Transparency is a vital first step towards managing environmental risk and allows producers to demonstrate that they are addressing the potential environmental and social impacts of palm oil production.
In turn, transparency of grower operations allows financiers and supply chain stakeholders to monitor and manage the environmental risks associated with their own financing and procurement activities.
Defining transparency and requirements for reporting
ZSL defines transparent information as information communicated in publicly available materials that are freely and readily accessible to all stakeholders at no cost.
- Numerous mechanisms have been developed that support transparency, such as the Annual Communication of Progress (ACOP) reports required by all RSPO members to communicate details of their operations and their progress towards certification.
- Ideally, companies will take ownership of information and maximise accessibility by also publishing clearly signposted and dated information in their own communication materials, such as in sustainability reports, annual reports, and regularly updated websites.
- Regular reporting of measurable progress against sustainability targets and on the implementation of commitments and their results assures stakeholders that commitments are being implemented in practice, thereby increasing trust in a sustainable palm oil industry.
To monitor and manage environmental risks effectively, increased transparency is required across a number of areas:
- As well as publicly reporting on commitments and on progress in their implementation, this includes clear, public communication of company operations, including by publishing maps to show concession boundaries. This is essential for being able to verify the information being communicated and truly monitor progress towards sustainable palm oil production.
- Full transparency of operations requires disclosure of the following for all operations globally:
- Total landbank licensed/owned (hectares): the total area under the company’s ownership or management (for the company’s palm oil relevant subsidiaries)
- Total landbank for oil palm cultivation (hectares): the total area to be developed for oil palm
- Total planted area (hectares): the total area planted with oil palm, including mature and immature palms, new plantings and nursery areas
- Total scheme smallholder area (hectares)
- Total land managed for conservation that is set aside (hectares): the total area set aside for conservation under a company’s management
- Number of estates/management units: the number of separate estates or concession areas managed by a company
- Maps to show the location and boundaries of concessions for each management unit – ideally this should also delineate the boundaries of conservation areas and other features, such as riparian zones
- Maps to show scheme smallholder sites
- Number of mills operated by the companies
- Maps to show mill sites
- Details of company ownership
- The RSPO requests some of this information in the Annual Communication of Progress (ACOP) reports required to be submitted by member companies.
- For maximum transparency and as not all companies are RSPO members, best practice involves companies publishing this information through their own communication materials.
A number of companies are aiming to achieve full traceable supply chains in order to verify the implementation of supply chain commitments.
- Traceability allows for a company to understand where it is sourcing products from and what the impacts on the ground may be.
- This allows companies sourcing palm oil to prioritise areas of high environmental risk.
- Achieving traceability poses significant challenges due to the complexity of the palm oil supply chain.
- It is important to recognise that whilst traceability is a necessary first step in ensuring sustainability and the effective implementation of company policies, traceability in itself does not equate to sustainability.
- Oil palm producers can facilitate traceability and the verification of sustainability commitments, by increasing the transparency of their operations, including the location of their mill sites.
Different supply chain certification systems represent varying levels of traceability:
- Identity Preserved: This represents the most stringent chain of custody system when it comes to traceability. CSPO is kept segregated from all other sources (certified and non-certified) and a batch of certified palm oil can be traced from plantation to factory to retailer.
- Segregated: certified palm oil is kept segregated from non-certified palm oil, but is blended with other batches of CSPO and cannot be traced back to a specific plantation.
- Mass Balance: Certified palm oil is mixed with uncertified palm oil, but quantities are monitored administratively so that claimed volumes are matched.
- Book and Claim: This bypasses the need for physical traceability of certified palm oil through the supply chain. Producers can earn certificates for producing certified sustainable palm oil. Certificates are then sold via an online platform to user (retailers, manufacturers) who can then claim to support sustainable production of equivalent volumes purchased.