Written by: Trade Interchange

Posted on: 13/11/19

The True Cost of Unsustainable Palm Oil Sourcing

Palm oil is a type of vegetable oil originating from the fruit grown on African oil palm trees, which are now grown in Asia, North America and South America, in addition to their native Africa. The oil’s relatively low-fat content, unique properties and source of vitamin E has resulted in a global demand with which growers are unable to keep up; however, the oil’s popularity is not without controversy.

Palm oil is used in almost half of the processed products in UK supermarkets, from chocolate and pizza to lipstick and shampoo. Other seed crops’ yield is 6 to ten times less than that of palm oil; its efficiency is one of the reasons palm is the most produced and consumed vegetable oil across the world.

UK companies have made great progress in their pledge to import more sustainable palm oil, as 2016 saw 75% of total palm oil imports originating from sustainable sources, yet David Attenborough’s new documentary highlights the true cost of decades of unsustainable sourcing.

Borneo has lost almost 40% of its forest in the last 10 years to palm oil’s production, as rainforests are cleared to grow crops which not only damages the environment, but also forces endangered animals such as orangutans and elephants into small pockets of land in which they cannot survive.

Over three-quarters of Indonesia’s Tesso Nilo national park has been converted to illegal palm oil plantations, threatening the habitat of tigers, orangutans and elephants while also leading to deforestation and fires.

Illegal plantations are unquestionably dangerous for the environment, animals and workers, however, companies have founded organisations such as the Roundtable on Sustainable Palm Oil (RSPO) in order to ensure the ethical and sustainable sourcing of palm oil.

RSPO accreditation stipulates all palm oil must be traced to its source, restricts the use of pesticides and fires, and ensures the oil is not the product of deforestation or unethical treatment of workers.

Currently, 19% of the world’s palm oil is certified by the RSPO, yet increasing awareness about the dangers of unsustainably produced crops could also increase consumer demand for ethically sourced oils.

Deforestation, unsustainability and unethical treatment of workers are all concerns for many companies and the country as a whole, however, by using Trade Interchange’s software solutions the entire supply chain is transparent and traceable, which provides confidence in suppliers’ adherence to company regulations regarding unethical practices.

A number of Trade Interchange’s companies, such as AAK and TGI Fridays, have all committed to using sustainable palm oil in their products, using Trade Interchange’s ARCUS® platform to trace their entire supply chain. Plug-ins can be used to audit palm oils’ production sites, proving due diligence has been undertaken throughout the supply chain of all products and ingredients.

San Tickle, ESC Procurement Manager at AAK Belgium NV & AAK Netherlands, says ‘Trade Interchange’s SIM module allows us to effectively manage compliance risks in our supply chains worldwide, such as quality and Corporate and Social Responsibility. We are always committed to enforcing best practice in all aspects of the business and we are confident that the ARCUS® platform fulfils all our requirements’.

Trade Interchange’s ARCUS® platform offers a complete overview of the supply chain, ensuring all suppliers adhere to company and government legislation to prevent unethical sourcing in raw and pre-prepared ingredients.

Suppliers upload all information and documents requested by the company, such as sustainability statements, RSPO accreditations and insurance policies, which are stored in a suppliers’ individual portal alongside all other documents and information.

Key documents such as Modern Slavery statements are scanned by artificial intelligence at the point of upload with a 99.5% accuracy rate, which allows companies to prioritise checks in addition to having confidence in the information uploaded by suppliers.

ARCUS® SIM’s plug-in, Manufacturing Site Audit, allows auditors to visit suppliers’ sites to reduce the risk of raw ingredients such as palm oil being the product of unethical practices.

This information is then uploaded and stored alongside all other supplier information, providing traceability and confidence throughout the supply chain.

Sustainability White Paper

The rise of the conscious consumer and what it means for the food and drink industry.

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Modern Slavery White Paper

Why the food and drink industry is particularly vulnerable and how to minimise risk.

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SIM Factsheet

ARCUS® SIM allows all supplier information to be stored in a cloud-based system, with automated reminders that chase suppliers for incomplete or out-of-date information.

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Manufacturing Site Audit Factsheet

The Manufacturing Site Audit plug-in for ARCUS® SIM makes the recording, managing and scheduling audits of suppliers’ sites a simple and efficient process.

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