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Many palm-oil companies failing to meet 2020 zero-deforestation targets

While many producers, processors, and traders of palm oil have made a clear and robust commitment to zero deforestation, SPOTT's 2020 palm oil assessment of environmental, social, and governance (ESG) policy transparency finds that only a minority of the 100 companies assessed provide detailed information on how they are actually monitoring deforestation in their own operations.

A SPOTT analysis of 100 of the world’s most significant producers, processors, and traders of palm oil has found that while 71 percent (56 out of 79) of the companies assessed have made a clear and robust commitment to zero deforestation, just 42 percent (33 out of 79) provide detailed information on how they are actually monitoring deforestation in their own operations (graphic courtesy SPOTT).

The clearance and burning of forests and carbon-rich peat soils to create land for palm oil production is amongst the biggest drivers of deforestation in the tropics – destroying precious wildlife habitats, removing natural carbon storage and so accelerating biodiversity loss and climate change.

Companies across the palm oil supply chain have committed to zero deforestation by 2020, through the Consumer Goods Forum pledge or through their own targets. Additionally, many have signed up to the New York Declaration on Forests, which aimed to halve deforestation globally by the same date.

Failing to report on actual commitment implementation and monitoring

The 2020 deadline is here, but most companies still do not report basic information on how they are monitoring deforestation in either their own or their suppliers’ operations.

The analysis of 100 of the world’s most significant producers, processors, and traders of palm oil published by the Zoological Society of London (ZSL) Sustainability Policy Transparency Toolkit (SPOTT) team – an initiative developed by ZSL to incentivize the transparency of reporting and the implementation of best practice – has found that while 71 percent (56 out of 79) of the companies assessed have made a clear and robust commitment to zero deforestation, just 42 percent (33 out of 79) provide detailed information on how they are actually monitoring deforestation in their own operations.

Palm oil producers are also encouraged to enforce these pledges throughout their supply chains, and while 54 percent (53 out of 98) apply clear zero-deforestation commitments to their suppliers, only 10 percent (10 out of 98) are able to comprehensively report on how they are monitoring this.

2020 has been a wake-up call, with many realising the impact of human consumption and behaviour on the planet. While progress has been made by palm oil companies in setting clear commitments to tackle deforestation, it is now certain that many 2020 zero-deforestation targets will not be met. These deadlines cannot be extended any further if we are to meaningfully tackle the climate and biodiversity crises, said Eleanor Spencer, ZSL’s Palm Oil Technical Advisor.

SPOTT’s analysis found similar statistics on reporting against other elements of companies’ No Deforestation, No Peat, No Exploitation (NDPE) commitments, with 72 percent (57 out of 79) of companies providing comprehensive commitments to no planting on peat, but only 20 percent (14 out of 70) reporting on the implementation of the commitment, and 75 percent (59 out of 79) committing to zero burning yet only 54 percent (43 out of 79) disclosing details of fire management and monitoring practices.

In our engagement with financial institutions we are focusing on lending and underwriting efforts, and how zero-deforestation commitments have to be reflected in due diligence standards. There are still big gaps, and even large international banks lack environmental and social standards on palm oil or other soft commodities. SPOTT helps us directly in assessing sustainability performance across soft commodities, and particularly in palm oil. It is also a tool that we reference in our engagements, for banks and corporates alike to consult, said Nina Roth, Director in the Responsible Investment team of BMO Global Asset Management.

A boycott would lead to greater destruction

Found in many household products, palm oil use has become a somewhat polarising topic, with campaigns to boycott it often achieving huge consumer awareness.

However, it is still regarded as one of the most efficient vegetable oil crops in terms of yield per hectare (ha), meaning that a complete rejection of the product would only likely shift demand to less-efficient alternatives and lead to greater habitat destruction.

Companies can purchase palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO), the world’s largest palm oil certification scheme, to help ensure that their products adhere to stringent sustainability requirements.

The responsibility to tackle deforestation and improve the sustainability of palm oil production is shared by all actors in the supply chain and key stakeholders outside of it, and it is vital that these different groups work together to push for change. These results should be a red alert for the palm oil producers, their investors, banks, and buyers downstream – all of whom have made the same commitments to stopping forest loss. It is crucial now that the industry and its stakeholders come together to ensure sufficient action is being taken on the ground, and that these zero-deforestation targets are not empty promises, Eleanor Spencer concluded.

ZSL is calling on palm oil companies and their stakeholders to live up to their commitments and ensure that zero-deforestation targets are being met, enforced, and reported on – in order to “truly address the crisis facing tropical forests”.

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