PEOPLE, PLANET AND PROSPERITY
New Britain Palm Oil
“Sustainability is a journey,” Dr. Simon Lord, Group Sustainability Director begins. “For this generation sustainability is a direction, not a destination and only successive generations can determine whether our actions were truly sustainable. For the present we continue to build the foundation as a legacy for the future.”
New Britain Palm Oil
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Safeguarding employees and the environment are only two of the impressive pillars that New Britain Palm Oil has built this foundation on. As one of the world’s leading producers of sustainable palm oil they help set the benchmark for the industry with their active role in the Roundtable of Sustainable Palm Oil and their strict adherence to this world’s first ever commodity standard for sustainability. Group Sustainability Director, Executive Board Member for RSPO and Director of Global Sustainability Associates, Dr. Simon Lord speaks with Daemon Sands regarding the future of the industry and where the remarkable strength of the company comes from. Palm oil is a natural vegetable oil from the palm Elaeis guineensis, the laden with fruit tree that produces a richlycoloured, entirely free from cholesterol oil. The palm produces two kinds of oil, crude palm oil from the flesh of the fruit and palm kernel oil from the nut. The versatility of the oils makes it very popular in European and Asian markets where it’s mainly used in food preparation and the confectionery manufacturing industries. As a highly diverse substance palm oil appears in many household products including margarines, shortenings, frying fats, ice cream, domestic and commercial cooking oils, and even perfumed soap products. “Palm oil is in one in ten items on a supermarket shelf ” Simon reveals.
Palm oil competes with other world oils and is often maligned, but a bit of research reveals that oil palm is ten times more productive than soya oil in terms of yields. This means that a hectare planted with oil palm provides the same quantity of oil as ten hectares planted with soya. This saves forests whilest at the same time providing a cheaper commodity to a world requiring more and more food. Add this to the length at which New Britain Palm Oil goes to ensure sustainable production. It’s a fresh edge to what this Papua New Guinea company is doing from a global perspective. NBPOL operates exclusively in the Asia Pacific region. “Our company headquarters are in West New Britain Province, Papua New Guinea, where we have a refinery and the main bulking terminal,” Dr. Simon Lord tells us “and our plantation operations are in five other provinces in Papua New Guinea and also in the Solomon Islands. On each site we have estates and smallholders as well as mills and storage facilities. Whilst at the other end of our supply chain in the UK we have the world’s first palm oil refinery built to deal with 100% sustainable palm oil.” The group’s pre-tax profits rose to US$ 780 million in 2011 on the back of almost a doubling of fruit production since its listing on the London Stock Exchange in 2007. NBPOL is also listed on the Port Moresby Stock Exchange, and this allows local people a chance to readily obtain shares. In fact the provincial Government of West New Britain is the
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second largest shareholder in the company and ensures that the people of this province share in NBPOL’s prosperity. “Despite this drop in oil prices and the turbulent global economic environment we are still on the growth path.” Part of NBPOL’s success can be attributed to the productivity of their own plantations, which cover 78,000 hectares of oil palm, but also to the hard work of its 15,000 smallholders who supply over a quarter of the fruit. The company now operates a total of 11 crude palm oil mills, and employs over 25,000 people in West New Britain, Ramu Valley, Milne Bay, Poliamba and Higaturu in Papua New Guinea and the Guadalcanal Province of the Solomon Islands. “Our main refinery, New Britain Oils, is based in Liverpool, UK,” Simon explains, “where the focus is on delivering segregated, traceable and certified sustainable food ingredients to end customers based in the EU.” It is this vertical integration of operations, from plantation to refinery, that has enabled this Papua New Guinea company to present an unbroken chain of custody for its fully certified sustainable palm right into the heart of Europe Before the onset of the Second World War, an Agricultural officer named Frank Henderson based at Talasea recognised the potential for agricultural development of an area known as the “Mosa block”. This land is on the northern coast of West New Britain Province, an island lying to the east of the Papua New Guinea mainland and situated in the Bismarck Archipelago.
Following the ravages of war, investment funds were directed to more urgent needs and the north coast of West New Britain remained undisturbed by any formal development. It was not until the 1960’s that Frank Henderson (newly appointed Director of Agriculture) could begin to realise the agricultural potential of this land. In 1967, the House of Assembly in Port Moresby passed the Palm Oil Industry (New Britain Agreement) Ordinance and New Britain Palm Oil Development Ltd came into being with land at the “Mosa block” being made available to the new Company under agricultural leases for a term of 99 years. Then in 1968, NBPOL (as it is now known) planted its first oil palms at two sites – Bebere and Dami within a projected area of just 1300 hectares. This initial operation has since grown to 36,000 hectares but NBPOL’s first venture outside of West New Britain was only in 2006, when the company acquired GPPOL in the Solomon Islands. In 2008, Ramu Agri-industries Limited joined the NBPOL family, adding a significant sugar and beef production to the Group’s activities and in 2010 three further operation in the provinces of Oro, Milne bay and New Ireland joined the NBPOL Group of companies. Now, 44 years later, while still being headquartered in the Mosa block, they have expanded operations to cover over 95, 000 hectares of directly managed plantations including oil palms, sugar and beef cattle, as well as 39 000 hectares of out-grower oil palm blocks.
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The list of accolades for this company is extensive but it is the focus on sustainability that makes this company uniquely facetted. “It wasn’t until 2007 that the concept of a sustainability standard for palm oil was officially achieved,” Simon explains. Conceived by The Round Table of Sustainable Palm Oil (RSPO), this multi-stakeholder initiative ensures that those seeking certification not only achieve the standard but continuously improve performance year by year. NBPOL has been an active member of the RSPO since its conception in 2002. “We identified 8 pillars which defined sustainability and then strengthened these Principles with a further 39 criteria which gave each Principle a context. Finally we added about 150 indicators to the standard which allowed performance to be measured,” he says adding “it is these Key performance indicators which make the standard so robust and give it depth whist it is the 8 Principles (Transparency, Adherence to legislation, Economic viability, Good Agricultural Practice, Environmental stewardship, Social consideration, Sustainable development and Continuous improvement) that give the standard its breadth.“ In 2008 the West New Britain Operations achieved this prestigious standard with the other units rapidly following. By the end of 2012, all operations, including smallholders, will be fully certified. “It takes about two years from acquisition
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to ensure an operation is fully compliant” Simon explains. The last principle (Continuous Improvement) mandates that even when NBPOL have achieved their targets for a year they have to have in place a full plan for how to improve upon sustainability in all its facets the following year. It is an authoritative margin to ensure that stagnation does not occur. However the company began the journey towards sustainability some years earlier, implementing a programme to certify its assets with the ISO 14001 standard for environmental management. By 2004 all of its in-house plantations and facilities in West New Britain had achieved full certification. It became one of the first plantation companies in the world to gain ISO 14001. Yet before there were applicable environmental or sustainability standards for the industry, NBPOL had already established their own way of doing things. Simon goes on to explain, “Our early plantation managers were particularly forward thinking and inventive. Land was cleared without the use of fire and to this day NBPOL still maintains this no burn policy. We have gone on to avoid planting on peat and clear primary forests or any other High Conservation Value land and it is these significant early moves that put us well ahead of the game in terms of sustainability and subsequently help reduce our carbon footprint.” The company has since been moving to raise awareness and educate all of its small holders in the same way. It now produces all its oil, whether from plantations or smallholders, to a strict standard where each operation is
audited by independent certification bodies who themselves are approved by a separate accreditation body. It delivers its oil through a similarly audited supply chain. “I think we are industry leaders because of our presence and willingness to move and change,” Simon says, explaining the secret of the company’s approach which became less of a secret when The World Economic Forum identified NBPOL as one of the 16 New Sustainability Champions of 2011 out of a short list of over 1000 companies worldwide. With fully vertically integrated operations, NBPOL is responsible for producing its own seed, planting, cultivating and harvesting its own land and processing and refining oil palm fruits into refined, bleached and deodorized BBD oil and finished packaged products. “Thanks to the refinery in Liverpool, we have an unbroken chain of custody of our product from the seeds to the plantations then to our own refinery in Liverpool to the customers,” Simon points out, “It’s a fully traceable and sustainability segregated supply chain” adding “this assures our customers that they receive only NBPOL sustainable oil from our operations which can be traced directly to its origin.” While Dr. Simon Lords considers NBPOL company with its 25 000 employees a medium-sized company it is one of the largest when it comes to accepting its responsibilities to people, planet and prosperity. Believing in transparency, honesty and accountability the company has been producing two year sustainability
reports since 2008 offering an explanation of its targets and commitments, These reports adhere to the Global Reporting Initiative (G4 guidelines) and clearly lay out the company’s performance (both positive and negative) in all environmental, social and governance aspects. “A responsible company is accountable to its investors and shareholders for environmental, social and fiscal management in equal measure” says Simon. People and prosperity are just as important as environmental considerations to the company and the work of the NBPOL Foundation is at the forefront of the group’s social initiatives. The new health and education partnership between VSO and NBPOL in Papua New Guinea highlights the approach with VSO and the New Britain Palm Oil Ltd Foundation have entering into an agreement to conduct a baseline assessment of the education and health needs of communities in areas bordering NBPOL’s site offices in Papua New Guinea. The research will inform the Foundation’s strategy for development in Papua New Guinea and will make recommendations on the priority needs of people within each area and on the project proposals to address those needs. VSO is the world’s leading independent international development organisation that works through volunteers to fight poverty in developing countries. This partnership and going the extra mile is what typify NBPOL activities on the ground. “My job is risk management,” Simon explains, “I need to
know what ship is coming over the horizon before we can see the sails. That way we can influence and control issues before they arise.” “For the future we see there being four main areas of concern,” Simon adds. “The first two are almost upon us “ he says “ Carbon accountability and the associated reduction of emissions will play an increasing role in shaping our industry. Responsible companies will also have to face up to the challenge of the UN Millennium Development Goals and deal with poverty, equality and health.” NBPOL have already produced a carbon footprint report earlier this year and have forged ahead with the NBPOL Foundation to determine a community baseline around its plantations to assist in targeted aid. “Three is food security and sovereignty whereby companies realise the gravitational pull they have on local livelihoods; lastly there is water accountability and companies impacts on eco-system services. “People planet and prosperity,” are not just simple words for New Britain Palm Oil but the core of what makes their company successful and what has lain down the path for their future. Companies like NBPOL set standards for their industries and the ripples they create in their industries determine the movement and prosperity of those industries. Creating a better world is possible thanks to these marvels of industry and sustainability and their open and transparent modes of operation. Perhaps it’s time for other companies to start rethinking their strategies and follow suit. NBPOL is clearly setting the standards for the industry.
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New Britain Palm Oil www.nbpol.com.pg +65 6227 6247 Written by Daemon Sands