Sustainability

Questions and answers about palm oil sustainability

Simo Honkanen, Senior Vice President, Sustainability and Public Affairs, Neste

Neste’s Senior Vice President of Sustainability and Public Affairs, Simo Honkanen answers questions regarding Neste’s palm oil supply chain and sustainability. 

How can you be certain the palm oil you use is produced sustainably?

All the palm oil we have used has been fully traceable to the plantation level since 2007, and 100% certified since 2013. 

We do not own or operate any palm oil plantations, mills or palm oil refineries. All palm oil we source is supplied by carefully selected responsible producers in Malaysia and Indonesia. We do not purchase separate palm oil certificates from the world market like many of the food industry companies do, for example. Instead, we source certified palm oil directly from producer companies for whom we have strict sustainability criteria

Why does Neste use palm oil as a raw material in biofuels production?

Neste has already over 10 different renewable raw materials in its portfolio for producing renewable products. Nearly 80% of the production of our renewable products is based on waste and residues, the rest is produced from sustainably produced vegetable oils, mainly palm oil. 

Sustainably-produced palm oil has lower life cycle emissions compared to oil from other farmed vegetable oil crops. Its yield is also the highest, meaning that less arable land is needed to produce the oil.

How much palm oil is used for biofuels?

The food industry continues to be the world's biggest consumer of palm oil. It accounts for nearly 70% of the global usage, industrial uses (namely the household chemicals industry, e.g. cosmetics) 17%, and the biofuels industry 16% (source: USDA). 

In 2017, Neste used 663,000 tons of certified, sustainably produced palm oil. This represents less than 1% of the global consumption of palm oil, and 6% of the biofuel industry's usage. 

Greenpeace published a report about palm oil Sept 19, 2018. How does Neste respond to these claims?

The Greenpeace report identifies large global companies sourcing materials from palm oil producers that may have links to unsustainable practices. We take all claims referring to potential sustainability violations in the palm oil industry very seriously.

We have investigated our palm oil supply chain and compared it to Greenpeace's report. On 28 September we were able to verify that we do not source palm oil from the companies mentioned in the Greenpeace report. Further investigations are ongoing.

Does Neste source palm oil from the mills mentioned in the report?

We have verified that we do not source palm oil from the mills or plantations mentioned in the report. However, we continue our investigations concerning other palm oil products.

Our investigations are supported by a sustainability expert organization Consortium of Resource Experts (CORE) and based on large background data on the situation in Malaysia and Indonesia. Local expertise and non-governmental agencies (NGO) are engaged in the process, as well.

Neste also uses PFAD as a raw material. What is PFAD? 

Palm oil fatty acid distillate (PFAD) is a non-desired output of the process where crude palm oil is refined e.g. for food or chemical industry uses. Its use does not drive palm oil production or expansion of oil palm cultivation. For these reasons, it does not accelerate deforestation. 

In circular economy, all residues and wastes should be utilized and have value. Many countries recognize PFAD as a processing residue, and its use as a renewable raw material in biofuels production is fully acceptable around the world.

PFAD is a residue that represents a very small share of the palm oil refineries’ overall output volume. 

How can Neste ensure, that PFAD is sustainably produced?

We are committed to becoming the first in the world to build a fully traceable PFAD supply chain beyond its place of origin, all the way to the oil palm plantation level.

Neste’s goal is to map all its PFAD use up to the palm oil plantations by 2020. By the end of 2017, we had mapped 96% of our PFAD supply chain to the palm oil mills supplying the palm oil refineries where PFAD is extracted during vegetable oil refining. Currently we are carrying out risk assessment of the supply chain, i.e. studying the locations of mills plantations, their proximity to protected areas, peatlands, forests, etc. PFAD mapping is challenging because the palm oil refineries’ supply chains serving primarily the food industry have not been traced before. Neste takes an active role in developing also traceability of these palm oil streams in order to safeguard the sustainability of the processing residue, PFAD.

What can be done to improve sustainability in the palm oil industry?

We believe that improving transparency in the palm oil production and logistics is the key to improving sustainability. 

Many NGOs have recently emphasized the importance of engagement, cooperation, and continuous improvement with palm oil producers instead of boycotts. We believe that it is important to strive for lasting change and to keep sustainability requirements at the highest possible level; thus, to not accept any deforestation, planting on peat or violating the rights of indigenous people or employees.

Close cooperation and engagement among different stakeholders, such as the food industry, the biofuels industry, and palm oil producers, as well as developing transparency of the supply chain provide the best tools for handling and preventing misconduct. We also strongly support legislative development in both Indonesia and Malaysia which aim to further develop their national regulations on palm oil production.  

Palm oil is facing headwind in Europe, what is Neste’s view?

Criticism reflects concerns for uncontrolled expansion of cultivation as well as social issues particularly in Southeast Asia. We believe that all industries using palm oil should strive for increased transparency and strict requirements for sustainability. On the other hand, the positive impacts of the palm oil industry are unfortunately not often covered in the news. Sustainably produced palm oil provides a livelihood for millions of people every day, all year round.

Has Neste set a timeline for phasing out its use of palm oil?

Our raw materials are increasingly coming from waste and residue as well as recycled material streams. Sustainably produced palm oil is, however, a good raw material and we are unable to say whether or not Neste’s palm oil use will be phased out at some point. 

Why do you still use palm oil, although it is causing much damage in Southeast Asia?

Sustainably produced palm oil is a good raw material and has significant positive impacts for people locally. We recognize the risks related to unsustainable palm oil but think that having high sustainability standards and working together with producers has a positive impact on the whole industry.

Where can I get more information on forests and deforestation?

You can visit e.g. World Resource Institute’s web page. WRI has also specific monitoring on global forestry.

Simo Honkanen, Senior Vice President, Sustainability and Public Affairs, Neste
Simo Honkanen
Senior Vice President, Sustainability and Public Affairs