Progress report on the use of sustainable palm oil

Sustainable Palm Oil in Europe Progress report on the use of sustainable palm oil - April 2016 Introduction This Sustainable Palm Oil in Europe progress report is brought to you by the European Palm Oil Alliance (EPOA), MVO – The Netherlands Oils and Fats Industry and The Sustainable Trade Initiative (IDH).

The report intends to increase transparency and give insight on the status of the road towards ‘100% sustainable palm oil in Europe by 2020’.

Although data on sustainable palm oil is far from complete and monitoring methods are differing per country, this progress report gives an overview of all the latest figures on the use of sustainable palm oil in food in Europe.

Together with its stakeholder, EPOA, IDH and MVO will continue to work on more elaborative reports during the course of 2016.

“TOWARDS 100% SUSTAINABLE PALM OIL IN EUROPE BY 2020”

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Sustainable palm oil

Palm oil is the most produced and traded vegetable oil in the world. It is a versatile ingredient used in different food, feed and fuel or oleochemical applications. Palm oil is derived from the fruits of the oil palm trees that are grown in the tropical regions around the world. More than 85% of the global production takes place in Indonesia and Malaysia.

Europe is the third user of palm oil after Indonesia and India. Since 2000, the production of palm oil has doubled and it is expected to increase even more in the near future as worldwide demand for vegetable oils is growing. If not carefully managed, increased production could come at the expense of forests and biodiversity and ignite social conflict. However, a sustainable management and production of palm oil with environmental protection and socio-economic benefits is possible.

Palm Oil Applications Food

Feed

Non-Food

The Palm Oil Supply Chain Bioenery

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Certified sustainable palm oil Sustainable palm oil is defined in multiple certification standards. This progress report aims to incorporate all sustainable palm oil standards in the various applications to provide a comprehensive overview. In food, the main certification standard used is the Roundtable for Sustainable Palm Oil (RSPO) standard. The RSPO certified palm oil is produced according to the principles and criteria of the RSPO and can be traded according to one of the four RSPO approved trading models: Book&Claim, Mass Balance, Segregated or Identity Preserved.

Other sustainability certifications on palm oil in food are Rainforest Alliance and International Sustainability and Carbon Certification (ISCC) Plus.

Biofuel applications criteria for sustainable palm oil are lined out in the EU Renewable Energy Directive (RED). These guidelines are mandatory for companies using vegetable oils such as palm oil to produce biofuel. The International Sustainability and Carbon Certification (ISCC) is the main certification system used and accredited for the EU RED system.

Indonesia and Malaysia have also developed their own standards for certified sustainable palm oil. The respective Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) are important steps towards a more sustainable palm oil supply chain. The standards focus on smallholder development, reducing greenhouse gasses and draw attention to environmental issues The ISPO standard is mandatory for palm oil producers in Indonesia.

Until now there has not been considerable demand by the European market for these certification schemes.

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Innovative policies Next to the current certification standards for sustainable palm oil, initiatives to work on sustainable palm oil have also been developed by individual companies. Palm oil producers and global manufactures using palm oil have their own policies for sustainable palm oil. A number of palm oil producers stress the need to combine their commitments in the Sustainable Palm Oil Manifesto (SPOM) and the Indonesian Palm Oil Pledge (IPOP) for additional requirements for sustainable palm oil such as ‘no deforestation, no peatland use and no exploitation of human rights’. The SPOM also conducts a High Carbon Stock (HCS) study to define what areas are suitable for sustainable production and which are not. This topic is also part of the Palm oil Innovation Group (POIG), a coalition between international NGO’s, producers and manufactures that aim to improve the RSPO criteria.

Next steps Recently, the RSPO has created RSPO Next. With RSPO Next the RSPO now incorporates criteria such as ‘no deforestation, no peatland use and traceability’.

This voluntary standard can be supported by both palm oil producers and downstream manufacturers to build upon the already existing RSPO certification.

It is expected that the RSPO Next credits will be available later this year.

General Results

Largest market for Certified sustainable palm oil The largest markets for certified sustainable palm oil (CSPO) are in Europe. Importing over around 12% of the global palm oil production a year (Oil World Annual, 2015), Europe has an important role to transform the global palm oil supply chain.

European reporting figures show that in 2015, 57% of the physical palm oil flowing into Europe was certified as sustainable palm oil. This is an increase of 11% compared to 20141. The reported share is equivalent to 2.1 million tonnes of sustainable palm oil representing around 80% Segregated and Identity Preserved and 20% Mass Balance supply chain models (Fediol, 2015;2016).

Physical certified sustainable palm oil into Europe 4000000 3500000

all volumes are in Metric Tonnes

3000000 2500000 2000000 1500000 1000000 500000 0

46%

57%

2014

2015

Sustainable palm oil

Conventional palm oil

1 Based on reported import volume of 3,5 million MT and only represents Mass Balance, Segregated and Identity Preserved supply chain models.

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Industry initiatives To increase the uptake of sustainable palm oil it is essential for industries in the palm oil supply chain to join forces. To this end, more and more companies and sector associations are working together in ‘national alliances on sustainable palm oil’. These alliances are now widespread in western and northern Europe committing many companies and sectors to use sustainable palm oil. National alliances are also emerging in southern Europe with the launch of the ‘Italian Union for Sustainable Palm Oil’ being the latest in 2015. All national alliances have a commitment to use 100% certified sustainable palm oil, with many alliances also moving towards additional criteria and the continuous improvement of certification standards. These commitments are all combined in the ‘Commitment to Support’ which was presented at the ‘EU conference on Global Value Chains’ in Amsterdam on December 7, 2015. The commitment aims to increase and align the demand for sustainable palm oil in Europe by working together with the European sector associations organised in the European Sustainable Palm Oil Advocacy Group (ESPOAG) and certification standards such as the RSPO. Government Governments have an important role to support and motivate the palm oil industry to use sustainable palm oil. Biofuel applications criteria for sustainable palm oil are outlined in the EU Renewable Energy Directive (RED). The Dutch ministry of Foreign Affairs has the ambition to combine trade with development and is supportive towards sustainable palm oil use in Europe. The ministry supports initiatives on sustainable trade via IDH, The sustainable trade initiative which is also active on palm oil. During the Dutch EU presidency in 2016, the Dutch government

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declared together with four other EU member states their support for more sustainable palm oil.

This ‘Amsterdam Declaration in Support of a Fully Sustainable Palm Oil Supply Chain in 2020’ supports the above described ‘Commitment to support’. During the Dutch presidency, the Dutch ministry of foreign affairs will engage with more member states to gain support for the declaration.

Initiatives and results per country

Monitoring the use of sustainable palm oil is not straightforward. Its widespread use, complex supply chain and variety of derived products make it difficult to specify exactly how much sustainable palm oil or fractions are used. Nevertheless, many national alliances have been monitoring the use of palm oil in their country or the use by their members. Although

Civil society organisations Civil society had an important role in the establishment of the RSPO and continue to push and support companies to use more sustainable palm oil. A number of civil society organisations are also involved in and actively taking part in discussions to improve sustainable criteria. They can and should play a constructive role in stimulating companies to use sustainable palm oil.

Other

16472

World Production Palm Kernel Oil in 1000 tonnes

Matured Area in 1000 ha

Facts and Figures on Trade Flows and Sustainability

PALM OIL AND PALM KERNEL OIL IN EUROPE Main Trade Flows

NON-FOOD

BIOENERGY APPLICATIONS

© 2015

100 0

Germany

Spain

Italy

80 0

1990

1994

1998

2,500

2002

2006

2010

PALM KERNEL OIL BALANCE

PALM OIL

400

WILL CONTINUE TO BE THE MOST FAVOURABLE OF ALL VEGETABLE OILS IN

300

1,500

200

1,000

100 Italy

The Netherlands Spain

Sweden

Austria

2014

Total Import Domestic Use

2,000

Germany

Romania

INTRA EU EXPORT PALM OIL GERMANY 160 120 40

PALM OIL BALANCE

500 0

0

1,281 1,756

Palm Oil

Palm Kernel Oil

Belgium-Luxembourg

USER OF

PALM OIL

50

Portugal

150

IN THE WORLD THE MOST WIDELY EU PALM OIL AND PALM KERNEL OIL IMPORT USED VEGETABLE OIL 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

INTRA EU EXPORT PALM OIL THE NETHERLANDS 250 200 100

1,191

Italy

UK

2,378 The Netherlands

Poland

3RD

UK

Other

515

3,220

Spain

Bioenergy applications

4,141

Hungary

FEED

Food, feed and other

France

200

FOOD

PALM OIL USE IN THE EU

PALM KERNEL OIL EXPORT TO THE EU THE EU IS THE 300

BROUGHT TO YOU BY:

Thailand

4,000 3,000 2,000 1,000 0

Germany

HOW IS IT USED?

PALM OIL EXPORT TO THE EU Papua New Guinea

OIL PALMS ONLY USE 6% OF THE GLOBAL CULTIVATED LAND DEDICATED TO VEGETABLE OIL PRODUCTION, WHILE IT IS DELIVERING 32% OF THE TOTAL VEGETABLE OILS VOLUME

Sweden

WHY IS PALM OIL SO POPULAR? • VERSATILITY • FUNCTIONAL BENEFITS • WIDESPREAD AVAILABILITY • EFFICIENT

Belgium-Luxembourg

World Production Palm Oil in 1000 tonnes

Thailand

6521

UK

Malaysia

Poland

Indonesia

59229 ALL OF THE WORLDS PALM FRUIT GROWS HERE

The Netherlands

TOWARDS 100% SUSTAINABLE PALM OIL IN EUROPE BY 2020

REGIONS AROUND THE EQUATOR

PALM OIL AND PALM KERNEL OIL IN EUROPE

Malaysia

CURRENT NATIONAL INITIATIVES OR COMMITMENTS ON SUSTAINABLE PALM OIL

saturated fatty acids

OF NATURAL SOLID FAT

Indonesia

OF PALM OIL GLOBALLY IS CERTIFIED BY THE RSPO

50%

PALM OIL IS THE MAIN

GLOBAL SOURCE

TREES

Papua New Guinea

RESPONSIBLE

20%

50%

unsaturated fatty acids

GROWING IN BUNCHES ON PALM OIL

WHERE DOES IT COME FROM?

Other

DEVELOPMENT

OF NEW PLANTINGS - COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY.

30-35% OIL

Malaysia

AFFECTED BY GROWERS AND MILLS -

EACH FRUIT CONTAINS

Indonesia

BEST PRACTICES

WHAT IS PALM OIL? COMING FROM PALM FRUIT

Denmark

SUSTAINABLE PRODUCTION

UK

0

Germany

Italy

The Netherlands Spain

UK

EUROPE

Legend

Reference year: 2014 Source: Oil World Annual 2015 All volumes are in thousand metric tonnes European Palm Oil Import Intra European Palm Oil Export EU: the European Union (28)

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Netherlands: 72% of the total food industry used CSPO in 2014 UK: Between 72% and 93% of the palm oil imported into the UK was supported by sustainability certification in 2014

Palm Oil Trade Flows PRINCIPLES OF THE ROUNDTABLE ON SUSTAINABLE PALM OIL COMMITMENT TO TRANSPARENCY - COMPLIANCE WITH APPLICABLE LAWS & REGULATIONS - COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY - USE OF APPROPRIATE

BY GROWERS AND MILLERS - ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY - RESPONSIBLE CONSIDERATION OF EMPLOYEES, AND OF INDIVIDUALS AND COMMUNITIES

monitoring methods and scope may be differing, the outcomes give a good overview on the status and progress of sustainable palm oil in Europe. The following map presents an overview on the most recent monitoring results by the respective national initiatives in Europe. Further details on the usage of sustainable palm oil in each country is highlighted below.

Belgium: all company members of the Belgian Alliance on Sustainable Palm Oil only use CSPO for the Belgian market from December 2015 onwards

Sweden: It is estimated that the members of the Swedish food industry used around 97% CSPO in 2014

Germany: 54% of the total food industry used CSPO in 2013. All members of the German Forum on sustainable palm oil used 100% CSPO in 2014 France: All members of the French Alliance used 96% CSPO in 2015

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Belgium Belgium uses around 6% of all the palm oil that is imported into Europe. To support the use of sustainable palm oil, the stakeholders in the Belgian palm oil supply chain established the ‘Belgian Alliance Sustainable Palm’ (BASP) in 2012. All company members of the BASP achieved their 2015 commitment to only use RSPO certified sustainable palm oil in their food products destined for the Belgian market as from 1 December 2015. There are 9 companies and 5 federations participating in the alliance representing in total around 80% of the Belgian food market. The Belgian cosmetics and detergents association DETIC has also joined the BASP in 2015. The members of the Belgian Alliance now focus on expanding their coverage of the Belgian market and work on their 2020 commitment that integrates ‘traceability, preservation of high carbon stock and peat land areas and the development of smallholder farmers’.

The Netherlands The Netherlands are the main importer of palm oil in Europe. Importing more than a third of the total palm oil use, the Netherlands have an important role to push the European supply chain towards more sustainable palm oil. Some 18% of the palm oil in Europe stays in the Netherlands to be processed in food or non-food applications. The Dutch Alliance Sustainable Palm Oil (DASPO) is a collaboration between eight food and feed associations that encourage the use of sustainable palm oil in the Netherlands. The DASPO is the successor of the Task Force Sustainable Palm Oil established in 2010- the first European national commitment to use 100% RSPO (or –equivalent) certified sustainable palm oil by the end of 2015. The Task Force reported 72% RSPO certified sustainable palm oil processed in the Netherlands in 2014 and expects the 2015 results mid-2016 (Task Force, 2015). website

website

Use of sustainable palm oil in the Dutch food sector (2014) margarine

100000 80000 60000 40000

milk and dairy

bakery and confectionary

other

potato sauce

20000

snack

0 Sustainable palm oil

Conventional palm oil

all volumes are in Metric Tonnes

Use of sustainable palm oil in the Dutch food industry (2014) 350000 300000

Denmark Denmark is the main importer and distributor of palm oil in Scandinavia. It uses around 2% of the palm oil imported in Europe. The Danish Food and Drink Federation leads the initiative on sustainable palm oil in Denmark. The members that endorse the initiative commit to a minimum to cover all palm oil

by GreenPalm certificates by 2016. No later than the end of 2018 the initiative aims to have 100% RSPO (or equivalent) segregated certified palm oil.

250000 200000 150000

53%

100000 50000 0

61%

72%

30% 2011

Sustainable palm oil

2012

2013

2014

Conventional palm oil

website

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France France uses around 6% of all the palm oil in Europe.

Founded in 2013, the French Alliance for Sustainable Palm Oil brings together companies and professional organizations to move towards more sustainable palm oil. Its aim is to increase the use of sustainable palm oil. Sustainable means: no deforestation, environmental friendly and respectful of biodiversity and local populations. Its members reported 96% use of sustainable palm oil in their products by the end of 2015, and have committed to even more stricter conditions for 100% of their supplies by 2020.

(French Alliance, 2016) website Italy Italy is second largest importer of palm oil in Europe.

Most of the palm oil imported stays in Italy to be processed into a food or non-food application. In total, Italy uses around 24% of the palm oil that is imported in Europe. Established in 2015, the â&#x20AC;&#x2DC;Italian Union for Sustainable Palm Oilâ&#x20AC;&#x2122; is the most recent national initiative in Europe and is active since the beginning of 2016. It brings together companies and sector associations committed to 100% certified sustainable palm oil by 2016. The members of the Italian Union also aim for more stricter definition of sustainable palm oil in 2020. To start promoting the use of sustainable palm oil, the Italian Union has launched a consumer campaign to explain the role of palm oil in our diet and its sustainable production.

Germany Germany is one of the biggest palm oil importers and distributors in Europe. Some 12% of the European palm oil is used in Germany in food or non-food applications. The German Forum on Sustainable Palm Oil (FONAP) was established in 2013 and is a collaboration between private sector companies including retailers, NGOs and the German Government. In 2013, the total German food industry used 54 % certified sustainable palm oil (FONAP, 2015). The margarine and bakery sectors yielded highest percentages used. All members of the German Forum achieved 100% certified palm oil at the end of 2014. They have further committed to a publicly available road map with intermediate goals to achieve 100% physical supply latest in 2020.

Additionally they demand voluntary add-on criteria to further strengthen certification systems. website

Use of sustainable palm oil in Germany (2013) 600000 500000 400000 300000 200000 100000 0 food

HPC

feed

Sustainable palm oil

chemical/ pharmacy

total

Conventional palm oil

all volumes are in Metric Tonnes

Use of sustainable palm oil in German food sector (2013) 120000 100000 80000 60000 40000 20000 0

margarine

meat out of home replacement convenience other fast food food restaurants

confectionary bakery

Sustainable palm oil

Conventional palm oil

website

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United Kingdom The UK are the fifth biggest importer of palm oil in Europe. Much of the palm oil imported stays within the UK and represents around 7% of the palm oil used in Europe. In 2012, the Department for Environment, Food and Rural Affairs (DEFRA) published a joint statement together with key palm oil using trade associations, NGOs and others who committed to “working towards achieving 100% sourcing of credibly certified sustainable palm oil in the UK by the end of 2015”. The UK statement covers a wide range of sectors including food and drink manufacturers, retailers, oil processors and distributors, government, zoos and aquariums, animal feed manufacturers, cleaning products industry, hospitality sector, chemical specialities, renewable energy and NGOs such WWF and ZSL .

The latest figures available indicate that in 2014 either 72% (scenario 1) or 93% (scenario 2) of UK palm oil imports were supported by RSPO certification, depending on the trade data source used by Oil World and FEDIOL. The reason for the differences in percentages is FEDIOL uses EUROSTAT data, without any further revision whilst Oil World uses trade intelligence to further refine their estimates of Palm Oil and Palm Kernel Oil data including imports into the UK. Results for 2015 will not be known until later in 2016.

Sweden Sweden uses around 2% of the palm oil imported in Europe. The Swedish Initiative for Sustainable Palm Oil is coordinated by the Swedish Food Federation and aims to use exclusively certified palm oil that is in line with RSPO’s criteria in food by the end of 2015. It is estimated that it’s members use 97% of certified sustainable palm oil with Book & Claim being the dominant supply chain model (The Swedish Food Federation, 2015). The Swedish cosmetics and detergents sectors organised in the ‘Kemisk- Tekniska Leverantörförbundet’ (KTF) launched a similar initiative to start using CSPO at the end of 2015. Both commitments are working to join forces on a national level.

website

Use of sustainable palm oil in the UK (2014) 600000 500000 400000 300000 200000 100000 0

scenario 1

Conventional

scenario 2 Book & Claim

Segregated and Mass Balance

all volumes are in Metric Tonnes

Use of sustainable palm oil in Swedisch food sector (2014) 80000 70000 60000 50000 40000 30000 20000 10000 0

Sustainable palm oil

Conventional palm oil

website

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Brought to you by:

European Palm Oil Alliance – EPOA aims to create a balanced and objective view on the nutritional and sustainability aspects of palm oil by providing science-based information. EPOA works in cooperation with its stakeholders to facilitate and support national industry alliances on sustainable palm oil.

MVO – The Netherlands Oils and Fats industry – MVO represents the interests of the Dutch oils and fats supply chain. MVO works on an international competitive sector and has a special focus on sustainable sourcing.

website

IDH, the Sustainable Trade Initiative, accelerates and up-scales sustainable trade by building impact oriented coalitions of front-running multinationals, civil society organizations, governments and other stakeholders. Through convening public and private interests, strengths and knowledge, IDH programs help create shared value for all partners. Driving sustainability from niche to norm and delivering impact on the Sustainable Development goals.

website website

Contact

For more information please contact info@mvo.nl

Sources: Bilan 2013-2015 de l’Alliance Française pour une Huile de Palme Durable et ses perspectives à l’horizon 2020.

DEFRA, 2015. Annual review. UK Consumption of Sustainable Palm Oil October 2015.

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Fediol, 2015. Fediol statement 18 November 2015: Certified sustainable palm oil use on up-wards trend in EU. Fediol, 2016. Fediol Factsheet 16 March 2016: 2015 Palm Oil Monitoring.

FONAP, 2015. Analyse des Palmölsektors in Deutschland Ergebnispräsentation.

Oil World Annual, 2015. Volume 1 – up to 2014/15.

Task Force, 2015. Task Force Sustainable Palm Oil Annual Report 2014.

The Swedish Food Federation, 2015. The Implementation of Swedish Food Federation Initiative on Sustainable Palm Oil Monitoring Report 2015.

© April 2016