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Developing the physical supply chain for supporting sustainable palm oil in home and personal care

Blog, 28 May 2015
© Robert Kneschke / Shutterstock

Chris Sayner, VP Global Accounts, Croda

Consumer awareness of the environmental problems caused by palm oil production is putting growing pressure on companies to support sustainability. So how is the industry responding? Chris Sayner, Vice-President of Global Accounts at speciality chemical manufacturer CRODA, explains.

Today, around 70% of the world’s cosmetics, and many household detergent products, contain raw materials derived from palm oil. The home and personal care (H&PC) industry consumes an estimated 5%1 of global palm oil and palm kernel oil (PO/PKO) – mainly as derivatives – which is a higher percentage than previously recognised or quoted by the industry.

Given that over 50% of packaged or processed foodstuffs contain palm oil or its derivatives food has long dominated the palm oil debate. However, high demand for H&PC products is now attracting greater attention due to growing consumer awareness and increasing NGO activity, both of which question consumer companies’ commitment to sourcing sustainable palm oil for their brands.

Many consumers have a connection with their chosen brands and want to know that they are not directly or indirectly contributing to deforestation or loss of wildlife habitat. While it is difficult to determine H&PC consumption with pinpoint accuracy, two major companies stand out as very high volume users.

Major global personal care companies are on the next tier of consumption, with individual consumer companies’ demand in the 60,000 to 100,000 tonne PO/PKO range. Volume here is calculated by tracing the ingredients back to the parent oils, which suggests that the volume of H&PC ingredients based on PO/PKO is over four million tonnes a year.

Such volumes clearly demonstrate just how dependent the H&PC industry is on palm oil. But what is the industry doing to support sustainable palm oil?

Firstly, membership and active participation within the RSPO is key. Most consumer companies are publicly committed to supporting CSPO. Arguably, those with near-term timelines (2015-2017) that support the physical supply chain are proactive, whereas those with timelines beyond 2017 are demonstrating a less proactive approach.

In personal care, there are approximately 21,000 monographs of International Nomenclature Cosmetic Ingredient (INCI)2 ­labelling names in the United States, the European Union and other countries, and more than 68,000 trade and technical names and 3,000 suppliers from 100 countries. An estimated 1000 (approximately 5%) of INCI references are palm-derived chassis ingredients – the building blocks used in the majority of cosmetics formulations, i.e. surfactants, emulsifiers and emollients. Many major personal care companies use up to 200 different palm-derived ingredients across a wide range of products.

A good mechanism for supporting sustainable palm, in the absence of a physical supply chain, has been the Book and Claim system. But despite its usefulness, Book and Claim is not without criticism as it does not ensure that physical CSPO is actually consumed. The fundamental step forward is Mass Balance as a physical supply chain. This option allows companies along the supply chain (such as traders or refiners) to mix certified palm oil with non-certified, thus avoid all the costs of keeping the two entirely separate (as in Segregated).

Each company handling Mass Balance CSPO is only allowed to sell the same amount of certified palm oil drawn from the ‘mixed’ oils that they originally bought as certified3.

A big issue facing sustainable palm is unsold volume – largely due to supply chain logistics and the inability to connect buyers and sellers. Ingredients based on sustainable palm via Mass Balance address this issue by ensuring that sustainable oils are drawn into the supply chain and audited throughout, giving the personal care industry a direct link to support the volume of sustainable palm and create momentum for segregated oils.

All the major personal care consumer companies are members of RSPO and in the two to three years up to 2014 many have lent support to sustainable palm via Book and Claim. While they continue to do so the big change in 2014 has been the significant shift in adopting the physical supply chain via CSPO Mass Balance ingredients. In many cases, companies have set volume targets for CSPO Mass Balance ingredient consumption. This is a huge step forward.

Equally, for ingredients suppliers, the RSPO’s Annual Communication of Progress Reports, and sustainability reporting on corporate websites, illustrate a broad spectrum of knowledge, ranging from proactive understanding to ambivalence. Suppliers who have timelines attached to supporting the physical supply chain are being proactive, while others favour less proactive or ‘wait and see’ approach.

Suppliers’ near-term targets (2015-2017), which support CSPO with Mass Balance, suggest a driving ambition to effect change. But our industry must move quickly: consumers will not put up with inertia or, in the worst case, a lacklustre approach to the issues.

As the producer of the world’s widest range of personal care ingredients, at Croda we believe we must help the drive towards sustainability in the industry. Supporting CSPO is a material issue in our sustainability programme. We consider this to be a global concern and our efforts are consistent in all regions, as exemplified by RSPO SCC and manufacture in Asia, Europe and the Americas.

We began to develop the CSPO physical supply chain of derivatives in 2012, when our Singapore manufacturing site was RSPO Supply Chain Certified to handle PO/PKO derivatives via the Mass Balance system.

In 2013, a second manufacturing site – Rawcliffe Bridge in the UK – became RSPO Supply Chain Certified for Mass Balance, and our Mill Hall and Atlas Point sites in North America followed later that year, extending our CSPO product portfolio considerably.

In 2014 we obtained RSPO Supply Chain Certification (SCC) of three more sites – Spain, Brazil and India.

Our seven RSPO certified sites handle over 80% of our global palm derivatives volume (mainly for consumer products). This is a volume-driven programme to effect change, quickly.

Throughout 2015, all of our remaining manufacturing sites four (in Holland, France, and two in the UK) handling PO/PKO and derivatives will have RSPO SCC, and we are working towards all of our PO supply chains being certified by 2017.

Beyond our support for RSPO and sustainable palm, we also consider it important to have a policy against deforestation. Consequently, Croda is committed to reducing its contribution to deforestation and any resultant impacts on climate change and biodiversity by working with organisations such as the RSPO and suppliers and customers to ensure traceability of critical raw materials back to suitably accredited sources. 

For more information on Croda, visit: www.croda.com

 

A breakdown of 2% personal care products and 3% home products.

The INCI is a naming system for waxes, oils, pigments, chemicals, and other ingredients of soaps, cosmetics, etc. based on scientific names and other Latin and English words.

For more details on sustainable palm oil supply chains visit: wwf.panda.org/what_we_do/footprint/agriculture/palm_oil/solutions/responsible_purchasing/scorecard2011/supplychains.cfm