Please answer the following Question:
Unilever is working toward full sustainability when it comes to palm oil production. The process of extracting palm oil has gained global attention because of unsustainable practices such as deforestation. Since Unilever is a large company that works with an extensive supply chain, maintaining ethical sourcing practices can be extremely hard to manage and track. Yet as a buyer, Unilever is responsible for any unethical sourcing practices in its supply chain. In order to ensure responsible practices, Unilever has built a palm oil processing plant in Indonesia. Also, Unilever has purchased GreenPalm certificates from the roundtable on Sustainable Palm Oil (RSPO) when it purchases palm oil from other processing plants. However, this method is not entirely dependable because the processing of all the palm oil is not completely traceable. The following link includes more information on Unilever’s sustainable palm oil practices:
https://www.unilever.com/sustainable-living/what-matters-to-you/transforming-the-palm-oil-industry.html (Links to an external site.)
Why is it so difficult for large firms to monitor their supply chain?
What are some ways that Unilever is attempting to improve the sustainability of its supply chain?
What are some problems with relying on GreenPalm certificates? Do you think Unilever should do more to ensure the sustainability of its palm oil sourcing?
Then once answered respond to two other classmates
Student 1:
It is hard for large firms to monitor their supply chain, because they are typically all at different stages of progress towards sustainability. Every customer has different needs. We are currently living in the era of customer satisfaction, and large firms, since they have such a large supply chain, most likely struggle to keep every supplier satisfied.
Unilever first focuses on their own supply chain, and then working to transform the wider industry. They work closely with their suppliers. To do this, they were a founding member of the RSPO. Part of the reasoning they joined the RSPO, is because they realized that not one business can ‘turn the industry around,’ but it will take a collection of businesses striving for the same goal to help improve sustainability for palm oil.The RSPO’s objective is to promote the growth and use of sustainable palm oil products through global standards and multistakeholder governance. They also work with the TFA, which is a global private-public partnership where people take voluntary actions to reduce tropical deforestation associated with palm oil. Their current target is to purchase 100% certified/traceable palm oil products by the end of 2019.
GreenPalm certification doesn’t guarantee on its own solutions to every social and environmental issue facing the sector. Only about 20% of the total industry volume was certified by 2019. I think that Unilever is doing enough to ensure sustainability. They have a commitment to increase traceability. I think that they do a good job with showing their suppliers where their palm oil comes from.
Student 2:
Why is it so difficult for large firms to monitor their supply chain?
Supply chain management is a collaboration between a retailer and its wholesale and manufacturing distribution channel partners. Many of the facets of managing supply chains are similar for small businesses, the scope and steps involved are less complicated than with large organizations. Large organizations often have employees dedicated solely to the supply chain management function. A large wholesaler usually has an SCM manager and staff, or separate logistics and distribution managers. A small business often can’t afford a dedicated supply chain team. One key advantage for a small business is that the scope of the supply chain is often smaller. Thus, you don’t have as many chain partner relationships to manage. A small business may source its inventory from just a handful of suppliers, for instance. Keeping track of contacts, pricing and distribution systems with a small number of partners is much simpler than in large organizations where hundreds of relationships may exist.
What are some ways that Unilever is attempting to improve the sustainability of its supply chain?
In June of 2020, Unilever set a goal for zero emissions from all their products by 2039. They want to communicate the carbon footprint of every product they sell. They will work with a new generation of farmers to drive programs to restore and protect forest, soil and biodiversity. Unilever will work with governments and other organizations to improve access to water for communities in water shortage areas.
All of Unilever’s suppliers adhere to People and Nature cross commodity policy. They are increasing traceability and transparency to enable cleaver visibility of issues in the supply chain. This is done by assisting suppliers in appropriate ways to deliver a positive impact. Also, being inclusive of smallholder farms.
Unilever’s People and Nature Cross Commodity Policy is a very detailed company policy that states (in part):
For In-Scope Materials in Unilever’s supply chain, we require that Direct Suppliers protect natural ecosystems from deforestation and conversion, based on the applicable cut-off date.
These Direct Suppliers must:
ensure there is no deforestation or
conversion of natural ecosystems, and
protect the natural ecosystems, and
have no burning policies in place,
implement best management practices and
toolkits, including but not limited to RSPO
peat best management practices, the High
Carbon Stock Approach toolkit, and best practices to prevent burning
These requirements are irrespective of whether the materials are sourced from the Direct Supplier’s corporate group or their third-party supply chain.
What are some problems with relying on GreenPalm certificates? Do you think Unilever should do more to ensure the sustainability of its palm oil sourcing?
Little is known about what RSPO plantations and palm oil producers are doing with the money that is returned to them from GreenPalm Certificates. For example, to date about 53,000 GreenPalm certificates have been sold, amounting to about $1 million in revenue to RSPO certified palm oil producers and plantations. However, no information on what these producers / plantations are doing with that money, and how it is being reinvested to “help tackle the environmental and social issues created by the production of palm oil” is available on the GreenPalm website.
While growers may be “sustainable”, that doesn’t guarantee that others in the supply chain are! In fact, transporters, other plantations owned by the same company, refiners, and manufacturers of food products often do not use sustainable practices, yet companies remain RSPO members because the grower is using Green Palm certificates.
These overall company processes are neither controlled nor traceable.
Only 5% of sustainable material is required for the product to be labeled “sustainable.” Further, it is unclear what constitutes “sustainable material”, as we were unable to find a real definition for this anywhere.
Further, companies paying for GreenPalm Certificates do not address unsustainable practices in their own palm oil supply chains, nor do they help create a demand for sustainable palm oil that is traceable to the source.
So, it seems that Green Palm certificates actually aren’t worth the paper they’re printed on, as they do not promote or guarantee sustainable practices!
Unilever can work with other groups, such as Rainforest Action Network, Forest Trust, and Green Peace. These organizations are putting pressure on the RSPO to become more than just another cog in the palm oil wheel. Real pressure needs to be put on the members as well to encourage real change. Activities should be rewarded and punished, respectively. Most large corporations have a hard time being a leader and making changes. Their first priority is to their stockholders to show a profit. Much of the sustainability gets lost. The plan is in place and Unilever means well, they need to be an advocate of change and put pressure on RSPO to make better changes and have more transparency.
References:
https://smallbusiness.chron.com/supplier-relationships-management-strategy-14405.html (Links to an external site.)
“How ‘Sustainable’ Is the RSPO?” Palm Oil Awareness Initiative, whatispalmoil.weebly.com/blog/how-sustainable-is-the-rspo.
