As part of S4RB, Coates has worked with leading retailers, including Waitrose, Asda, Ahold Delhaize and the Co-operative Group. In recent years, she has seen a jump in retailer interest in sourcing products that contain sustainably sourced palm oil as high-profile campaigns raise consumer awareness in Europe.
“Our retail customers are very focussed on building sustainable palm oil sources – although some are further along the path than others. For many, more than half of their palm oil is sourced sustainably – so their major emphasis is on increasing that proportion. It is the exception amongst UK supermarkets, but one of our UK-based retail customers is already 100% sustainable with palm oil.”
As they work toward the goal of 100% sustainable palm oil, retailers need to collaborate with their suppliers and agree on common principles to promote traceability and transparency, such as Roundtable on Sustainable Palm Oil certification, Coates advised. “Simply put, retailers and suppliers have to agree common principles for traceability and transparency that can be enforced throughout the supply chain. We think that the only way to ensure sustainable sourcing is through effective long-term supplier engagement – and we see the success retailers are having by taking this approach.”
S4RB has developed its Affinity platform, a tool designed to “educate and survey” suppliers. Systems like this can make it “quicker and more effective” for retailers to complete annual surveys of suppliers while also boosting traceability.
Global standards ‘vital’ to tackle deforestation
One of the biggest challenges in the palm oil supply chain is the deforestation – and the knock-on implications for global warming - that occur as more virgin forest is turned over to palm oil plantations. Globally, multiple food brands and retailers have united behind the Consumer Goods Forum’s zero net deforestation target by 2020.
In order for this to be achieved, Coates suggested it is “vital” to rally around common standards and definitions. “A major hurdle continues to be the lack of common regulations on the production of palm oil, as well as deforestation. Organisations such as the Roundtable on Sustainable Palm Oil (RSPO) have set a global standard for sustainable palm oil and continue to evolve their certification to consider the needs of local populations and smallholder plantations.
Forests cover about 30% of the planet’s landmass – but they are shrinking at an alarming rate. According to the World Bank, between 1990 and 2015 there has been a 3% decline forested land globally – that equates to 1.3 million square kilometres, or an area roughly the size of South Africa. Much deforestation has been driven by the growing demand for agricultural commodities, such as palm oil, soy and cocoa.
“We think this is a vital piece of the puzzle because as more companies come on board demanding sustainable palm oil, there is less incentive for palm growers to farm unsustainably. There’s no doubt that this will bolster the aim of achieving the Consumer Goods Forum’s zero net deforestation target by 2020. It’s essential that we reach the point where palm oil is sourced 100% sustainably globally,” she told FoodNavigator.
But while palm oil has a bad reputation thanks to its associations with deforestation and biodiversity loss, Coates stressed that sustainably sourced palm oil is a better option than some alternative oils, such as rape seed oil, and argued against reformulation efforts that might take it out of products.
“The reality is that palm oil is an efficient crop that generates high yields from a relatively small amount of land. That’s why the majority of UK supermarket retailers believe that the use of sustainable palm oil in products, rather than a complete absence, is the best solution to the challenges of deforestation.
“It’s clear that simply reducing the use of all types of palm oil won’t stop the impact of deforestation. The primary production areas in Indonesia and Malaysia are a hotbed of agriculture and whilst the demand for products such as palm oil remains, the environment is unfortunately likely to suffer due to mass production. The only way is to ensure sustainability.”
She noted that the recent campaign from UK retailer Iceland that saw a marketing and reformulation push to take palm oil out of its own brand products actually had a negative impact on RSPO. “RSPO has said that the recent Iceland advertising campaign has been detrimental to its message, evidencing the important role that large retailers and brands play in educating and influencing consumers’ decision-making.”
Soy in the spotlight
Another widely used ingredient that has come to be associated with deforestation, particularly in Latin America, is soy.
Coates said that this is something both retailers and consumers in European markets are waking up to. Indeed, recently UK convenience operator The Co-op pledged to move all direct and indirect soy in its own label supply chain to sustainable sources. At the time, sustainable sourcing manager Sarah Wakefield told FoodNavigator: “There are certain things that customers just expect you to do and this is one of them."
This effort kicked off with the news that The Co-op has funded three years’ worth of sustainable soy credits, certified by the Roundtable for Responsible Soy (RTRS). Ultimately, The Co-operative said, it wants to move 100% of the soy in its supply chain to physical sustainable soy.
This is a pattern Coates sees many retailers follow. “Buying soy directly from sustainable sources is the best option because the credits effectively pay to support the same process via Round Table Responsible Soy (RTRS), but do not guarantee that you are using sustainable soy yourself. Credits are a good interim step until a retailer can source fully sustainable soy.
“There is an issue with supply and demand, of course. After years of farming in less sustainable ways, due to a lack of education and awareness, the sudden call for sustainable ingredients like soy is huge. The best retailers and manufacturers are looking to support RTRS and other organisations to help the farming process to change to help supply to meet the demand for sustainable products.”
Tip of the iceberg
Moving sourcing of soy and palm oil to a sustainable footing is quite a significant challenge. But Coates suggested that retailers will simultaneously need to turn their attention to other commodities in their supply chains if they are to keep pace with consumer attitudes.
“In my opinion, palm oil and soy are just the beginning. There is growing awareness and concern about sustainability, authenticity and disease which means that retailers need to be prepared to provide tracking evidence for all ingredients,” the consultant observed.
The drive for improved sustainability will also “inevitably” extend to packaging, reflecting the widespread consumer and regulatory concern over plastic pollution. “Retailers need to make provision for suitable material tracking and traceability capability for both food and packaging recipes,” Coates predicted.
According to Coates’ assessment, consumer attitudes are an important driver for this trend and she believes sustainability issues are “playing an increasingly important role” in shopper behaviour. “We believe that consumer demand will probably be the single biggest influence on supply chains in the UK food and drink sector.”
The need to communicate what action is being taken on this issue will largely fall to retailers. “As always, it’ll be the retailers that are tasked with providing transparency on the ingredients and the background to their own brand products and those that do this well will be best placed to benefit from a more demanding customer base.”
Not another label? Retailers should ‘do the hard work’
Consumers are increasingly demanding transparency. But communicating these very complex supply chains can be challenging and the sentiment that there are already ‘too many logos’ on product packaging is widely held.
Technology could well be part of the answer – not only to the challenge of communicating supply chains to consumers but also to the retailer’s ability to reliably track and authenticate the claims being made.
Retailers and brands are already experimenting with these tools. For instance, in partnership with French retailer Carrefour, Nestlé is using an on-pack QR code to provide full traceablity for its Mousline potato brand. Carrefour had already piloted this technology across a number of own brand lines, including its Auvergne chicken and farmhouse-fattened chicken line, as well as its tomato, egg, milk and orange supply chains.
But Coates is unconvinced this approach will go mainstream. While consumers might want to feel reassured that the products they are buying are sustainable on the one hand, on the other it is likely that they don’t have the time, inclination or depth of understanding to delve into the details of how each ingredient has been sourced.
“Communicating messages to customers on packaging is an eternal challenge for retailers and manufacturers. The use of QR codes allow a lot of information to be held and communicated but it is time consuming for consumers to look up and scan every product. Blockchain will help with the traceability of ingredients but doesn’t communicate directly to customers. Realistically with so many calls for information on packaging and the need for so many ‘assurances’, the ideal is for retailers to commit that everything they sell will meet required standards and do the hard work for the consumer.”
If this is the ‘ideal’ what will it take to move the industry further in that direction? Coates stressed that full supply chain traceability and sustainability won’t happen overnight and remained sceptical that the industry would adopt this approach without further pressure from regulators.
“This change won’t be instant and is likely to cost more money in the early days – resulting in higher costs for manufacturers and retailers. Higher costs would disadvantage those doing the right thing, so it will probably need government intervention to force all retailers and manufacturers to employ fully traceable and sustainable sourcing - to maintain a level playing field between retailers and not make sustainability a competitive disadvantage in terms of cost.”