Kraft Heinz Releases New Palm Oil Policy, But Some NGOs Are Skeptical

On Tuesday, the $26 billion food giant Kraft Heinz announced a commitment to create a more sustainable supply chain -- in part by revamping its palm oil policy. As part of its vision dubbed Grow a Better World, the company pledged to source palm oil in an “ethical, transparent and sustainable matter,” saying 100 percent of the ingredient would be certified by the Roundtable on Sustainable Palm Oil (RSPO).

Kraft Heinz, which includes brands such as Planters, Oscar Meyer, Velveeta and Jell-O, also said it would work with its palm oil suppliers to improve traceability, as well as stamp out child labor within its supply chain.

While the company claims to use a small amount of palm oil across its global operations, it said it shares the food industry’s “collective concern” about the impact the ingredient has on the environment and human rights.

“We are committed to achieving a sustainable and traceable palm oil supply chain as one aspect of the aggressive CSR goals and initiatives we announced today," a Kraft Heinz spokesperson told TriplePundit in an email. Other corporate social responsibility (CSR) initiatives announced on Tuesday include animal welfare commitments and a pledge to donate 1 billion meals to those in need. The company plans to report on its progress "through bi-annual CSR reporting,” the spokesperson said.

This shift at Kraft Heinz comes as NGOs have become even vocal about the effects palm oil exacts on communities worldwide, particularly in the top two producers, Indonesia and Malaysia. As the industry seeks new regions in which to cultivate this product, including Africa, organizations such as the Rainforest Action Network (RAN) and Mighty Earth criticized the sector for an overall lack of transparency, disregard for human rights and continued deforestation. To its credit, the RSPO (of which Kraft Heinz is a member) has been successful in increasing global supplies of sustainable palm oil.

Critics, however, are quick to point out environmental degradation in remote areas of Indonesia as an example of how the industry still has a lot of work ahead. Organizations such as WWF are quick to remind consumers that at least half of the world’s food and personal care products contain palm oil as an ingredient – a statistic that demonstrates the potential this industry has to either become more destructive or emerge as a pillar of sustainable development worldwide.

To some observers, Kraft Heinz’s pledge is a step in the right direction. WWF, for example, gave the company’s palm oil efforts an overall thumbs-up in its most recent palm oil scorecard. Nevertheless, environmental organizations and activist investor groups want to see more action.

Kraft Heinz has made it clear that such actions will unfold on its terms. Domini Impact Investments and Calvert Investment Management announced a shareholder proposal directed toward Kraft Heinz shareholders earlier this month. The measure urged shareholders to require the company to assess its impact on human rights and deforestation -- and report on those findings publicly.

Kraft Heinz’s board urged the owners of its stock to vote against the measure at the company’s annual shareholder meeting next month. It also recommended shareholders abandon two other proposals focused on sustainability.

In addition, the United Kingdom-based publication Ethical Consumer claims it sent Kraft Heinz a survey about its palm oil sourcing policies last month, but the company never responded. Those comments echo the concern of other activists who have been dubious about the company’s stance on transparency since Kraft Foods and Heinz announced their merger in 2015.

So far, NGOs have at best offered a tempered response to the company’s new palm oil policy. RAN welcomed Kraft Heinz’s new stance. But the NGO says consumers must be aware that their favorite brands may still contain what it describes as “conflict palm oil.” RAN has characterized Kraft Heinz as a palm oil “laggard” in the past, and is urging the company to publish an implementation plan that will inform stakeholders about the progress it is making to achieve its goals.

Describing the announcement as a “first step,” RAN’s Gemma Tillack said she viewed these commitments to protect forests, peatlands and local communities as a positive.

“It is disappointing, however, that the policy lacks a deadline for ... implementation,” she told 3p in an email. “Customers will continue to be at risk of buying products that contain conflict palm oil for years to come.”

Mighty Earth, a Washington D.C.-based NGO that has amplified its objections to how the world’s largest palm oil players have conducted themselves over the past year, was even less conciliatory in assessing Kraft Heinz’s announcement. When 3p asked Mighty for comment, Campaigns Director Deborah Lapidus replied:

“Kraft Heinz's new palm oil policy falls far short of giving customers the satisfaction of knowing they are buying macaroni and cheese or ketchup that was produced without deforestation or human rights abuse. Instead of a clear plan for sourcing 100 percent deforestation-free and exploitation-free palm oil, like its competitors Kellogg’s and Nestle did years ago, Kraft Heinz is taking a baby step of buying palm oil certified by the Roundtable on Sustainable Palm Oil.”

Lapidus also pointed out that Kraft Heinz is partly owned by 3G Capital, a Brazilian investment firm that is also owns a stake in Burger King, a company Mighty has accused of driving deforestation in South America. Burger King, like Kraft Heinz, has been criticized in the past for its lack of transparency in discussing its palm oil sourcing. Though that company did make what insiders call a significant step in its animal welfare policies this week.

Among all of this, one question remains: If Kraft Heinz -- the world’s fifth largest food company -- can show demonstrable progress, its peers follow suit? And if more firms commit to sustainable palm oil, can this industry actually have a remediating effect on the planet, or will the world’s hunger for this ingredient sow even more deforestation and misery in local communities?

Image credit: CIFOR/Flickr