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Unilever promises 100% sustainable palm oil by end of 2014

November 28, 2014

All palm oil used by Unilever PLC’s European food business will be derived from sustainable sources by the end of 2014, The Wall Street Journal reported the company as saying on 19 November.

All palm oil used by Unilever PLC’s European food business will be derived from sustainable sources by the end of 2014, The Wall Street Journal reported the company as saying on 19 November.

The declaration marks a step towards Unilever fulfilling its pledge to use only traceable and sustainable palm oil worldwide by 2020. The Anglo-Dutch company is the world’s biggest consumer of the ingredient, using around 1.5M tonnes/year. 

Unilever said it chose to focus on Europe first because consumers in the region were most likely to shun products made in ways that potentially harmed the environment.

“European consumers are definitely more discerning and there is more pull from the market”, said Biswaranjan Sen, vice president of procurement at Unilever.

The harvesting of palm oil has come under scrutiny in the last decade for the role it plays in deforestation in countries such as Malaysia and Indonesia. Unilever and other companies – including Procter & Gamble Co and Nestlé SA – have committed themselves to sustainable sourcing, but progress has been slow.

Demand for palm oil is rising sharply, expected to increase to 78M tonnes/year in 2020 from the current level of 60M tonnes/year, according to a recent report by McKinsey & Co.

Unilever has made the environment a central part of its business, the report said. Executives are rewarded for hitting sustainability target and chief executive Paul Polman regularly appears on academic panels discussing the impact of big business on the environment.

Nevertheless, it is no easy task. The company said around 58% of the palm oil it uses is now traceable to known sources, but that does not necessarily mean it is produced sustainably. Only 10% is both traceable and certified as sustainable, an indication of how far the company has to go before reaching its 2020 goal.

Part of the problem for Unilever is the low productivity of smallholder farmers, who produce around 30% of the world’s palm oil. These farmers use twice as much land as industrial plantations to produce the same amount of palm oil. 

“It is a much more difficult task than we initially thought it would be”, said Sen. “We are getting there, but it takes time.”

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