Unilever Takes the Lead on Palm Oil Supply Chain Transparency

In the event some multinationals, along with their complex global supply chains, have not gotten the memo, here it is: your stakeholders want transparency, and want to know where your raw materials are sourced. If these materials are not coming from sustainable sources now, you need a plan to shift to a more responsible supply chain. And if such steps are not possible, be ready to explain why. This is particularly true of palm oil, which has become a popular replacement for hydrogenated vegetable oils and other emulsifiers found in both food and beauty products.

One company that has taken such a step is Unilever, which announced last week that it will now disclose the suppliers and mills that process the palm oil used in the company’s wide range of personal care and processed food products. This was no simple feat: Unilever says it can trace its palm oil purchases to approximately 1,400 mills and over 300 direct suppliers. In the meantime, the company has appeared to be walking the talk, as when it severed business ties with a major global palm oil supplier two years ago after NGOs claimed that company’s operations were linked to deforestation in Southeast Asia.

This news follows up on a promise the company made in 2013 with its palm oil policy as it pledged to procure only sustainable palm oil by next year. At last count, the company was only sourcing 36 percent of palm oil from sustainable sources in 2016 - Unilever aims for that metric to reach 50 percent when 2017 numbers flow in, and according to its plan, the total amount should reach 80 percent for 2018.

Unilever says becoming more transparent is not just about keeping stakeholders informed; this decision is also smart long-term business. Knowing where all that palm oil exactly comes from allows the company to become more proactive in identifying problems, in turn giving supply chain managers the ability to address such challenges quickly. Having all this data out in the open also makes it more seamless for Unilever’s business partners and other stakeholder groups to bring any palm oil-related issues to its attention.

Furthermore, Unilever claims it will have the ability to identify indirect suppliers - an absolutely important step because the kernels churned into palm oil often change hands many times - making those human rights and environmental risks often difficult to locate.

For companies that insist supply chain transparency is too cumbersome and costly, this latest development from Unilever shows that those complaints are false. And the reality is that as consumers become more discerning about the products they buy, food and personal care product companies really do not have a choice. The alternative is for those products to sit on shelves - if they even get there, as retailers are feeling the pressure, too.

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