How to engage more palm oil suppliers on the sustainability change journey
Many companies with sustainability policies committing them to “No Deforestation, Peat and Exploitation” (NDPE) are now being challenged to ensure that their suppliers adhere to these policies.
A 2018 Greenpeace report urged global brands to do more to ensure that the palm oil they buy comes from responsibly produced sources. Palm oil producers were also challenged on the effectiveness of their NDPE policies. This is compounded by market pressures such as the EU (European Union) parliament’s “decision to phase out palm oil from its biofuel programme by 2020.” The challenge for companies is the size and complexity of supply chains, which makes it difficult for on-the-ground efforts alone to have effect at scale.
This is where technology can play a role. In this light, The Forest Trust (TFT) and its members – Asian Agri and Apical, Cargill, Fuji Oil, Golden Agri-Resources, Louis Dreyfus Company, Mars and Wilmar – have been co-developing a system to engage suppliers called Tools for Transformation (T4T).
T4T is an online platform designed to help businesses meet NDPE policies by empowering them to take the necessary steps towards transformation. It comprises of four components – a questionnaire, action plans, supply chain analytics and resources to aid transformation. These four components will work hand-in-hand to help mills and plantations identify, understand and close gaps in their practices.
Parts of the platform are still in development, with all four components slated for release in early 2019. As of now, the questionnaire and resources are online, with action plans and supply chain analytics to follow in the coming months.
Since 2017, TFT has been testing the questionnaire with more than 70 mills and plantations that supply to Cargill, Fuji and Wilmar. The questionnaire is now accessible to paying customers and will help palm oil producers identify gaps in their operations. Resources are and will remain free for public use.
In its entirety, T4T would start with suppliers (mills and plantations) completing the questionnaire. This would produce a dashboard telling them where they stand based on 15 environmental and social NDPE metrics. Individual data from the questionnaire will be confidential to suppliers who fill it up, as well as their buyers.
The questionnaire would be used to form action plans to improve practices. Questionnaire data could also be anonymised and aggregated to provide supply chain analytics. This can help brands that use palm oil in their products and producers, like Cargill and Fuji, evaluate their suppliers and supply chains. Analytics would give them an understanding of where they need to invest resources. This data also allows them to monitor their suppliers’ progress against their NDPE commitments.
Action plans are supported by a library of resources to help suppliers implement changes in their practices. The library, which is still growing, includes templates and guidance on important environmental and social issues covered in NDPE policies. Several of the guidance documents have been field tested at TFT transformation sites in Malaysia and Indonesia.
While data from T4T isn’t enough to single-handedly provide transparency into a business’ supply chain, it can support on-the-ground verification efforts and face-to-face engagements with suppliers. It can also support TFT verification initiatives like Kumacaya and Starling, which allow businesses to verify policy commitments within their supply chain.
It is hoped that wider use of the T4T system will allow suppliers to help themselves adapt to emerging market trends by giving them the tools to do so. Companies that embrace change can increase or at least maintain competitive edge in a market that is slowly but surely shifting towards sustainability.