Averting Disaster How Sainsbury's Is Trying to Limit the Environmental Impact of Palm Oil

By BEN WRIGHT
It is the man-made ecological disaster that most people have never heard of. Although most shoppers don't know it, thousands of products on supermarket shelves contain palm oil -- it is the world's cheapest vegetable oil and appears in items ranging from ice cream to soap and from peanut butter to toothpaste.
Such is the high level of demand that farmers are clearing millions of hectares of virgin rainforests in the tropics, and especially in Southeast Asia, to make way for ever-expanding palm-oil plantations. In the process, some are destroying the habitat of endangered species. Orangutans, which are now limited to the islands of Borneo and Sumatra, are among the species most threatened by the palm-oil trade.
The $26 billion-a-year industry is expected to grow 10% a year. As well as being used in about 50% of all packaged food products in supermarkets, according to the World Wildlife Fund, palm oil is also an important bio-fuel for "green" cars and power stations.
This year, Sainsbury's, the U.K. supermarket chain, topped the World Wildlife Fund's European palm-oil buyers scorecard, which ranks the purchasing practices of the largest European companies that produce or sell everyday consumer products.
Sainsbury's has committed to only use certified sustainable palm oil in its products by 2014. The company's sustainability manager, Fiona Wheatley, spoke to The Wall Street Journal about one of the world's least well-known environmental issues.
THE WALL STREET JOURNAL: What are the dangers of using non-sustainable palm oil?
MS. WHEATLEY: While well-managed plantations exist and serve as models of sustainable agriculture, there is concern that not all palm oil is being produced sustainably. The development of new oil-palm plantations has, in some cases, resulted in the destruction of forests with high conservation value, threatening the rich biodiversity in these ecosystems.
WSJ: What steps have been taken to lessen the environmental impact of palm-oil production?
MS. WHEATLEY: To meet global demand for vegetable oil, the oil-palm industry needs to increase production. However, it is imperative that the expansion must be done sustainably. It is necessary to develop a globally acceptable definition of sustainable palm-oil production and use. The Roundtable on Sustainable Palm Oil was established to define and promote the sustainable production of palm oil.
WSJ: What characterizes sustainable palm oil?
MS. WHEATLEY: The mills that produce certified sustainable palm oil must prove valuable forests have not been destroyed in the development of new oil-palm plantations. Other criteria for certification control the way the oil-palm plants are grown and harvested, the environmental practices of the crushing mill, and the social conditions of the workers, smallholder growers and communities local to the mill.
WSJ: What are the main challenges to this initiative?
MS. WHEATLEY: An important challenge for the palm-oil industry is replacing commodity trading systems, which regard all palm oil as equal, with traceability systems that separate the certified sustainable palm oil from all other production.
Once the palm-oil mill has been certified as meeting the standards of the RSPO, every company that handles the palm oil also has to prove that they have systems in place to make sure that uncertified palm oil cannot be passed off as sustainable. This assures buyers that they are getting what they pay for and that their investment is being used to protect forests and biodiversity.
WSJ: What are the difficulties in sourcing sustainable palm oil?
MS. WHEATLEY: There are currently many plantations that have had RSPO audits and are waiting on the RSPO to confirm their certification. The RSPO has to be confident that audits have been rigorous and this is leading to a delay in issuing certificates.
Sustainable palm oil is more expensive. It requires separate storage and processing through the supply chain. Growers also have to invest to ensure their oil-palm growing practices meet the standards required to prove sustainability. Take-up has been slow.
If more companies started buying sustainable palm oil, it would stimulate the market and prompt more palm-oil producers and users to invest in the necessary infrastructure. This in turn would lead to a drop in prices, an increase in production and the all-important decrease in deforestation.
WSJ: How best can these difficulties be overcome?
MS. WHEATLEY: The RSPO is recruiting more people to speed up the certification process. This will release more palm oil that has been certified as sustainable to those markets that demand it.
Retailers like Sainsbury's are asking their suppliers to buy sustainable palm oil.
Write to Ben Wright at bwright@financialnews.com Printed in The Wall Street Journal, page R7