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Noting and Perpetuating More Responsible Sourcing of Palm Oil

February, 2023

By: Girish Deshpande, Global Sustainability Director

As the pace of development accelerated and new palm plantations and smallholdings were established, deforestation rates rose, especially in Indonesia, peaking there in the mid-2010s. However, both in Indonesia (the world’s largest producer of oil palm) and Malaysia, “primary forest loss has declined significantly in recent years,” as the World Resources Institute (WRI) has shared (based on new University of Maryland data available on Global Forest Watch).

In fact, according to WRI, “The rate of primary forest loss in Indonesia continued to decline in 2021 for the fifth straight year, falling by 25% compared to 2020” and this rapid decrease “should be celebrated as a massive achievement that didn’t seem likely just five years ago.”

What’s the reason for the decline? There may be no single “magic bullet” answer, but in terms of a key contributing factor, experts have pointed to the role served by the setting of No Deforestation, No Development on Peat, and No Exploitation (NDPE) policies as part of purchasing criteria by downstream users.

However, there remains a need to share, more broadly, the message of the benefits of sustainable, NDPE-compliant palm – both as individual companies and together in partnership with the Roundtable for Sustainable Palm Oil (RSPO).

P&G first made our NDPE commitment in 2015 and consistently has strengthened that commitment, with the most recent update in 2021. Our NDPE commitment is based on the RSPO Principles and Criteria 2018 and requires all direct suppliers to meet specific expectations. P&G brands use the RSPO certification as their compliance verification mechanism and since 2021, P&G also uses RSPO certified palm oil usage (including palm oil itself, palm kernel oil and their derivatives) in our brands.

The work to ensure responsible sourcing of palm oil isn’t finished and P&G continues to hold suppliers and their third parties accountable through a compliance monitoring process wherein a service provider, Earthqualizer, provides satellite data on potential noncompliance relating to deforestation, for investigation through the P&G Forest Grievance Process. Outcomes and actions are reported transparently in P&G’s Palm Grievance Tracker.

The key challenge now is focused less on large-scale deforestation by huge plantation companies and more on lesser-scale encroachment, such has been associated with smallholder activity, often unknowingly. The solutions required are different, but again, call for a multi-stakeholder approach and engagement: NGOs, local governments and direct suppliers coming together to educate smallholders and help improve the farmers’ livelihoods in ways that are sustainable over the long term – for example, the application of prudent agricultural practices to deliver better yields from the lands they’re already harvesting.

P&G will continue to invest in this approach with our smallholder education and professional development program in Johor, Malaysia, and our partnership with the RIMBA Collective. Our sustainability initiatives are integral components in our ongoing commitment to being a Force for Good for people and the planet.