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What does the future hold for sustainable palm oil?

PepsiCo has become the latest major company to cut ties with a palm oil supplier because of alleged unethical practices, adding to growing demand for more sustainable production. Can the palm oil industry deliver?

PepsiCo announced that it would no longer source palm oil from IndoAgri – either directly or indirectly from suppliers – after it failed to deal with complaints over workers’ rights. PepsiCo joins a host of other major food and beverage companies that have stopped trading with suppliers over unsustainable practices, such as deforestation and labour rights violations. For example, Cargill has also cut ties with IndoAgri, among other suppliers, as have palm oil traders Bunge Loders Croklaan, Wilmar and Golden Agri Resources.

Moves to reject unsustainable and unethical palm oil have been gathering momentum, and could help boost the ingredient’s reputation. Despite ongoing efforts to improve sustainability in the sector, many consumers still think of palm oil as an inherently unethical ingredient – and it also suffers from a poor reputation because of its high saturated fat content. However, it remains the world’s most popular vegetable oil for its low cost, long shelf life, and processing benefits such as heat stability and solidity at room temperature, making it an attractive alternative to partially hydrogenated oils.

It is also much more land-efficient than other vegetable oils, yielding ten times more oil per hectare than soybeans, and far outstripping yields from sunflower and rapeseed too.

Several effective strategies have been put in place to spur more sustainable production. Many European countries have pledged to source only sustainably produced palm oil, and the world’s largest sovereign investment fund, Norway’s Government Pension Fund Global, worth about $710 billion, said in 2012 it would no longer invest in unsustainable palm oil production.

Apart from PepsiCo and Cargill, other major food companies including Mondelez International and Unilever have also used their scale to leverage changes in production practices. Their commitments to sustainable palm oil prompted a major Malaysian producer, IOI, to commit to reforms in 2017.

Despite these efforts, progress in the sector has been slow, and still only about 21% of the world’s palm oil is certified sustainable, according to the Roundtable on Sustainable Palm Oil (RSPO).

The RSPO claims that a fully sustainable supply chain is possible – but it is an inevitably slow process. This is partly because the organisation’s approach is consensus-based, so all stakeholders need to work together constructively to shift established practices, including smallholder farmers, commercial growers, traders, processors, food manufacturers, governments and civil society groups. The supply chain is complex, with about 40% of global palm oil produced by smallholders. In addition, keeping forests standing involves taking care of the local communities who could profit from clearing the land to produce palm oil.

Commitments from major companies like PepsiCo can have – and have had – a major impact on how palm oil is produced, but the sector has yet to reach a tipping point for sustainable, ethical production.