Our contribution to the sustainable cultivation of palm oil

Our understanding of sustainability and corporate social responsibility extends to the sustainable management of raw materials and the conservation of natural resources. The use of renewable raw materials in particular, such as palm oil, requires close consideration to be given not only to the economic consequences but also, and especially, to the ecological and social impacts. Our vision is that, in the future, whenever palm oil and palm kernel oil are used in our products, this oil should be derived from sustainably cultivated sources. Our aim is that, from 2015 onwards, all of the palm oil and palm kernel oil supplied in the form of raw materials for our products should be covered throughout by RSPO certificates for sustainably cultivated palm oil.

Background: The oil palm and worldwide cultivation of palm oil

Photo Palm Tree

Compared to other oil crops, the oil palm produces high yields, is easy to cultivate and bears fruit all year round, which accounts for the fact that it now takes first place among the oil-producing plants cultivated around the world. The fruit of the oil palm yields two kinds of oil: palm oil and palm kernel oil. Most of the world’s palm oil production, about 80 percent, is used in the food industry, e.g. as a vegetable fat in margarine and confectionary. Palm oil is also suitable for the production of biofuels as an alternative to mineral oils.

In contrast to palm oil, palm kernel oil is only used to a very limited extent in the food industry. It is employed in the oleochemical industry as a base material for the production of surfactants (washing active substances) for laundry detergents, household cleaners and cosmetics.

Whereas the world market for palm oil amounted to 45.8 million metric tons in 2009, the market for palm kernel oil had a volume of only 5.5 million metric tons.

Photo coconut

The use of palm kernel oil by Henkel – responsibility across the entire value chain

There are only three starting materials that can be used to produce surfactants, i.e. washing active substances, for laundry detergents, household cleaners and cosmetics. These are mineral oil, coconut oil and the oil of palm kernels. The vegetable oils produced in Central Europe are technically unsuitable for surfactant production.

One of the key objectives of our research and development is to find substitutes for ingredients that are based on mineral oil. The reasons for this include the limited availability of mineral oil, climate protection, and the ecological risks associated with the extraction of mineral oil. Before making any decision, the ecological, economic and social aspects of each particular alternative must always be considered as part of the overall appraisal.

The surfactant ingredients used in our laundry detergents and household cleaners are derived to about 30 percent from renewable raw materials. Our products therefore play a leading role within the laundry detergent and household cleaner industry. However, Henkel does not manufacture surfactants itself, but rather purchases them from raw material suppliers on the world market. The palm kernel oil and palm oil that Henkel utilizes indirectly through its suppliers of surfactants or other raw materials account for less than 0.2 percent of the world total.

Our ambition is to operate sustainably and in a socially responsible manner throughout the entire value chain. Because of this, we take the problems that can occur through extensive cultivation of palm oil plantations very seriously and, together with a number of different stakeholders as our partners, we work toward sustainable and thus ecologically and socially responsible palm oil production.

Our vision is that, in the future, whenever palm oil and palm kernel oil are used in our products, this oil should be derived from sustainably cultivated sources. Our aim is that, from 2015 onwards, all of the palm oil and palm kernel oil supplied in the form of raw materials for our products should be covered throughout by RSPO certificates for sustainably cultivated palm oil. 

Henkel in dialogue: Round Table on Sustainable Palm Oil (RSPO) and Coalition on Sustainable Palm Oil (POC)

Cultivation of the oil palm has soared in recent years. This has resulted in problems due to the clearing of rainforests and draining of peat bogs, etc., to gain land for cultivation. Renewable raw materials can therefore only make a positive contribution to sustainability aspects such as climate protection if the conditions under which the crops are cultivated are ecologically compatible and socially responsible. For this reason, Henkel actively supports the implementation of sustainability criteria in the supply chain of palm oil and palm kernel oil.

To achieve this goal together with our partners, Henkel has been participating in the Round Table on Sustainable Palm Oil (RSPO) ever since 2003. The RSPO arose out of an initiative by the World Wide Fund for Nature (WWF) and a number of interested representatives of the business sector, aimed at finding suitable ways of cultivating palm oil sustainably and combating the exhaustive cultivation of rainforests and the destruction of wetlands, especially in Indonesia. Initially, in 2002, the initiative took the form of informal cooperation between a number of companies, trade associations and the WWF. In August 2003, the RSPO was officially established in Kuala Lumpur, Malaysia. The establishment meeting was attended by 200 participants from 16 countries – including Henkel. Today (mid 2010) the initiative has more than 389 members, including oil palm growers, producers of consumer products, retailers, banks, investors and non-governmental organizations (NGOs). The initiative is headquartered in Zürich and the secretariat is located in Kuala Lumpur.

The aim of the RSPO is to advance the sustainable production of palm oil and prevent exhaustive cultivation of rainforests. At the fifth Round Table (RT5), it was decided to build up a certification and marketing model for palm oil from sustainable cultivation. A primary objective was that the certification model should be flexible and take account of the different conditions under which palm oil is produced, processed and traded. Once this had been approved, Henkel became an official member of the RSPO in April 2008.

A further, decisive step was the establishment of the Coalition on Sustainable Palm Oil (POC), which Henkel joined in October 2009. The Coalition on Sustainable Palm Oil includes representatives from globally operating companies in the consumer goods and food industry as well as from non-governmental organizations such as Greenpeace, Oxfam, WWF and others. Their common goal is to support a moratorium on the destructive clearing of rainforests, while the participating companies commit to shift their sourcing of palm oil entirely to sustainably managed sources by agreed target dates. The intention thereby is to promote the concept of sustainable palm oil cultivation even more vigorously than before.

Certification model for palm oil and palm kernel oil from sustainable cultivation

As palm oil is purchased on the world market rather than directly from the producers, the RSPO has established a certification procedure and three marketing models for palm oil from sustainably cultivated palm oil plantations: segregation (physical separation of sustainable and normal palm oil streams), mass balance (controlled mixing of sustainable and “normal” palm oil), and the Book & Claim system.

While the segregation of palm oil – the main product – enables the raw material to be tracked directly from the plantation until it is used in an end product, in the short and medium term it is scarcely implementable in the supply chain from palm kernel to surfactant. Although the segregation of sustainably cultivated palm kernel oil is possible, it requires considerable investment in new pipelines, transport resources (tanker ships, trucks, rail cars) and silos, involving a lot of time and money. Henkel has therefore decided to focus on the Book & Claim system. This separates the certificates for sustainably produced palm oil and palm kernel oil from the physical product streams. In Henkel’s view, the establishment of the Book & Claim system for palm kernel oil offers excellent opportunities for creating significant incentives for all participating market players to support sustainable cultivation of palm oil and palm kernel oil, so that new markets can open up for sustainable palm kernel oil.

How does the Book & Claim system work?

The Book & Claim system is based on the trading of certificates that stand for a corresponding quantity of sustainably produced palm oil and palm kernel oil. The certificates are traded separately from the physical product streams. A familiar example of such a certificate trade is the eco-electricity that is traded in Germany in accordance with similar criteria. The system is relatively simple. Plantations that satisfy the strict conditions of the RSPO – including the precondition that rainforest should no longer be extensively cleared – receive certificates for their sustainably produced palm oil and palm kernel oil. A special platform has been established for trade in these certificates. This is run by the GreenPalm company. On the GreenPalm trading platform, the producers of palm oil register how much of their RSPO-audited and certified palm oil they wish to sell. On the basis of this registration, the certificates can then be traded on the market. By purchasing certificates, purchasers can document that an equivalent quantity of sustainably produced palm oil has entered the supply chain. The certificates give smaller producers, who are not involved in international trade, a financial incentive to produce sustainably. Henkel believes that the Book & Claim system currently offers the best prospects for sustainable palm oil and palm kernel oil cultivation – provided the processes are traceable and transparent.

Palm kernel oil certificates for Terra laundry detergents and household cleaners

To advance and establish the Book & Claim system for palm kernel oil, Henkel became the world’s first company to make use of the extended palm oil certification system which had been expanded to include palm kernel oil. Henkel was therefore the first company to ensure, in October 2008, that palm kernel oil from sustainably cultivated oil palms could enter the supply chain for the production of surfactants. This became possible after the RSPO defined criteria for sustainable palm oil cultivation and the first palm oil plantation was approved as satisfying these criteria.

Since then we have initiated further steps toward achieving our aim. Our laundry detergents Le Chat Eco Efficacité in France and Persil Eco Power in Belgium, together with our Ecocert-certified cosmetics products, have also been covered by corresponding palm kernel oil certificates since 2010

My Report
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