Cargill’s target to eliminate deforestation from its palm oil supplies remains on track
A key environmental target is in sight for Cargill, with plans to track and eliminate deforestation within all its commercial palm concessions in third-party supply chain by the end of 2020 remain on course. Neill Barston reports.
According to the global food and agriculture group’s latest annual palm sustainability report, its progress towards traceability targets remains fully on target, which will influence its strategy over the next five years.
As the business noted, its study reveals ongoing work and commitment with 22,000 smallholder palm farmers across more than 10 countries to deliver sustainable palm oil to hundreds of customers worldwide. A total of 95% of supplies are from third parties.
The key ingredient’s use within confectionery, and other food segments, has proved challenging, with environmental groups raising concerns regarding degrading of forests, as well as impact on rare animal species. This has lead to key reports being produced, such as the Palm Oil Buyers Scorecard from the WWF, examining processes relating to the sector – which sector analysts have maintained remains important to the sector, providing sustainable sources are fully monitored.
Globally, Cargill operates and manages 17 refineries, nine palm oil mills, three kernel crushing plants, and five palm plantations. The company’s south east Asia plantations in South Sumatra and West Kalimantan, Indonesia, work with nearly 22,000 smallholder farmers (who have plantations of two hectares each). More than 95% of Cargill’s palm oil volume comes from third parties (about 1,277 mills).
“Cargill is proud to have a role in driving transformational change across the palm oil sector,” said John Hartmann, global sustainability lead for Cargill’s palm oil operations. “This progress is only made possible through the tremendous efforts of farmer producers, palm plantation companies, our customers, industry peers and our team focused on achieving a common vision of palm oil sustainability.”
Speaking in the report, he acknowledged that there remains challenges in its processes, which it will continue to build upon with its global operations within the palm sector.
He added: “In some areas, such as traceability and direct supplier performance, we have made great strides toward meeting our 2020 goals. In the fourth quarter of 2019, for example, 93% of our palm oil volume globally was covered by NDPE policies and 58% of our direct traders/refiners had put in place a credible NDPE policy implementation plan to cover their supply chains.
In other areas, such as our ability to engage with indirect suppliers to achieve NDPE compliance, we realise the need to adjust our approach to accommodate limitations of commercial relationships. We have revised our strategy accordingly and are now working through our direct suppliers, providing them the training and tools they need to motivate improvements within their own supplier network.”
Progress in 2019
Cargill is on track to eliminate deforestation in all commercial palm concessions in our third-party supply chain by the end of 2020. In the fourth quarter of 2019, 93% of the company’s palm oil volume globally was covered by “No Deforestation, No Peat and No Exploitation” (NDPE) policies and 58% of direct traders/refiners had put in place a credible NDPE implementation plan to cover their supply chains.
Cargill has established a clear and transparent process for managing and resolving NDPE grievances. To provide transparency, we disclose grievances that fall outside the scope of our procedure.
The company also continues to work toward achieving traceability of palm supplies back to the plantation in high-risk landscapes by the end of 2020.
The report also outlines Cargill’s progress across priority focus areas including traceability, grievances, supplier engagement, landscape projects, smallholders and Cargill plantations.
Looking Ahead: 2025 Strategy
Sustainable supply chains is an ongoing commitment across Cargill’s supply chains and requires consistent, focused efforts to make sustained progress. As Cargill looks to the next five years, sustainability efforts will expand to:
Ensure compliance: Work with direct suppliers to verify their compliance with Cargill’s sustainable palm policy and continue to support those who have not yet reached this milestone to be accountable to their action plans. Cargill will work with them to better facilitate engagement of their supply chains to drive transformation, particularly at the fresh-fruit bunch dealer and smallholder levels, through tools and training. Suppliers will be transferred to the grievance process if they are not making sufficient progress against milestones in their action plans.
Address leakage: Aim to address the “leakage market” by working with suspended suppliers where possible on re-engagement plans to prevent growth of unsustainable practices and drive progress on sustainable sourcing through collaborations in Indonesia, Malaysia, India and China.
Support smallholders: Pilot and scale ‘production-protection models’ with smallholders and communities to prevent deforestation outside concessions and ensure improvement of livelihoods.
Collaborate with peers: Pre-competitively collaborate with industry peers through ongoing and new landscape programs, with a focus on smallholder productivity, conservation, land rights and mill supply shed mapping.
Protect human rights: Partner with labor experts to review and improve Cargill’s human rights due diligence, monitoring and remediation. Working with industry peers through the Decent Rural Living Initiative, Cargill will also look to improve the livelihoods and conditions of workers and their families.
Align with governments: Initiate dialogues with governments to raise awareness around activities, align with district or state level action plans and support strengthening of national certifications and enforcement of regulations to create an enabling environment for better practices.
Improve transparency: Cargill will increase transparency and progress against NDPE commitments through an innovative, interactive technology platform that provides greater insight into the palm supply chain.