The company – a division of Associated British Foods and the owner of other bread brands, including Burgen, Allinson and Sunblest – is one of the 'Big Three' UK plant bakers - along with Hovis (The Gore Group/Premier Foods) and Warburtons.
Allied Bakeries said its sourcing shift meant that the commodities are now wholly sourced through segregation (SG) or mass balance (MB), rather than so-called ‘Book & Claim’.
But the baker's ultimate aim remains 100% SG, which it describes as "the strictest standard of sourcing sustainable RSPO certified palm oil".
Palm oil unpacked...
Let's unpack these definitions a little. SG means certified palm oil, physically separated from non-certified palm oil from mill to end user; MB allows traders and refiners to mix certified with non-certified oil to reduce the cost of separation, but they can only the same amount of certified palm oil - drawn from mixed oils - that they originally bought as certified.
Finally, Book & Claim/Green Palm is essentially a certificate trading system separate from the physical palm oil trade. Manufacturers purchase palm oil from a supplier with a certificate for every tonne used - a payment from each certificate goes towards production of certified sustainable palm oil (CSPO).
As a member of the Roundtable on Sustainable Palm Oil or RSPO (a not-for-profit that develops and implements standards for sustainable palm oil) since 2010, Allied Bakeries said it had made "considerable progress" in sourcing - with 90% of its palm usage now SG and 10% MB.
Nicky Gillett, nutrition and health development manager at Allied Bakeries, said the company was proud of the progress it has made so far on palm oil targets and would continue to progress towards full segregation. "While Book & Claim is beneficial, we believe it's a stepping stone not a final solution," she said.
Asked about a timescale for full SG, an Allied Bakeries spokesperson told BakeryandSnacks.com: "As a business we are targeting 2020, but this is reliant on some of our ingredients becoming available as SG products within that timeframe."
According to the WWF, the advantage of Book & Claim system is that since no paper trail or physical separation of oil along the supply chain is needed, it is a much cheaper option for companies. "It also means that companies that are using derivatives of palm oil that are not yet available as CSPO can still buy certificates to support the production of CSPO," the WWF states.
Quizzed on the costs of sourcing wholly via SG and MB, the spokesperson said: "There are often cost implications to moving to sustainable ingredients but both Book & Claim and the physical supply chain options require audits and processes to demonstrate that we are complying with the rules – these days this is just part of being a responsible business."
"We know sourcing sustainable palm oil matters to our customers and leads to a sustainable global farming system and environment." (Nicky Gillett, nutrition and health development manager at Allied Bakeries)
Gillett said sourcing sustainable palm oil was extremely important to Allied Bakeries, "because we know it matters to our customers and leads to a sustainable global farming system and environment".
"Our aim is to continue to working closely with our suppliers and the industry to ensure the message about using sustainably sourced palm oil is taken on board across our whole supply chain," she added.
Do mainstream consumers really care though? They do, according to Allied's spokesperson who told us: "Our care line gives us the opportunity to hear what our customers think and they want to know that we are doing the right thing with regards to our palm oil use."
However, this consumer care doesn't seem to translate into preparedness to pay a few cents (or pennies) extra for a loaf of bread. "We don’t control retail pricing but we know from research that while consumers are very concerned about the environment they are not prepared to pay more for this reassurance," the spokesperson said.
What are Allied Bakeries' rivals doing?
Asked where Allied Bakeries stands versus its peers with the move towards sustainable sourcing, the spokesperson said: "We can’t comment on our competitors activity, but there is a strong drive by RSPO for manufacturers to use the sustainable palm oil being produced. The Annual Communication of Progress (ACOP) reports ask for information on member company plans to move to physical supply chain solutions."
Premier Foods (which has just sold a 51% stake in Hovis to US private equity firm The Gores Group) says on its website that it is committed to sourcing 100% RSPO certified sustainable palm oil by 2015 using either a segregated or mass balance supply chain, and hoped to bring that target forward.
A spokesperson for Hovis told this website on 5/2/15: “We’re excited to say that we are very much on track to hitting our goal of moving to complete certified sustainable palm oil this year across all of our products.”
The company's online Palm Oil Policy, evidently written a few years ago, reads: "During 2011, we are committed to achieving 100% sustainable sourcing for the palm oil and palm oil stearin we use directly in baking, and by 2015, aim to have achieved 100% sustainable sourcing for palm oils used in added ingredients and lubricants."
The UK-based Federation of Bakers did not respond to a request for comment.
*10/2/15: Story updated with comment from Hovis.