Ferrero targets nature net-gain and 'fully transparent' supply chain under new palm oil strategy
Ferrero Group, the confectionery giant which owns Nutella, has launched a new Palm Oil Charter featuring commitments to regenerate biodiversity and water systems.
The firm published its first Palm Oil Charter in 2013 and has said in a statement that the new updates will take the company’s approach beyond the essentials delivered by the first iteration. It is divided into three focus areas: human rights and social practices; environmental protection and supplier transparency. Ferrero called these issues “critical in an intricate industry where environmental and social issues are oftentimes deeply rooted, complex and interconnected”.
On human rights and social practices, Ferrero claims that its first Charter has helped it to embed “basic requirements” required by national laws and international agreements including those set out by the International Labour Organisation (ILO). The updates to the new Charter, it claims, are designed to maintain and improve measures on responsible recruitment, fair and safe working conditions and eliminating forced labour, while helping smallholders build resilience against environmental and economic risks.
This resilience-building will cover training and funding to implement more sustainable process, plus measures to protect smallholders from the volatility of commodity market prices. It will be delivered through a network of partnerships, yet to be announced,
There is also a commitment to ensure that indigenous communities are “fully engaged whenever agricultural land expansion may occur”.
This may come as a disappointment to some green groups, given that land use for palm oil has already expanded rapidly in recent years, with organisations including the Intergovernmental Panel on Climate Change (IPCC) linking land-use change to biodiversity loss and rising emissions. The second pillar of Ferrero’s new Charter, however, contains a commitment for the business to “become a positive driver to regenerate biodiversity, soils and water systems”.
To help realise this vision, the company has made a “no-deforestation” supply chain commitment, banning the use of fire to clear land and banning planting on peat, which is known as a valuable nature-based solution for sequestering carbon. Where land is cleared, trees must be restored elsewhere and efforts made to protect surrounding forests and other habitats.
This commitment builds on a recent statement, signed by Ferrero and more than 40 other firms, designed to support the EU in eliminating deforestation in multinational supply chains.
Ferrero’s supply chain for palm oil spans some one million hectares. With this in mind, it will be using satellite monitoring to identify potential instances of deforestation. This information will inform targeted remediation efforts. Satellite monitoring has been used by the firm since 2018 and will continue to be scaled.
Transparent and traceable
The satellite mapping commitment spans both the environmental protection and supplier transparency pillars of the new Charter.
On this issue, the firm was pressed by Greenpeace to improve disclosures in 2016, along with competitors such as Hershey’s. It claimed at the time that it had already achieved full grower level traceability and 100% Roundtable on Sustainable Palm Oil (RPSO) certification.
The updated Charter’s plans to take the firm beyond this level of compliance. It states that Ferrero will continue to share a list of mills from which it sources palm oil twice a year and will also develop a yearly progress report on the Charter’s full list of specific goals. Additionally, it will launch a new helpline, whereby stakeholders including supply chain staff, local communities and environmental groups can confidentially raise potential instances of non-compliance.
Non-profit Earthworm Foundation has worked with Ferrero since 2013 and co-developed the firm’s new Charter updates.
Earthworm Foundation chief executive Bastien Sachet said: “We welcome this updated charter for three reasons: Firstly because it builds on successful implementation of previous commitments and therefore it associates words to action. Secondly, Ferrero is demonstrating its commitment to driving environmental and social excellence linked to strong core values and long-term change. Finally, this Charter will inspire other companies to raise their own bar, as collective leverage and action remains critical to scale impact beyond one company’s supply chain.”
Ferrero, like all major global palm oil users, has faced scrutiny from environmental groups historically. However, in WWF’s most recent ranking of palm oil buyers on sustainability and ethics, the company ranked first, among other leaders such as L’Oreal and Ikea.