Green Column: Palm Oil Companies Slow in Meeting Sustainability Goal

JAKARTA — Sustainability is the catchword in the palm oil industry these days, with many multinational companies having pledged to use oil only from sustainable sources by 2015. But with only three years left, they will have to move a lot faster to achieve that goal.

Palm oil, a key ingredient in a variety of major consumer goods like cookies and household cleaning products, accounts for around a third of the world’s vegetable oil trade. Interest in palm oil as an alternative fuel is likely to increase investment, with consumption expected to grow from 50 million tons a year now to at least 77 million tons in 2050, according to the environmental group W.W.F.

But that growth will take its toll on the environment, especially in Indonesia, the world’s largest producer. Palm oil plantations there expanded by 2,100 percent from the early 1980s to 2007, with the total land area currently devoted to palm oil estimated at close to 7 million hectares, or 17 million acres, according to a paper by the Center for International Forestry Research, based outside Jakarta.

Some experts say about 350,000 hectares of land are cleared each year for palm oil production — an area five times the size of Singapore. The land clearing releases carbon dioxide and destroys habitats for endangered species like orangutans, which are often killed by plantation owners who view them as pests.

As consumers pay more attention to the environmental damage caused by palm oil planting, pressure has increased on manufacturers to use sustainable sources. Unilever, McDonald’s and Nestlé have pledged to use only sustainable palm oil by 2015.

However, a scorecard released by the W.W.F. last month found that the companies that had promised to move toward sustainable oil still got only 47 percent of their supply from sources certified by the Roundtable on Sustainable Palm Oil, showing no improvement from 2010. (The W.W.F. is a member of the round table’s board.)

Of the 87 companies included in the W.W.F.’s scorecard that have committed to switching completely to sustainable palm oil by 2015, many of them, including the Australian snack food supplier Arnott’s, have yet to purchase any.

Growers that belong to the round table have to meet certain criteria, like negotiating land use with local communities and refraining from clearing virgin forest, before receiving certification.

Retailers and consumer goods manufacturers have purchased only 44 percent of the five million tons of sustainably sourced palm oil in circulation, the R.S.P.O. said at its annual meeting in Kota Kinabalu, Malaysia, on Nov. 24.

Toni Jones, an Arnott’s spokeswoman, said in an e-mail that the company’s first shipment of R.S.P.O.-certified oil would be delivered in mid-December. The delay was due to changes needed to process it and difficulties in finding adequate amounts of “segregated” palm oil, which is separated from noncertified palm oil during production to ensure its purity, she said.

“Committing to certified palm oil requires complex changes to ingredient receipting, tracking, handling and usage,” Ms. Jones said. “Another complexity is managing all the recipe changes that will be triggered by the introduction of the certified palm oil.”

The slow sales of sustainable palm oil have driven down prices, making it less attractive to producers, and the W.W.F. said that without guaranteed demand from buyers, growers were unlikely to pursue certification. Growers in Malaysia recently called for a freeze on further certification until demand for sustainable oil increased.

Mohamad Akhir bin Man, the general manager at Kayung Agro Lestari, an Indonesian palm oil plantation, said planters were initially told they could get a $20 per ton premium for R.S.P.O.-certified palm oil. He says the current premium of between $2 and $5 per ton over regular palm oil, which goes for $1,000 a ton these days, does not offset the additional production costs.

For buyers, however, even the current premium can be prohibitive.

Article source: http://www.nytimes.com/2011/12/05/business/global/palm-oil-companies-slow-in-meeting-sustainability-goal.html?partner=rss&emc=rss