Improving Palm Oil Sourcing

Abstract

This case study outlines how M&S carried out a programme to use only sustainable palm oil across an extensive own brand product range, including food, household, and beauty categories. It explains some of the challenges that have been faced and overcome as well as those that remain.

Keywords: Marks and Spencer, 2015 goal, segregated sustainable palm oil, supply chain certification, chain of custody

Background situation

Marks & Spencer is one of the UK’s leading retailers, with around 21 million customers visiting our stores every week. We sell high quality, great value clothing and home products and outstanding quality food. We source products responsibly from over 2,000 suppliers around the world. Over 81,000 people work for M&S in the UK and worldwide. Our core values are Quality, Value, Service, Innovation, and Trust. Marks and Spencer Group plc is a public limited company listed on the London Stock Exchange.

Plan A is the M&S sustainability programme that was launched in 2007 to address three global challenges: increasing pressure on our planet’s finite resources, rising social inequality, and the need for healthier, more sustainable lifestyles in the developed world.

M&S recognises the impact of commodities like palm oil on tropical forests and the communities that rely on these forests for their livelihoods. We have committed to only using sustainably produced palm oil by 2015 and have been on a journey to tackle the challenges that such a commitment brings with it.

Marks and Spencer in-store poster for Plan A ©M&S

Marks and Spencer in-store poster for Plan A ©M&S

Options and action

Commitment: In 2007 M&S committed to only source sustainable palm oil. In practice, this means buying from producers that have adopted the Roundtable on Sustainable Palm Oil (RSPO) growing standard. Initially M&S worked to exclude palm oil from its products as there was little certified palm oil available and our customers were demanding that we avoid palm oil associated with forest destruction; however, as RSPO palm oil has become available, the business has increasingly focused on the positive procurement of RSPO palm oil in preference to avoidance or removal.

Implementation: To report progress on our commitment and to give us the information to develop an implementation programme, M&S had to track which products contained refined palm oil and palm kernel oil, palm oil fractions, and palm oil derivatives, in what volume, and where they come from. We were aware that we used refined palm oil as a vegetable fat, but what became apparent was how commonly palm oil was used as a component of other ingredients. For example, palm oil is used to coat dried fruit and as a ‘carrier’ for seasonings.

This footprinting exercise highlighted that palm oil is used in many M&S products, but commonly it performs a functional purpose (e.g., emulsifier, stabilizer). In these circumstances it is used in very small volumes and is a tiny proportion of the finished product.

Traceability: As we engaged with the palm oil industry, M&S became increasingly aware of the complexity of palm oil supply chains, with many ingredients undergoing several processing steps after refining, and traceability being lost through these relationships.

Supply Chain Certification: It became increasingly obvious that the widespread adoption of supply chain certification was going to be as critical to success as adoption of the growing standard by producers.

Supply chain certification is used to ensure raw material integrity. It requires all companies that process palm oil in its many formulations to undergo an audit. This audit confirms they have processes in place to prevent accidental mixing of certified material with non-certified and ensures that the amount of RSPO palm oil sold does not exceed the amount bought. This is commonly known as ‘chain of custody’. An intact chain of custody is essential for M&S to make an RSPO claim, and to achieve this every company from producer to finished ingredient or product manufacturer must be supply chain certified.

SUPPLY CHAIN CERTIFICATION OPTIONS:

Physical palm oil: M&S initially communicated a preference for segregated palm oil; however, as time passed we have broadened our suppliers’ options and currently will accept any of the physical palm oil options: segregated and mass balance. We recognise the role of mass balance in allowing procurement to meet demand while demand is still a relatively small part of their business. We anticipate that as demand grows, processors and refiners will find that they will be sourcing sufficient certified palm oil to justify moving to 100% RSPO palm oil and only offering segregated options to their customers.

GreenPalm certificates: As it became clear early on that this was not going to be a ‘quick win’, M&S decided to buy GreenPalm certificates to demonstrate commitment to sustainable palm oil and to send a clear signal of support for RSPO certification to producers. M&S certificate purchases do not count towards our 100% 2015 target, which will only be met when all the physical palm oil we use is certified.

Outcomes and conclusion

Progress on transforming the M&S physical palm oil supply chains and procuring sustainable palm oil in its many formulations has been challenging. Until all our suppliers can access RSPO certified versions of all their palm oil ingredients, we cannot make it an absolute specification. Our suppliers who make our products depend on many other upstream relationships to change their procurement practices and they (like us) often cannot influence that on their own.

To achieve our goal M&S needs refiners, processors, and suppliers to buy RSPO certified palm oil AND to undergo supply chain certification. However, we also have to recognise that our upstream suppliers make products for other customers, and we need to give them time to align their procurement to meet all their customers’ needs. Operational efficiency (suppliers’ ability to manage different streams of certified and non-certified palm oil) has to be considered, but only while there is a commitment and a plan in place to achieve certification by 2015 for M&S products.

We know that we use more RSPO palm oil in our products than we can talk about, but if the chain of custody is broken, then the potential to make a claim is lost. So we are focusing effort on making sure our suppliers understand the RSPO supply chain certification requirements. M&S has carried out training sessions attended by certification bodies and our suppliers, and we have spoken at several industry events to promote the adoption of certification across the food, household, and beauty sectors.

M&S has learned a lot about how to improve the uptake of sustainably produced commodities through our experience with palm oil, and we hope that this case study helps others beginning this process.

  • Make a clear commitment and time bound target: It’s the only way stakeholders will take you seriously. Report progress at least annually.
  • Know your product use: Understand and quantify ‘hidden’ and low volume ingredients as well as simple formulations.
  • Map your supply chain: Knowing which major processors and refiners make the ingredients you use will allow you to have direct conversations with them. They may not know that you are a customer of theirs and will often appreciate a direct approach.
  • Know who the leaders are: Support those companies who have invested in sustainable palm oil by making sure your direct suppliers know which refiners and processors offer RSPO certified palm oil / ingredients.
  • Train and engage: Don’t assume your suppliers know about things like supply chain certification. Make sure they have access to guidance, either produced by your company or from informed partners like certification bodies, industry bodies, or internal experts.
  • Make your policy clear: Your buyers and technologists have to know what to do to achieve your public or internal commitments. They are busy people; don’t assume your big issue will be front of mind for them.
  • Engage with stakeholders: The decisions your company makes will affect a lot of other people, so talk to them—industry, producers, NGOs, standard setters, and many others.  If you don’t have time to talk to everyone, put updates online.

Prepared by: Fiona Wheatley
Position:Sustainable Development Manager
Company: Marks and Spencer
Contact: PlanA@marks-and-spencer.com
Date: September 2012