The Forest Trust (TFT) announced today that Swiss consumer goods company Nestlé has agreed to a plan that will rid its products of palm oil purchased from suppliers whose activities are destroying vulnerable tropical forests in the developing world.

logoUnder the terms of their agreement, the Geneva-based nonprofit will work with Nestlé to transform its purchasing power into a force for forest conservation, according to TFT’s executive director Scott Poynton. Auditors from the Geneva-based NGO will be in Southeast Asia before the end of May to start work on making Nestlé’s supply chains in the region responsible.

“For the first time ever, a global company is saying that it doesn’t want its products to have a deforestation footprint, and it is taking action to live up to its words,” Poynton said. “This is the whole push behind TFT’s model-to get one end of the supply chain to take responsibility for what happens at the other end. This is a game-changer.”

In a statement today, Nestlé said its actions “will focus on the systematic identification and exclusion of companies owning or managing high risk plantations or farms linked to deforestation.”

“Nestlé has entered into a partnership with The Forest Trust (TFT), a global non-profit organisation that will help Nestlé to build responsible supply chains by identifying and addressing embedded social and environmental issues,” the statement said. “The partnership (with TFT) starts with palm oil, and Nestlé is studying its supply chains to determine a similarly ambitious target for the pulp and paper it uses.”

Greenpeace, which was instrumental in outlining the measures that would be seen as meaningful, called the agreement “a very positive step.”
‘Nestlé’s new policy sends a very clear message to companies that are destroying forests and peatlands for new plantations,” said Andy Tait, Senior Campaign Advisor for Greenpeace. “If you don’t stop deforestation and protect peatlands, your days of supplying to global brands such as Nestlé are over. This is a very positive step forward by Nestle, but delivery is critical, and we will be monitoring progress carefully.”

The company has committed as well to ensure that suppliers act to safeguard the rights of forest communities in developing palm oil plantations, Poynton said.

“As part of the agreement, TFT will audit Nestlé’s suppliers and will help identify and exclude those that are not doing the right thing,” said Poynton, an Australian forester. “And if there are suppliers that want to change the way they operate, our team on the ground will help them to improve their practices in order to comply with Nestlé’s purchasing requirements.”

Potential impact of corporate giant’s decision

With sales of CHF 107.6 billion in 2009, Nestlé is one of the world’s top 50 companies. It employs 278,000 people and has 449 factories in 83 countries. Nestlé products are sold in almost every country in the world.

“The impact of Nestlé’s announcement is huge because the company is so important globally,” Poynton said. “Nestlé does not use a huge volume of palm oil or pulp and paper compared to other companies. The focus for the first time is on products, and if Nestlé’s decision inspires other companies to engage in the same process, we can stop wringing our hands about carbon baselines and forest carbon markets. Demand for sustainable products can work its magic without them.” Nestlé has a policy that by 2015 the company will obtain 100 percent of the palm oil it uses from sustainable sources. This year, 18 percent of its palm oil purchases will come from sustainable sources, rising to 50 percent by the end of 2011, according to the company statement.

Nestlé says in its statement that the company has worked with TFT to come up with “a set of critical requirements” that will guide the Nestlé procurement process and ensure compliance with the Nestlé Supplier Code. “The partnership will focus on assessing suppliers’ performance with respect to these guidelines and on providing technical support to those who currently do not meet the requirements, but who are committed to achieving sustainability.”

The statement notes as well that Nestlé worked with TFT to come up with the following requirements for palm oil purchases. Such purchases will:

Be derived from plantations and farms operating in compliance with local laws and regulations.

Protect high conservation value forest areas.

Support the free prior and informed consent of indigenous and local communities to activities on their customary lands where plantations are developed.

Protect peatlands.

Protect forest areas of ‘high carbon’ value.

And to further implement the “Responsible Sourcing Guidelines,” the two partners will:

Communicate these guidelines strongly and clearly to the global commodity industry, particularly the palm oil and pulp and paper sectors.

Continue to focus its procurement to already certified suppliers.

Conduct and ensure field audits of its existing suppliers to determine their performance against the guidelines.

Exclude all suppliers found to be in breach of the guidelines.

Implement technical assistance programs to support those willing to proceed to sustainability.

Identify new suppliers who comply, or could comply with technical assistance, with the guidelines.

Provide regular and transparent feedback on its findings and its performance against these guidelines.

“We’re getting going immediately, no delays, we’re going for it,” Poynton said. “Our guys are heading to Singapore in a less than two weeks to meet Nestlé’s procurement staff and we’re away. It’s game on.”