Making food systems more sustainable – and thus ensuring a steady supply of the products necessary to food production – is a key factor in the ongoing financial success of food manufacturers, and an issue that is proving that sustainability is an important aspect of an overall business strategy. But how can companies ensure the sustainability of their key ingredients at a time when supply chains are often long and complex, involving multiple tiers of suppliers and ultimately thousands of actors? In July, PepsiCo published its Palm Oil Action Plan Progress Report for 2016, which details the work the company is doing in order see that its sources of palm oil remain sustainable and ensuring the company’s future growth.
PepsiCo is a significant buyer of palm oil and, as a result, has a complex global supply chain that encompasses dozens of suppliers, more than 1,500 mills and tens of thousands of farms and plantations that produce palm fruit. In 2015, PepsiCo launched its Palm Oil Action Plan, committing to help advance the sustainability of the palm oil industry and announcing the company’s commitment to source 100% certified sustainable palm oil.
In the 2016 report, PepsiCo says it can now trace 89% of its palm oil back to the mill level. But getting to the source earlier in the supply chain, before the mill level, is an even greater challenge because there is no common industry definition of traceability among farms and plantations. PepsiCo is collaborating with industry and other stakeholders to address the gap.
Additionally, PepsiCo increased its procurement of physically certified sustainable palm oil to 16% of its volume, using the Roundtable for Sustainable Palm Oil (RSPO) standard; PepsiCo is targeting 30% by the end of 2017. In some local markets, physically certified supply is not currently available, and greater investment in capacity building is required.
Why Focus on Palm Oil?
Because of its crop efficiency and versatility, global demand for palm oil more than doubled from 2005 to 2015, according to a 2015 report from Conservation International and World Wildlife Fund. This has brought unprecedented threats to forests, wildlife, and people where oil palm is grown and harvested and has prompted many companies – including the world’s largest McDonald’s franchisee – to pledge sustainable sourcing of palm oil.
Eight major corporations including McDonald’s and L’Oreal recently joined the newly-expanded supply chain platform of CDP – the non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests – to request information from their key suppliers on how they are managing the risks linked to deforestation. The companies say they are combining their purchasing power to achieve deforestation-free commodity supply chains.
Tracing Ingredients to the Very Source
Thai Union, manufacturer of the Chicken of the Sea tuna brand, is another company committed to being able to track key ingredients back to their very source. In fact, the company has vowed to chase “full digital traceability,” allowing consumers to track their tuna back to the vessel it was caught on and identify the fishing method used.
Last month, Thai Union also agreed to pursue measures that will tackle illegal fishing and overfishing throughout its supply chains.
Outdoor clothing manufacturer Timberland released a clothing line last year with every article in the line made from recycled plastic bottles from Haiti. Working with Thread, the company that provides the recycled material, Timberland monitors and tracks the chain of custody from the time the bottle is picked up off the ground to the time it is made into a product.