Palm Oil (RSPO) certified segregated palm oil traceable back to plantation,” says a Ferrero spokesperson.

Ferrero has created various sustainable practices across Malaysia, including local sustainability projects, partnerships and research. As part of these efforts, since 2021, Ferrero has been part of a pilot research project on plant biodiversity and nature-based production practices.

“Over the last year, the project has been scaling up and includes the development of a toolkit of nature-based solutions based on a growing programme with smallholders,” says a Ferrero spokesperson.

Among these projects is the chocolate giant’s efforts to ensure its palm oil is deforestation-free. “All our palm oil sourcing areas, covering over 1.6 million hectares of land, are monitored for deforestation using Starling satellite technology in partnership with the Earthworm Foundation,” says Ferrero’s spokesperson. “In this respect, Ferrero is also an active advocate of the EU Deforestation Regulation​ (EUDR).”

Ferrero is also taking action to improve working conditions at palm oil mills. “By combining both Ferrero and recently acquired products in our latest mills list which represents the period between January to June 2023, 95.7% of the total palm oil volumes sourced by the Ferrero Group were RSPO Certified Segregated,” says a Ferrero spokesperson.

Links to deforestation are still present​

Between 2001 and 2016, oil palm plantations were the largest driver of deforestation in Indonesia, accounting for almost a quarter (23%) of the country’s deforestation. In the past 15 years, thanks to efforts from the likes of Ferrero this has been declining, sitting at 15% in 2021 compared to its peak of 40% in 2008-2009.

“Some of these confectionery companies have been more ambitious and successful than others,” says Daniela Montalto, Senior Forests Campaigner for Greenpeace UK.

However, a lack of transparency remains a widespread problem within confectionery, and it is still present. “The opacity and general dishonesty of the palm oil industry makes this a very difficult task,” says Montalto. “As a result, many are still linked to deforestation in their supply chains."

Sustainable manufacturers have to do their own due diligence​

In recent years, the amount of palm oil certified as sustainable has stalled at around 20% of the industry’s production. This, coupled with concerns over flaws in the certification scheme and ethics in RSPO-certified supply chains, means the Certified Sustainable Palm Oil (CSPO) concept has received criticism.

“The Roundtable on Sustainable Palm Oil's certification scheme, which could have provided manufacturers and their customers with a reliable source of deforestation-free palm oil, has been weakened and diluted by the industry and is not fit for purpose,” says Montalto.

Taking the UK as an example, the Greenpeace Senior Forests Campaigner confirms that the country has no safeguards in place to prevent it from importing or financing palm oil operations. These can damage critical forests, peatlands, indigenous lands and habitats for threatened species, including orangutans.

“Manufacturers who want to produce sustainably have to do their own due diligence to remove deforestation from their supply chains, something most promised they would have done by 2020 and failed to do,” says Montalto.