Sustainably-produced, 100% certified and 100% traceable palm oil is part of Neste's extensive portfolio of renewable raw materials. Despite our strong focus on waste and residue raw materials, also sustainably-produced vegetable oils, such as palm oil, are a part of our raw material portfolio due to preferences in specific markets.
Over the past decade, palm oil's share in our annual renewable raw material inputs has decreased significantly. Based on changing customer preferences and regulatory trends, we have further reduced our use of palm oil. In 2022, palm oil represented approximately 4% of our renewable raw material inputs globally. Neste plans to reduce the share of palm oil to 0% of its global renewable raw material inputs by the end of 2023.
See our traceability dashboard for the most recent data on the palm oil that we use.
100% certified, 100% traceable
We source only sustainably-produced palm oil from carefully selected producers in Malaysia and Indonesia who are committed to sustainable practices and meeting strict sustainability criteria embedded in the regulation on biofuels. These criteria include, for example, having a proactive approach to preventing deforestation and mitigating its risk. We do not own any oil palm plantations or operate any palm oil refineries or mills.
Like all our renewable raw materials, also the palm oil volumes that we source always meet EU RED or US EPA requirements, as well as the legal requirements set by local authorities in all our markets. The palm oil that we source is 100% ISCC-certified and 100% traceable all the way to the oil palm plantations. Most of these volumes are additionally RSPO-certified as we require all our palm oil producers to be committed to RSPO certification, in addition to our other sustainability requirements.
When sourcing palm oil, we do not purchase separate certificates from the world market as many food industry companies do. We source certified palm oil directly from producer companies, which provides us an opportunity for direct engagement and collaboration, as well as better visibility into their operations.
We work closely with sustainability specialists to monitor our supply chains, and we regularly engage directly with our suppliers. We aim at building long-term relationships with our suppliers and continue being committed to do even more than what is legally required to ensure that the palm oil we source is and remains fully sustainable.
Efficient oil crop helps combat climate crisis
The oil palm (Elaeis guineensis) is a perennial plant that thrives when cultivated in tropical areas. Oil palm cultivation is very efficient in terms of land use. Compared to other oil plants, its oil yield is superior: on average, 4 tons of oil per hectare and at best up to 8 tons per hectare. Oil palm trees do not have to be felled for the fruit bunches to be collected; instead, the oil palm also produces oil year round for decades, providing steady income for those cultivating it.
Sustainably-produced palm oil has lower life cycle emissions compared to other farmed vegetable oil crops. Thanks to this, renewable fuel produced from palm oil can significantly cut climate emissions and contribute to combating climate crisis.
The palm oil that we source provides a greenhouse gas (GHG) reduction of over 70% on the average when refined into Neste MY Renewable Diesel and when the fuel's emissions over its entire life cycle are compared to similar emissions from fossil diesel use. The emission reduction clearly exceeds the 50% GHG emission reduction requirement for all biofuels defined in the Renewable Energy Directive (EU RED).
Approximately 58% of the palm oil we sourced in 2020 came from mills where methane is captured or its formation reduced with other methods. As early as in 2017, we were able to verify a 50% methane emission reduction from application of a belt filter press at palm oil mills. We have since continued to aim for accelerated implementation of methane avoidance methods within the palm oil industry.
Sustainability aspects of palm oil use
The biofuels industry is required by law to ensure that the palm oil they use is verifiably sustainably produced. To do so, they must know the exact origin of the palm oil they uses all the way to the plantation level. This is where the biofuels industry players like Neste differ from palm oil users from other industries. The palm oil that we have used has been 100% traceable to the plantation level since 2007, and 100% certified since 2013.
European biofuels legislation prohibits the use of raw materials from estates that have been established by clearing natural forests or other land with high biodiversity value after 2008. This helps biofuels producers to ensure that their palm oil volumes have not contributed to deforestation or threatened biodiversity.
Knowing the exact origin of the palm oil helps biofuels producers and sustainability experts also to monitor that human rights violations are not taking place in their supply chains. Comprehensive data on our palm oil supply chain is transparently provided on our website. This helps our partners and third parties to monitor our suppliers' sustainability performance.
Examples of our sustainability projects and cooperation
Neste has a clear stand against any actions that would cause deforestation. We are committed to preventing deforestation in our supply chains and require the same from all our raw material suppliers.
Our key partner in managing deforestation risk is the Consortium of Resource Experts (CORE). This association of Daemeter and Proforest supports us particularly in our continuous efforts to develop the transparency of our raw material supply chains, and in assessing and mitigating the environmental risks of our company’s palm oil supply chain.
Already in 2015, all our palm oil suppliers committed themselves to No Deforestation policies including their third-party sourcing. We have conducted environmental risk assessments of our palm oil suppliers and engaged in a dialogue with our suppliers regarding managing the risks at their plantations. We offer regular training to our suppliers to ensure sufficient understanding of our policies and guidelines and to ensure their efficient implementation. We have continued monitoring the progress of their implementation process. We have developed a Supplier Sustainability Portal in collaboration with our suppliers to digitalize and further enhance our supplier engagement and monitoring.
Neste discloses its forest footprint transparently as part of the CDP Forests program. In 2022, Neste was assessed as belonging to the leading performers’ Leadership class, reaching A- rating (palm oil) and A rating (cattle products) for its deforestation risk management performance in the CDP Forests and Water Security assessment
Labor rights and migrant workers
The minimum human rights requirements for Neste business partners - including suppliers, contractors and service providers - are set out in the Neste Supplier Code of Conduct, with supporting information for implementation provided in the Supplier Code of Conduct Guidance. Neste encourages and supports its business partners to continually improve and develop beyond the minimum, to reach the human rights standards and expectations set out in the Human Rights Principle.
Read more about human rights in the supply chain here.
Landscape project in Siak, Indonesia
Alongside several other global brands, Neste, as well as Daemeter, Proforest and the Siak government continued to cooperate in the Siak Pelalawan Landscape Programme. This program is designed to have a large-scale transformative sustainability impact in the regions in Indonesia. The program has helped protect forests, peat and biodiversity and support sustainability performance of smallholder farmers. In 2022, the program focused on involving all types of village stakeholders to boost ecosystem conservation and improve community livelihoods by working towards nature-positive and socially inclusive solutions.
Read more about the project here.