Palm oil is the most widely consumed, yet one of the most contentious, vegetable oils on the planet. This high-yielding and versatile food commodity pervades half the items on our supermarket shelves, but not without a cost: deforestation and degradation of critical ecosystems, climate change and abuses of labor and human rights.
As demand continues to grow amidst rising affluence, and with the agriculture and forestry, and land use sector already contributing to 24 percent of the world’s greenhouse gas emissions, how we use land for food must become a critical part of the climate solution rather than the problem.
Not enough progress
Current solutions to transform the way we use land for food, and palm oil in particular — despite seeing significant progress — will remain ineffective as long as Asian companies and banks continue to buy and finance unsustainable palm oil.
Parts of the market are forging ahead. Many of the sector’s large brands have sustainable sourcing policies in place, albeit varying in strength. These at least require certification to the most widely adopted certification standard, the Roundtable on Sustainable Palm Oil (RSPO), which is being revised to account for its shortcomings, or go further to include No Deforestation, No Peat and No Exploitation (NDPE) (PDF). Many international banks, too, go beyond RSPO to include NDPE commitments, and investors representing $6.7 trillion have called for the RSPO revisions to catch up to these leading market practices. Financial institutions representing over $81.7 trillion (PDF) are also backing Task Force on Climate-Related Financial Disclosures (TCFD), which calls for the disclosure of forward-looking and science-based climate strategies and has recommendations for the food and beverages sector. Some banks are already rewarding more sustainable companies with loans that tie the cost of capital to ESG ratings — including companies in food supply chains.
While these developments are not without their challenges — for example, how to monitor and enforce NDPE commitments — the arguably bigger threat to the sector is continued leakage of unsustainable palm oil into a secondary market with slacker requirements.
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