Palm Oil

Roundtable on Sustainable Palm Oil suspends Nestlé for breaching code of conduct

This article has been updated.

The world’s largest food and beverage company, Nestlé, has been suspended from the Roundtable on Sustainable Palm Oil (RSPO) for being in breach of the RSPO’s statutes and code of conduct.

Nestlé, which has its headquarters in Vevey, Switzerland, has more than 2,000 brands, including KitKat, Nescafé, Maggi, and Perrier sparkling water, and is present in 189 countries around the world.

The suspension of Nestlé’s RSPO membership results in the suspension of RSPO certification at all its facilities and subsidiaries.

The company no longer has the right to state that it uses Certified Sustainable Palm Oil (CSPO).

A Nestlé spokesperson said in reponse to its suspension: “We share the RSPO’s ambition for improving the social and environmental performance of the palm oil sector. Our approaches to this do differ and we respect the RSPO board’s decision regarding Nestlé’s membership. We will continue our dialogue with the RSPO and hope to requalify in the near future.”

Nestlé said it was fully committed to the responsible sourcing of palm oil, and was working hard to achieve its ambition of 100 percent responsibly sourced palm oil by 2020.

“We have always viewed the RSPO certification as one tool in achieving that ambition, but it is not the only tool,” the company stated.

Nestlé says there are fundamental differences “in the theory of change that Nestlé and the RSPO are employing to realise the ambition of a wholly sustainable palm oil industry”.

The company says its goal is not to achieve 100 percent RSPO certification of the palm oil it sources.

Certification of the Nestlé Australia facility had been due to expire in November this year and certification of the Cereal Partners UK factory at Bromborough, Merseyside, in England would have expired in September 2019, but, in both cases, certification has been suspended with immediate effect.

The decision to suspend Nestlé’s membership was taken by the RSPO board of governors today (Wednesday) during its meeting following the RSPO’s sixth annual European roundtable in Paris, which took place on Monday and Tuesday.

Nestlé is in breach of the RSPO statutes and code of conduct because it has not submitted the required Annual Communication on Progress (ACOP) report for 2016, and, for 2017, it submitted the ACOP report without a time-bound plan.

Its membership payment is also overdue.

The RSPO wrote to Nestlé stating: “We regret to inform you that membership of Nestlé with the Roundtable on Sustainable Palm Oil (RSPO) has been suspended, effective from the date of this announcement, in accordance to Clause 5.5 of the RSPO Code of Conduct for Members 2017, and as approved by the RSPO Board of Governors at its meeting on 27 June 2018.”

The roundtable added in its announcement of the suspension: “It is compulsory for members to communicate their commitment by submitting the ACOP reports annually.”

In the ACOP, RSPO members are required to specify the steps taken in the previous year and specific steps intended for the coming year and for the long term.

They must do this in the form of a time-bound plan detailing how they are working towards producing or buying certified sustainable palm oil and applying any or a combination of the RSPO-approved supply chain mechanisms.

They are expected to specify volume or percentage targets.

Members are required to make an annual report about the progress of their time-bound plan.

“Nestlé was given the opportunity to complete its ACOP report for 2017 through active engagement, and has declined to submit a time-bound plan,” the RSPO said in its announcement of the suspension.

The company also owes an overdue membership fee of €2,000 (about US$2,300).

Nestlé says it does have time-bound plans in place for responsibly sourced palm oil, and does annually report on progress and provide third party assurance. It says notification of these plans and relevant online links were submitted to the RSPO as part of the ACOP 2017 submission process.

“We were asked by the RSPO to remove our response and resubmit that we have ‘no action plan’,” Nestlé said.

“Whilst we respect the decision of the RSPO to consider only action plans focused on moving towards 100 percent certification, we believe that this approach is not conducive to achieving the levels of industry transparency and transformation the sector so urgently needs.”

As a result of its suspension, Nestlé no longer has voting rights at RSPO general assemblies, and cannot belong to any of the RSPO task forces or working groups.

The RSPO has granted Nestlé a period of thirty days from today to communicate its suspension to its customers, “thus allowing them to seek alternatives”.

After this thirty-day period, Nestlé certificates will automatically cease to be valid and the company will no longer be able to trade CSPO via the RSPO’s traceability system for certified oil palm products, PalmTrace.

“We hereby request that Nestlé fully comply and commit to the RSPO statutes and code of conduct for members 2017 by 20 July, 2018,” the RSPO stated.

“The suspension will only be lifted and certification reinstated once the RSPO is satisfied that this has been fulfilled. Failure to comply will result in membership with the RSPO being terminated.”

Nestlé’s other brands include Purina pet foods, S.Pellegrino, Milo, and Carnation milk. The company produces Nesquik and numerous breakfast cereals, including Cheerios and Shreddies.

NGO reactions

Rainforest Action Network’s agribusiness campaign director Robin Averbeck said in a statement: “The RSPO’s decision to suspend Nestlé’s membership demonstrates a renewed commitment to require transparency from its members. However, this is far from the most critical test facing the RSPO right now.”

The RSPO, Averbeck says, urgently needs to enforce its standard and require responsible production practices from palm oil growers.

“For two years, the RSPO has failed to suspend its member Indofood while the company has continuously violated workers rights, the RSPO standard, and Indonesian law.

“A one-off action to suspend Nestlé for failing to report cannot be taken too seriously when the RSPO, at the same time, allows Indofood to continue selling certified ‘sustainable’ palm oil produced by children, unpaid women, and exploited workers.”

The forest campaigner for Greenpeace Southeast Asia, Bagus Kusuma, said: “Greenpeace has raised at least five cases of RSPO members destroying rainforest with the RSPO in the past year, including deforestation by members of RSPO’s board of governors and its complaints panel.

“The RSPO has not taken any action against them, but it has suspended Nestlé for not buying enough RSPO palm oil. This just shows that the RSPO cares more about profit than protecting forests.”

Bagus pointed to a Greenpeace International investigation that revealed that RSPO board member Wilmar International is still linked to forest destruction for palm oil almost five years after making a no-deforestation commitment.

He said mapping and satellite analysis shows that Gama, a palm oil business run by senior Wilmar executives and their relatives, has destroyed 21,500 hectares of rainforest or peatland.

Nestlé is one of the companies that source from Wilmar. Others include Colgate-Palmolive, Hershey, Kellogg, L’Oréal, Mars, Mondelēz, PepsiCo, Procter & Gamble, PZ Cussons, Reckitt Benckiser and Unilever.

Bastien Sachet, who is the Chief Executive Officer of the international charity The Forest Trust, says it’s very unfortunate that the RSPO isn’t taking into account Nestlé’s efforts to make the palm oil industry sustainable.

Nestlé’s policy, Sachet says, is more ambitious in terms of sustainability than the RSPO criteria.

“The RSPO is judging its member companies exclusively on whether or not they are aiming for 100 percent RSPO certification. This is selfish and irresponsible.

“It should instead be focusing on urgently updating the RSPO standard to include the High Carbon Stock (HCS) methodology, which exists since 2011.”

The roundtable should be protecting dense secondary forest, Sachet says. “How can dense secondary forests be protected if the HCS criterion is not included by the RSPO?”

HCS forest is included in the “RSPO NEXT” add-on criteria, Sachet says, but this is only a voluntary engagement.

Sachet says the RSPO standard is inferior to Nestlé’s responsible sourcing policy in terms of ambition, “so it’s quite ironic to see the RSPO kicking out such a leader in palm sustainability”.

Nestlé, Sachet says, was the first company to write a zero-deforestation policy. That policy includes a commitment to the conservation of HCS forests.

Sachet thinks the suspension of Nestlé could spark some interesting discussions about what added value the RSPO standard brings to brands and consumers “if it lacks ambition on protecting the most important forests”.

He says that transforming the palm oil industry is about innovating and finding what works. Nestlé, he says, wants to drive change. “They want their products not to be associated with deforestation or forced labour.”

It would not make sense, Sachet says, for Nestlé to only buy RSPO-certified palm oil. “The path to sustainability can be varied and that’s how solutions can be found.

“Fifty percent of palm oil is produced by smallholders and they are not RSPO certified and will not be certified in the coming years.

“I don’t think anyone wants to see smallholders excluded from global supply chains, so the RSPO shouldn’t put its head in the sand and continue to ask companies to be 100 percent RSPO certified. It’s not realistic.”

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Nestlé’s full response

In its detailed response to its suspension, Nestlé says its responsible sourcing, which includes RSPO segregated oil, goes beyond the RSPO principles and criteria and includes explicit provisions aimed at protecting peatland and High Carbon Stock (HCS) land.

The company says it believes in achieving traceability to plantations and transforming supply chain practices through interventionist activities instead of solely relying on audits or certificates.

“We also believe that, in order to achieve genuine industry change, we need to embed the true cost of sustainable production into supply chain procurement practices, rather than focusing on premium mechanisms only.”

Nestlé says it recognises that it has a long road ahead of it to achieve its ambitions. It says its responsible sourcing strategy has enabled it to trace 50 percent of the palm oil it buys back to the source plantations and 92 percent back to the mills.

“In addition, 58 percent of our palm oil is today responsibly sourced and we have achieved the status of 63 percent deforestation free, across commodities …”

Nestlé says that, in early June, it published a list of ten companies that will be removed from its supply chain for not making enough progress towards its responsible sourcing provisions as well as a dedicated action plan to address labour rights issues in the palm oil industry.

“For the next thirty days, in a spirit of open collaboration, we will dedicate more time to dialogue with the RSPO board, in order to see how the Nestlé group can better contribute to the roundtable and hopefully requalify for the membership and leadership they are demanding of us.

“In parallel, we will continue with our responsible sourcing operations, including directly engaging smallholders, working to ensure no deforestation, and focusing on addressing systemic labour rights issues in the supply chain through the deployment of an exhaustive and complementary set of tools and mechanisms.”

 ‘No room for unequal commitments’

The CEO of the RSPO, Darrel Webber, says the RSPO cannot make room for unequal commitments within its membership. “We have always worked hard to remind all of our members that they each have a role to play in our mission. Collaboration is our engine of transformation.”

Webber points out that the roundtable has 3,800 members from more than 80 countries. “Our members are different shapes and sizes, but they all expect us to apply our rules without fear or favour.

“Our members sign up to specific commitments when they join the RSPO and they know full well that our theory of change is dependent on everyone taking part in transforming the sector.”

Producers who are members of the RSPO commit to certifying all of their management units within a time-bound plan, Webber says. “This is recorded and they are audited against their plan. Similarly, there is a requirement, in the RSPO, for other stakeholder members to put on record their commitments to promote the use and production of sustainable palm oil.”

There are many members, Webber says, who state that they go beyond the standards of RSPO certification.

“Many of these same members have been very happy to report, through our Annual Communication on Progress, how they first meet the requirements of the RSPO and then they explain how they go beyond this. This is something we applaud.

“There is clear documentation of them meeting the requirements of the RSPO and then going beyond them.”

Webber says the RSPO is a mission-driven, non-profit organisation, so profit is not at the forefront of its actions. “Collaboration,” he said, “is our currency for achieving our mission.”

The RSPO, he adds, has suspended or terminated memberships in the past. “We took those actions even when there was the threat of legal actions that would have had severe financial implications for the RSPO.”

Webber adds that the RSPO is not only a certification scheme. “We actively engage and we seek commitments from our members to transform the supply chain and facilitate the convening of external stakeholders to solve major problems.”

IOI case

Nestlé was one of more than twenty companies that ceased trading with the Malaysian company IOI when its membership of the RSPO was suspended in April 2016.

In a move that was fiercely criticised by NGOs and others concerned about environmental protection and human rights, the RSPO reinstated IOI’s certification in August 2016.

There was clear evidence that the IOI group had engaged in illegal land clearance, including on peatland, and illegal planting.

A Greenpeace report said the impact of deforestation and peatland drainage on palm oil concessions owned by the IOI group far exceeded that referred to in the complaint to the RSPO that led to the company’s suspension.

In addition to Nestlé, there are currently 11 other companies – mostly palm oil processors and/or traders – whose membership of the RSPO is suspended. The membership of 13 companies – also primarily palm oil processors and/or traders – has been terminated.

The RSPO, which is based in the Malaysian capital, Kuala Lumpur, has members from numerous sectors: oil palm producers, processors, and traders, consumer goods manufacturers, retailers, investors, and environmental and social non-governmental organisations.

Palm oil is the most ubiquitous edible oil on the planet. It is found in products ranging from soap, cosmetics, and cleaning products to candles, chocolate, and ice cream, and it is also used to make biofuel.

Oil palms are grown in 43 countries and the plantations are estimated to cover about 27 million hectares worldwide. More than 85 per cent of the world’s palm oil is produced in Indonesia and Malaysia.

There are four types of Certified Sustainable Palm Oil: Identity Preserved (IP), Segregated, Mass Balance, and Book & Claim. IP oil is from a single certified source and Segregated is from different certified sources. Both are kept separately from ordinary palm oil throughout the supply chain. Mass Balance oil is from certified sources, but is mixed with ordinary palm oil in the supply chain. Under the Book & Claim system, manufacturers and retailers buy credits from RSPO-certified growers and crushers and independent smallholders.

 

Update 1/7/2018:

The Palm Oil Innovation Group (POIG), issued a statement saying that, while decisions to hold RSPO members to account were much needed, the RSPO should focus its enforcement efforts on sanctioning non-compliant members who were destroying forests and committing human rights violations.

“Major consumers of palm oil such as Nestlé should avoid misleading communications to the market,” said spokesperson from the Rainforest Action Network Gemma Tillack.

“Instead, companies need to invest in the much-needed transformation of the palm oil sector by achieving third-party verification of their supply chains instead of second-party alternatives that lack the independence, oversight, and transparency provided by certification systems and the Palm Oil Innovation Group.”

The POIG includes RSPO members and builds upon RSPO standards to produce verified, responsibly produced palm oil, Tillack said.

Founded in 2013, the POIG was developed in partnership with NGOs and progressive palm oil producers.

Michelle Desilets, who is the executive director of the Orangutan Land Trust, which is a POIG member, says she finds it astonishing when “so-called palm oil campaigners” applaud Nestlé for failing to comply with the most minimal requirements of RSPO membership requiring transparency about their progress in ensuring a sustainable supply chain.

“To suggest that second-party verification of a No Deforestation, No Peat, No Exploitation (NDPE) policy somehow removes this basic responsibility is nonsense.

“To ensure NDPE, one must look to third-party verification, such as via POIG. All suppliers of NDPE are RSPO certified. You can’t get NDPE without it.”

Desilets says that for Nestlé to say they are choosing a different avenue to deliver sustainable palm oil does not really explain why they cannot submit ACOP reports or a time-bound plan for 100 percent RSPO certification. 

Update 3/7/2018:

The World Association of Zoos and Aquariums (WAZA) welcomed the RSPO’s decision to suspend Nestlé.

“WAZA is committed to the sustainable development of palm oil and believes industry leaders should lead the way,” said WAZA CEO Doug Cress. “Nestlé could be in a position to model change on a global scale. Instead, the company could not – or would not – meet the RSPO’s minimum standards. As a result, the RSPO did what it had to do.”

WAZA signed a Memorandum of Understanding with the RSPO in 2017. It seeks to have at least 50 percent of WAZA zoos and aquariums committed to using certified sustainable palm oil products by 2023.

Palm oil is found in many of the consumer items sold at zoos and aquariums as well as in some of the food given to the animals.