Most Palm Oil Companies Can’t Fully Trace Supplies, Survey Shows

(Bloomberg) -- Most palm oil producers, processors and traders can’t fully trace where their supplies came from and should do more to check that what they buy meets their sustainability targets, according to an international conservation charity.

Only 19 of 83 companies said they can trace all of the raw material arriving at their mills back to where it was grown, according to a survey by the Zoological Society of London. No companies that buy from external suppliers could track 100% of their palm oil back to plantations.

“Most companies do not have a full understanding of the origin of all palm oil in their supply chain or a robust monitoring system in place to ensure palm oil meets their sustainability commitments,” the organization said in a statement Tuesday.

Consumers and investors have stepped up scrutiny of the palm oil supply chain amid concerns about the environmental and social impacts of the commodity found in everything from shampoos to biscuits. Global output has jumped roughly 15-fold since 1980, and the boom has been associated with hurting forests and wildlife and displacement of local communities. Indonesia and Malaysia are the top growers.

While two-thirds of companies surveyed have committed to zero deforestation, fully tracing supplies is difficult because the commodity changes hands multiple times before reaching supermarket shelves. The ZSL is calling on the global industry to monitor the entire supply chain and invest in systems to ensure companies comply with their sourcing policies.

Companies were assessed on the public disclosure of their policies, operations and commitments to environmental, social and governance best practices in a bid to increase transparency in the sector, the ZSL said. The appraisal led to an average score of 35%, down from 48% in November 2018.

To contact the reporter on this story: Agnieszka de Sousa in London at atroszkiewic@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Dylan Griffiths

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