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April 24, 2012

UK: Unilever to build plant to meet new palm oil target

Unilever is planning to build a palm oil processing plant in Indonesia as part of a target to use only "traceable" sources of the commodity by 2020.

By Dean Best

Unilever is planning to build a palm oil processing plant in Indonesia as part of a target to use only “traceable” sources of the commodity by 2020.

The Flora butter owner said today (24 April) it is in “advanced discussions” with the Indonesia government over its plans for a processing facility for palm oil derivatives.

Unilever, which plans to spend EUR100m (US$132m) on the site in Sumatra, said it would hit its target of using only palm oil covered by Green Palm certificates by the end of the year – three years ahead of plan.

GreenPalm works by giving palm oil producers certified by the Roundtable on Sustainable Palm Oil a GreenPalm certificate for each tonne of palm oil they produce sustainably. Manufacturers and retailers then bid for and buy the certificates online.

The palm oil covered by the certificates may in fact be conventional palm oil but the system is designed to encourage farmers to produce palm oil sustainably. However, the GreenPalm scheme has been criticised by some activists. Campaigners are concerned about the potential for consumers to be misled.

Unilever’s initial target on palm oil sourcing was part of its Sustainable Living Plan, a programme to halve its environment footprint that was announced in 2010. Today, the company issued a report on its progress, including its success in meeting its target on palm oil, and set a new goal for its use of the commodity.

The group said it had made “strong progress” on its sourcing of palm oil but said the Green Palm scheme was “only a step along the road” towards a sustainable form of the commodity. It now plans to buy all its palm oil from “traceable sources” by 2020, which would mean it can track the commodity it buys back to the plantation on which it was grown.

The plant in Sumatra, Unilever said, will make it easier to trace where the palm oil it uses comes from, as well as cutting costs.

Palm oil is the agricultural commodity that Unilever uses the most but the company wants to source all of its agricultural raw materials “sustainably” by 2020. In the progress report on its Sustainable Living Plan today, Unilever said 24% of its agricultural raw materials were “sustainably sourced” in 2011, compared to 14% in 2010.

The company said it was “on plan” to achieve its 2020 goal for the bulk of its agricultural commodities, with the exception of sunflower oil. It said it had “scoped pilot projects” for “sustainably sourced sunflower oil” last year but had “made less progress than we anticipated”.

Unilever cited “genuinely good progress” in other areas, including nutrition and renewable energy. However, the company conceded it was finding it “difficult” to change some consumer habits, including encouraging shoppers to eat products with less salt.

“Many of our goals look as daunting now as they did when we announced them but you have to set uncomfortable targets if you are to really change things,” Unilever CEO Paul Polman said. “Sustainable growth will be the only acceptable model of growth in the future, which is why we have put the Unilever Sustainable Living Plan at the heart of our business strategy. And far from being a hindrance to our progress, we are now seeing increasing evidence that it can drive business growth.”

However, he added: “It is also becoming ever clearer that we cannot tackle the big issues alone: much of our progress to date has come where we have worked with others. And at the end of the day, if we achieve our own sustainability targets but no one else follows, we will not have been truly successful. At Unilever we believe collaboration will become the only way of doing business in the future.”

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