P&G enters next stage in ensuring sustainable Palm Oil practices

After 6 months of work with suppliers, farmers, and external stakeholders, P&G taps experts for broader understanding and advice; then meets with top suppliers.

The challenge was clear: trace the untraceable. The landscape: complex. The commitment to make a positive and lasting impact on the palm oil supply chain: unwavering.

And thus set the tone for two days of discussions that brought together some of the world’s leading thinkers and experts in the Palm Oil industry, including scholars, customers, suppliers, and not-for-profit organizations.

Their host was the Procter & Gamble Company (NYSE:PG) which recently set new goals committing to zero deforestation in its palm oil and palm kernel oil supply chains and to helping others do the same.

“Together, we need to find a solution that enables sustainable farming of this highly productive crop while also ensuring that we are protecting the environment from deforestation,” said P&G Vice President of Global Sustainability Len Sauers. “Palm oil is used in a range of products all around the world and its farming supports the livelihood of thousands of small farmers and their families.”

The meetings were part of several activities P&G has spearheaded over the last few months aimed at making a positive change in the palm oil industry.

- In April, the Company set new goals calling for traceability of palm oil and palm kernel oil to supplier mills by December 31, 2015, and to plantations by 2020, while also committing to invest in building sustainable practices with small farmers.

- In May, P&G launched a partnership with the MIT Global SCALE Network’s newest center, Malaysia Institute for Supply Chain Innovation (MISI) — a joint initiative between the Massachusetts Institute of Technology and the government of Malaysia — to conduct a two six-month studies to understand the complex small-farmer supply chain and how best to help local growers.

- Since May, teams of P&G leaders and MISI experts have been working with farmers and suppliers of all sizes to begin establishing traceability within the supply chain, first with larger suppliers and then mapping out longer-term solutions for small farmers.

Session of Experts

Sauers and other P&G leaders first met in an all-day session with nearly a dozen experts on how best to apply what P&G had learned during their in-field work with MISI to help the Company achieving e full traceability across P&G’s palm oil supply chain.

Establishing full traceability means that P&G will know who is growing the Palm fruits from which the palm kernel oil it actually buys is derived. This is critical for the Company to be certain that it is not contributing to deforestation. It is also key in identify ways to improve the productivity and preserve the livelihood of the many small farmers who grow and depend on the crop. But, it also is a complex task that no other company has been able to accomplish on a large scale.

Among those attending the workshop of experts:

- David McLaughlin of the World Wildlife Fund
- Dr. Asad Ata of MISI
- Palaniappan Swaminathan of Felda Global Ventures -- initially operated as the commercial arm of Malaysia Federal Land Development Authority (FELDA ) and now the world’s largest Crude Palm Oil producer and the second largest Malaysian palm oil refiner
- Dr. Reza Azmi of Wild Asia, a not-for-profit focused on shaping sustainable business practices in developing markets
- Marieke Leegwater of Solidaridad, an international organization with more than 45 years of global experience facilitating socially responsible, ecologically sound, and profitable supply chains
- Rikke Netterstrom of Helikonia, an Asia group of sustainability advisors

The meeting helped frame the complex challenges faced and identified valuable insights on how to tackle them.

Supplier Connection

P&G next met in a day-long session in Malaysia with 10 of its largest palm oil and palm derivative suppliers. The aim was twofold:

- For P&G to better understand the challenges and opportunities faced by its top suppliers
- For P&G suppliers to understand P&G’s new palm oil commitments and time-bound goals.

“It was an intense and highly passionate two days of meetings, discussions and brainstorming,” Sauers said. “Building sustainable behavior across the palm oil supply chain is highly complex challenge. We ae starting with our own supply chains, but we hope that our work can also help others and that together we can build sustainable practices that end deforestation.”

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