Companies in China share progress on responsible procurement of palm oil

27 June 2017

How can we make the palm oil sector in China more sustainable? What are the steps for scaling up sustainable palm oil in the Chinese market? During the 4th China Roundtable on Sustainable Palm Oil organized by Solidaridad and China National Vegetable Oils Association, representatives from the palm oil supply chain shared their opinions on these questions.

This meeting held in June included representatives from China National Vegetable Oils Association, CCICED,Agricultural Trade Promotion center of the Ministry of Agriculture, UNDP, Embassy of Netherlands in Beijing and six palm oil companies including COFCO, Sinograin Oils Corporation, Fangshun Oils, Cargill Investments (China) Ltd., and FrieslandCampina China.

Solidaridad’s global approach to sustainability

Isabel Nepstad, programme manager at Solidaridad China, opened the roundtable by introducing Solidaridad’s palm oil programme and why Chinese companies should care about sustainable development. Since President Xi Jinping has demonstrated China’s leadership role in combating global climate change, many efforts are taking place domestically.

Nepstad said, “Climate change has no borders. Forests are our allies to defend against climate change. It’s a global challenge we must face together.” Remarking on the lessons learned from previous study tours to Indonesia and Europe, sustainability interventions boost reputation and provide added brand value, and can therefore generate greater returns in the long term.

Challenges facing international businesses

Following the opening, representatives from Cargill Investments (China) Ltd. and FrieslandCampina China shared their best practices in sustainable palm oil production and procurement. These two multinational companies joined RSPO in the years 2004 and 2007 respectively, and have already made commitments to achieve deforestation-free palm oil to support the usage of sustainable palm oil and protect rainforest and biodiversity.

These companies also shared challenges they faced on their way to achieving sustainable palm oil. One of the challenges is persuading all their suppliers to follow sustainable palm oil policies. Secondly, there were significant challenges in communicating with smallholders about the sustainable palm oil policies. Last but not the least, the extra cost associated with purchasing certified sustainable palm oil is now covered by companies themselves because of the low level of awareness and demand from consumers.

China at the starting line

Representatives from Chinese companies also shared the current situation of Chinese sustainable palm oil development. Big Chinese companies like COFCO and Sinograin have joined RSPO and taken some concrete actions in the area of sustainable palm oil. However, representatives shared their feelings that compared with developed European countries, China is still a developing country and started very late in the area of sustainable development.

It is difficult for companies to cover all the extra costs due to procurement of sustainable palm oil. The demand from downstream retailers and consumers is really important in order to pressure producers and traders. This is the key to the success of the whole palm oil supply chain.

Multiple standards cause confusion

An additional challenge is that China uses the international RSPO standard, whereas Indonesia and Malaysia have their own palm oil certification standards. Too many standards make it difficult for the industry to comply. Standards can be useful only if it can get the recognition from downstream companies.  In other words, it needs the collective effort of government, associations, companies, NGOs and consumers to push for the development of sustainable palm oil in China.

In the last group discussion of the event, Chinese companies and organizations showed their support in the development of green supply chains and global sustainable palm oil production and trade. They also discussed the possibilities for increasing the production of palm oil by using technology rather than deforestation.

Learn more about Solidaridad's global palm oil programme.