Unilever to increase sustainable palm oil production in Indonesia

Global consumer goods firm Unilever has struck a deal with a government-owned palm oil plantation firm in Indonesia to create a support framework that enables local mills and smallholders to produce palm oil according to standards of no deforestation and no peatland deterioration.

Unilever signed a Memorandum of Understanding (MoU) with government-owned PT Perkebunan Nusantara (PTPN) to improve farmer livelihoods and increase yields while adhering to agreements that ensure no deforestation, developments on peat, or exploitation of people and communities take place.

PTPN will provide Unilever with access to mills and its farmer suppliers. The global consumer firm will support these farmers and mills, helping them gain certification for sustainable sourcing practices.

Unilever’s chief supply chain officer Marc Engel said: “Unilever’s ambition is to make sustainable palm oil mainstream. We have been working really hard to make this a reality and we have been evolving our approach over the years. We are involved in various partnerships to help smallholder farmers improve their yields while protecting the environment and local communities.

“The MoU with PTPN is the first time we can apply the produce-protect model at scale – our partnership will have a positive impact in Indonesia from an environmental, social and economic perspective which makes it unique to the industry.”

PTPN employees more than 121,000 people and generated 63% if its $2.5m global sales from palm oil production last year. Through the MoU, these employees will be trained to deliver the company’s palm oil commitments, which include goals on transparency, regulatory compliance, responsible conservation and worker welfare.

Some of PTPN’s 10 palm oil plantation subsidiaries are already certified as sustainable, but the deal with Unilever will improve farming practices for PTPN’s smallholder supply chain as well.

“We are committed to continuing sustainable palm oil management” PTPN’s operating managing director Erwan Pelawi said. “Palm oil from smallholders also enters our supply chain through PTPN Group’s palm oil mills. Therefore, being able to source from certified smallholder farmers gives us the ability to produce quality and sustainable palm oil products.

“The MoU with Unilever is expected to improve the quality of how smallholder farmers manage palm oil cultivation and will also accelerate the process of sustainable palm oil certification which will in turn provide better benefits for the welfare of oil palm farmers in Indonesia.”

Links to destruction

Malaysian and Indonesian companies dominate global palm oil production, but have been linked to deforestation and slash-and-burn clearance methods that have contributed to the huge forest fires across Indonesia.

Last year, Unilever suspended Indonesian firm Sawit Sumbermas Sarana (SSMS) and its subsidiaries, after an investigation from Chain Reaction Research captured satellite images highlighting ongoing deforestation and peatland clearance.

The Rainforest Action Network (RAN) recently accused Pepsico, Unilever and Nestlé of complicity in the destruction of Sumatra’s Leuser ecosystem – which is meant to be protected under a moratorium. RAN claimed that plantations built on the land were supplying palm oil to major firms.

Elsewhere, Greenpeace claimed that a raft of consumer goods companies, such as PepsiCo, Colgate-Palmolive and Johnson & Johnson, were “letting their customers down” by failing to break the link between the use of palm oil in everyday products and deforestation.

Matt Mace

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie