Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Lipsticks, Burgers, Orangutans and Climate Change


By Raminder Chowdhary

Countless agricultural commodities form the building blocks of thousands of products that are manufactured and traded globally by corporations. Over the past decades, the demand for agricultural produce for feed, fuel and food purposes has been a key driver of deforestation and responsible for over 50 percent of it.

Forests cover around 30 percent of the planet’s surface, provide habitat for over 80 percent of the earth’s terrestrial biodiversity, are the source of livelihood to over 1.6 billion people, and provide unrecognized ecosystem services for our food, energy, climate and water security. Approximately 15 percent of all greenhouse gas emissions are caused by deforestation in the tropics and subtropics – equivalent to the global transport sector.

Yet, we are losing forests at an unprecedented pace. Over the past 50 years, over half of the natural forest cover of our planet has been lost.

Enter the global corporations: The “big four” commodities -- palm oil, soy, beef and paper/pulp -- are the building blocks of countless products traded globally. Conversion of forests to agricultural commodity plantations has been the largest single cause of deforestation in recent years. As demand for these commodities grows, we can expect global agricultural cropland to expand by 42 percent by 2050. This demand cannot be met without incurring significant business and environmental risk. Complex global supply chains are generating positive forest footprints leading to the creation of unexpected reputational, operational and valuation risks for most corporations.

Not convinced? Consider the scale of impact of a single corporation. Take the case of Wilmar International. The company is an agri-business conglomerate and one of the largest palm oil cultivators. It is a discloser to the CDP’s forests program and hence committed to zero deforestation. If it delivers on its commitments, the expected savings could be more than 1.5 gigatons of carbon dioxide by 2020 – roughly equivalent to the combined annual carbon emissions of Central and South America from energy consumption.

Now that I have your attention, let us have a closer look at the biggest of the big four - palm oil: an edible oil used globally and found in a wide variety of products including chocolate, soap, shampoos, cookies and cosmetics. Other industries where it is used are livestock, meat sector, and biofuels. Some of the best palm oil plantations can generate up to 10 times more oil per unit area than soybean, rapeseed or sunflower. Hundreds of thousands of small farmers depend on palm oil for their livelihoods.

More than 50 million tons of palm oil is produced annually, and over 85 percent comes from Malaysia and Indonesia. Palm oil production is also rapidly expanding into other areas of the world, including western and central Africa, Latin America, and Papua New Guinea. India and China are the largest importers. So much for facts.

The problem

The growth in demand for palm oil is fueling deforestation and depletion of peatlands. A study by Carlson et al. (2012) found that deforestation for development of oil palm plantations in Indonesian Borneo is becoming a globally significant source of CO2 emissions. Cutting down or burning tropical rain forests to plant oil palm releases large quantities of stored carbon. Many of Indonesia’s national parks have suffered deforestation due to illegal logging and palm oil plantations. Palm oil plantations have replaced the habitat of many endangered species, including primates such as the orangutan.

Several reports from Greenpeace from 2007 onwards (Cooking The Climate, Frying The Forest and Palm Oil's New Frontier) and a 2009 report from Environmental Investigation Agency (EIA) titled Permitting Crime have highlighted the problems of land grabbing, destruction of peatlands and rain forests, exploitation of communities, etc.

We the consumers need to realize that leading global brands in fast foods, packaged foods and personal care are using a commodity that is causing the destruction of rain forests and peatlands. Before you react to this, the great news is that palm oil can be produced sustainably when large corporations commit to deforestation-free palm oil in their complex supply chains. Distressing is to know that many companies are lagging far behind. How can we as consumers differentiate?

The Union of Concerned Scientists (UCS) prints an annual Palm Oil Scorecard evaluating the commitments made by leading corporations. The 2015 scorecard raises an important question: Why are so many of the world’s biggest brands still using unsustainably-produced palm oil and contributing to deforestation and peatland destruction? 

Guess which global corporations had no commitment to using certified sustainable palm oil: Target, Costco, Wendy’s, Domino's, Walgreens, Dairy Queen, etc. (Interestingly, after the report we saw new commitments rolling in at an unprecedented pace.) Keep in mind, these are commitments and we have to see how these translate into actions.

A 2013 Report by WWF assessed 130 retailers, food service companies and manufacturers from Europe, Japan, U.S., India and Australia. The findings were astounding and the report named and shamed a large number of global buyers. Of the 130 companies surveyed, fewer than half purchase palm oil that meets the social and environmental standards set by the the Roundtable for Sustainable Palm Oil (RSPO), a voluntary scheme that now covers about 40 percent of palm oil production. This was quickly followed up with a punchy short film titled "Unseen." The report questioned that with certified palm oil so easy to source, why are so many companies failing to hit their own sustainability targets?

The report identified many buyers in the 100 percent club. Unilever, for instance, one of the largest palm oil buyers in the world and a founding member of RSPO, buys all of its palm oil from certified providers. Twenty-four of the 78 manufacturers in the study do likewise. U.K. supermarket brands Sainsbury, Tesco, Waitrose, Marks & Spencer and Asda feature in a similar leading list of 21 retailers that buy 100 percent certified.

Then there were the laggards. A second tier of companies like Procter & Gamble and McDonald's that bought just 13 percent of their palm oil from certified sources. At 17 percent, PepsiCo is another big name on the laggard list.

What needs to be done

  • Palm oil plantation companies: Those managing plantations need to ensure they are improving yields from existing plantations and expanding only into areas with low carbon storage

  • Companies in palm oil related business need to ensure that their supply chains are not responsible for deforestation and peatland depletion. Buy from RSPO certified sources.

  • Downstream retailers and consumers can play a crucial part in ensuring that supply chains are deforestation free. Insist on product labeling that is clear on whether certified sustainable palm oil has been used.

  • Most governments need to enact product labeling laws ensuring that manufacturers are not concealing ingredients by using generic titles. Like “vegetable oil” for palm oil.
Image credits: 1) Flickr/chem7 2) FAO 2013

Raminder Chowdhary: After earning two Master’s Degrees in Economics and Business Admn., from Delhi University & UT - Austin, I worked around the World for various MNC’s for 20+ years as a supply chain specialist. It was time to change tracks and I set up One Earth Foundation - an NGO focusing on conservation of natural eco-systems, preservation of traditional wisdom and environmental education. I am a regular speaker on various regional and national forums promoting the need for higher levels of corporate participation in social and environmental issues facing us today. I have had the opportunity to initiate and successfully implement numerous projects in the sectors of TK & TCE preservation, special needs groups, and livelihood challenges for indigenous communities, water, large scale forest and lakes stewardship drives and engaging students in various ecological initiatives.

3p Contributor

TriplePundit has published articles from over 1000 contributors. If you'd like to be a guest author, please get in touch!

Read more stories by 3p Contributor

More stories from Energy & Environment