Palm oil is harvested from palm tree farms.Palm oil is found in over half of the products on supermarket shelves – from face cream to toothpaste, cleaning products and candles, to snack foods, cookies, frostings and breads. Unlike partially hydrogenated vegetable oil, palm oil does not contain trans fats. The refined oils are neutral in flavor and serve as a versatile ingredient for many formulations. As the highest yielding oil crop, it is inexpensive to produce; however, we may be underestimating the true cost of this ingredient.

Palm oil production increased from about 25 MMT to over 65 MMT from 2001 to 2015, an increase of 260%.¹ The escalation in demand is impacting the areas where palm oil is grown leading to rainforest deforestation, destruction of peatlands, elimination of crucial habitat, and threatening the lives of indigenous people and even our climate.³

Public Opinion of Sustainable Products

Many commercial and small scale bakeries don’t yet realize the negative attitude millennial consumers have about products that destroy the environment. These consumers read labels and understand the need for sustainably sourced ingredients. Over the last two years, major consumer goods companies including Mars, Kellogg’s, Nestle and General Mills have publicly announced their commitments to source sustainable palm oil.⁴

Sourcing certified sustainable palm oil (CSPO) can be complex. You must evaluate not only the production of the palm oil, but also the integrity of the product throughout the supply chain. One of the most recognizable certifications for CSPO is the Roundtable on Sustainable Palm Oil (RSPO), a not-for-profit organization which developed a set of social and environmental criteria for companies producing and supplying palm oil.⁴

There are four different levels of supply chain certification through RSPO:

1. Identity Preserved (IP) – RSPO’s most stringent supply chain certification.  Palm oil from a single identifiable certified source is kept separate from ordinary palm oil throughout the supply chain.²
2. Segregated – Sustainable palm oil from different certified sources is kept separate from ordinary palm oil throughout the supply chain.²
3. Mass Balance (MB) – Sustainable palm oil from certified sources is mixed with ordinary palm oil throughout the supply chain.²
4. RSPO Credits / Book and Claim – The supply chain is not monitored for the presence of sustainable palm oil. Manufacturers and retailers can buy Credits from RSPO-certified growers, crushers and independent smallholders.²

Making the Transition

You can begin transitioning your palm oil to CSPO with these steps:

Step 1: Understand your palm oil footprint and supply chain

Step 2: Understand sustainability issues

Step 3: Understand costs and premiums

Step 4: Develop your action plan

The cost of palm oil in your baked goods should go beyond your percent margins into the broader cost of creating a sustainable supply chain, a renewable resource that benefits the environment and farmers. There really is nothing more disappointing than falling in love with a well-crafted baked good only to learn that the brand you love has not considered the sustainability of its palm oil.

Using CSPO in your formula lets consumers know you are socially responsible. If your company has not yet received questions from customers about palm oil sourcing, maybe it’s time to start the conversation.

References

1. List, Gary. “Palm oil.” Lipid Technology 27.9 (2015).
2. “RSPO Supply Chains.” RSPO – Roundtable on Sustainable Palm Oil. www.rspo.org/certification/supply-chains. Accessed 08 Mar. 2017.
3. Thomas, Melissa, Don Grubba, David McLaughlin, and John Buchanan. “Sustainable Sourcing Guide for Palm Oil Users a Practical Handbook for US Consumer Goods and Retail Companies.” Conservation.org. Conservation International and WWF, May 2015. www.conservation.org/publications/Documents/CI_Palm-Oil-Sourcing-Guide.pdf. Accessed 8 Mar. 2017.
4. Lofgren, Tonya “RE: Organic Palm Oil.” Received by Katie Jones, 06 March 2017.