What next for Palm Oil in 2015?

What next for Palm Oil in 2015?

The palm oil sector saw extraordinary change during 2014. As we move into 2015, it’s time to take stock of where we’ve come to and what’s next. There are real grounds for genuine excitement, for hope. That’s positive but in truth, though 2014 witnessed the flowering of a gentle revolution, all we’ve achieved so far is the easiest part of the journey; much hard work remains in 2015 and beyond. At TFT, we speak about a VT TV change model, that’s Values, Transparency, Transformation and Verification. “Values” is where you set what you want your product story to be – it’s your policy. “Transparency” is about knowing - and sharing - how you’re going against your Values. “Transformation” is where you deal with the gaps; it’s about change. “Verification” is getting truly independent people to tell you how they think you’re going.

VTTV-image
VTTV-image

In 2014, the companies that control the majority of the world’s palm oil trade published strong Values statements to delink themselves from deforestation, exploitation and the clearance of peatlands. They were supported by global brands publishing their own Values statements. That really was a revolution and we emerge from 2014 with the Values box largely ticked. There are still laggards that need to hurry along and join their peers but overall we have a great platform to move forward.

What about Transparency?

There are different levels of progress here. Those that started earliest are most advanced. Among the traders, Wilmar kicked off the race to the top with the release of its policy in December 2013 and it completed a huge amount of supply chain mapping during 2014. Golden Agri Resources extended its Forest Conservation Policy to cover its downstream operations at the end of February and it too has since mapped much of its supply. Likewise, Cargill, who announced its commitments in September 2014, had already done a significant amount of mapping work. Others are moving forward. Mapping is one thing; finding out how you’re doing against your Values is another. Again, the early adopters are leading the engagement with suppliers to assess compliance against their Values. TFT is helping most of the industry with those assessments so there’s a great bank of knowledge developing around supplier performance.

This work must continue but the next important Transparency step is to publicly share the findings.

A number of TFT members publish quarterly progress reports. There is some nervousness around this but as more do so without negative consequences, we’re seeing a growing readiness to “come out”. Beyond the traders, the global brands led by Nestlé, the first mover, are working hand in glove with their suppliers to build traceability and compliance.

Increased Transparency will be an important theme in 2015.

Now, Transformation! As supply chain maps emerge and supplier visits reveal risks and opportunities, we’re identifying gaps. Now it’s time to turn the Titanic. That doesn’t happen overnight but we must accelerate. There remain way too many reports of egregious behaviour. Orang-utans are still being murdered, forests and peatlands are still being cleared and a vast number of workers still suffer mistreatment.

In 2015, global brands and major traders must use their leverage to drive real transformation at hugely increased scale across the whole industry with, “Breach my Values and I’ll not buy from you” clarity.

Verification is the least developed part of the change process. Yes, we have so-called “independent third party” auditors but these are neither independent nor truly third party because the companies they audit pay them. Local NGOs highlighting Values breaches represent a real independent alternative. In 2014, particularly in Indonesia, this blossomed.

This local, truly independent Verification activity must be supported to go to scale in 2015.

There’s a last issue that needs more attention – smallholders. During 2014, as Values statements with No Deforestation and No Peatland traceability requirements were published, there was real concern, particularly in Malaysia, that smallholders would be excluded from supply chains. There is no reason why that should happen, quite the opposite.

In 2015, we must engage with smallholders to ensure that they are actively included in global supply chains and supported to increase yields and resilience.

We must make 2015 the Year of Transformation. The VT TV model provides the framework and if all industry stakeholders continue to work together, much could be achieved.

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