Cargill claims that 96% of its volume is already traceable to mills and 55% is traceable back to plantations, and the ingredient giant is aiming for a palm oil supply chain that is 100% traceable, transparent and sustainable by 2020.
According to its own progress report, in 2017 it made advancements in the four components of its implementation plan: traceability, supplier engagement, sustainable plantations and smallholder programs.
This is an internal commitment, and the company is not seeking to be 100% certified by the Roundtable on Sustainable Palm Oil (RSPO), although some of
its palm oil is RSPO-certified. “When we talk about fully traceable it’s not the means to an end but rather the end we’re looking for,” said John Hartmann, Cargill’s global sustainability director for edible oils. “We want to have sufficient traceability to be able to have confidence in the statements we make about our own supply chain.”
“As a fundamental approach, our objective is to transition the entire industry into a sustainable one,” he told FoodNavigator. “This is not only a Cargill objective but also of our suppliers and customers – and in the commercial supply chain, our competitors, customers and suppliers are sometimes the same organisation.
“In building up this transformation we are all reaching out into our supply chains to influence production practices.”
The supplier has a large foothold in the palm industry, owning 19 refineries, 11 mills and five plantations. It also works with just under 22,000 smallholders with plantations of less than 25 hectares and 1,558 third party mills.
Ensuring best practice in such a vast and complex supply chain is therefore no easy task, and in November last year, it announced it had suspended sourcing oil from Reforestadora de Palmas del Petén, S.A (REPSA) after the Guatemalan supplier failed to meet its sustainability standards.
It therefore works with a variety of other stakeholders and NGOs to help implement its policy.
One of these collaborative partnerships is with the World Resources Institute’s Global Forest Watch, and the supplier is investing in the satellite mapping tool, Global Forest Watch Pro.
Scheduled to be rolled out in 2018, this tool will provide a management system to track issues across the company’s supply chain in near-real-time and address concerns in accordance with its grievance procedure.
It also counts national certification schemes, such as Malaysian Certified Palm Oil (MSPO) and Indonesian Certified Palm Oil (ISPO), as ways of measuring the sustainability impact of its operations in those countries (which, together, account for around 85% of the world's palm oil production).
“I accept that people perceive them as being less ambitious but I would qualify that," said Hartmann. "Both MSPO and ISPO origins are from the government so in that sense, they are a collection of government regulations and that serves as a very important point that we build on. They are important for parts of the supply chain where producers would not be otherwise be inclined to embrace sustainability.”
Bad for business
Addressing sustainability concerns associated with palm oil - deforestation, high-value habitat loss, the destruction of biodiversity and child labour issues, for instance - is an important business case, he said.
“Challenges in the palm oil sector - those things represent an erosion of demand and that’s not good for anyone.”
Hartmann said the public ousting of REPSA had sparked interest from food manufacturers wanting to know if the Guatamalan company supplied them oil, and this awareness of the issues in the palm oil supply chain is translating into an increase in demand for sustainable palm oil globally.
“It all comes down to: ‘What do we need to do as a supplier so manufacturers can make statements about their sustainability progress on their products?’”
“Some needs are met with certification and finding the right volumes of certified product. In some cases, because we have our own plantations, that’s the solution and they are reassured by that.”
“Companies, especially branded companies, are concerned about their products and even within markets where you wouldn’t expect discussions on sustainability, such as Indonesia. It is both the largest producer and consumer of palm oil and for different reasons, issues of sustainability keep gaining attention.”
Lessons from soy, cocoa
As one of the biggest food companies in the world and massive global footprint, Hartmann said having such a hugely varied portfolio of products means it can in some cases draw lessons from different business units.
“We can explore and identify gaps together. Some approaches can be shared, we can pass learning on from soy into cocoa, for instance.
“Certain supply chains get a lot of attention and critical opinions, and palm is definitely one. Soy, cocoa and pulp and paper for packaging are also primary ones.
“Having said that, Cargill’s mission statement is to nourish the world sustainably so this goes beyond reacting to a customer request or dealing with a grievance from a civil society group,” he added.