Did you know that palm oil is one of the most widely used ingredients in packaged products, ranging from food and beverages to cosmetics and cleaning products? Almost half of all packaged products contain palm oil.
And for five decades, global palm oil production has been soaring steadily. According to Grand View Research, the global palm oil market was worth USD 63.7 billion in 2022. It is expected to grow at a 5.1 percent annual rate from 2022 to 2030.
The palm oil challenge: Protecting habitats
However, the rapid expansion of the palm oil market has raised concerns about cutting down some of our planet’s most valuable and vulnerable habitats to make way for plantations.
As a market, Europe has been a vocal advocate for sustainably produced palm oil to tackle these concerns. Even now, they remain the top demand driver for Certified Sustainable Palm Oil.
Mandatory sustainability: An ingredient in Europe’s recipe for a greener world
Europe is set to step up its efforts in promoting sustainably produced palm oil with a new regulation, which requires companies to ensure that their supply chains are deforestation-free to sell their products in the EU market.
While we have yet to learn all the details, there are three requirements for EU buyers. They are the submission of:
- Specific location of production plots
- Checks for deforestation
- Checks for production legality
More regulations are also coming, like the Corporate Sustainability Due Diligence directive. This will ask companies to ensure they are not harming the environment or violating human rights. The EU is also working on a rule to stop products made with forced labour from entering the EU market. More details are coming this year.
Palm oil is perhaps the most prepared commodity to meet these new requirements. The sector has made sizeable headway in tackling deforestation over the past decade, with joint efforts resulting in a substantial reduction in Indonesian palm oil deforestation rates. Additionally, a majority of palm oil imports (93%) are already certified, which is a big step towards meeting the new requirements. While there is still work to be done, the palm oil industry is well-positioned to lead the way in sustainable commodity production and serve as an example for other sectors to follow.
Ahead of the game: How GAR’s ready for new EU rules
Palm oil can be grown responsibly, with consideration for both the environment and the local people. Thanks to our early investments in forest protection and traceability, we are well-equipped to help our customers meet the new requirements.
Our commitment to safeguarding forests dates back to 1997 when we introduced our Zero Burning Policy. Under this policy, we educate, train, and help suppliers and local communities build fire-fighting capabilities to prevent and suppress fires.
In 2011, we went one step further with our Forest Conservation Policy, under which we protect forests that contain High Carbon Stock (HCS) and High Conservation Value (HCV) areas. In 2015, we extended this policy to our third-party supply chain. Thanks to these early efforts, today we protect over 79,000 hectares of conservation areas in our operation areas, support our suppliers in conserving 117,000 hectares of forests, and work with local communities to protect another 43,000 hectares of forests – for a total of 240,000 hectares.
Similarly, we started our traceability journey early in 2014, achieving full Traceability to the Mill in 2015. By the end of 2017, we had taken our traceability efforts to the next level, reaching full Traceability to the Plantation (TTP) for our owned mills. Since then, we have attained 98 percent TTP and are continuing to chase our goal of 100 percent TTP with concrete steps like satellite monitoring, site visits, and having our data verified by 3rd parties to ensure the highest level of transparency and accountability in our supply chain.
Our commitment to combating deforestation is longstanding. As a pioneer in sustainable palm oil production, we have a deep-rooted commitment to protecting forests. And with a proven track record of achieving traceability in our supply chain, we have the expertise and data to support our customers in meeting the new EU requirements.
A chance to shift the story
Delivering sustainability information at a per shipment level under the new EU regulations will be challenging, and the rules are still unclear. But, arguably, these regulations offer the palm oil industry a chance to demonstrate its commitment to deforestation-free supply, sustainability and social responsibility.
Concerted public and private sector efforts have led to an 82 percent drop in Indonesian palm oil deforestation rates over the past decade.
By highlighting their sustainability efforts, palm oil producers can shift the negative perceptions surrounding their industry, prove that palm oil can be produced responsibly, and gain the trust of European consumers.
We always seek opportunities to work with others who share our values. Check out our Product & Services page to collaborate with us to create products that comply with EU regulations.