Sustainable Palm Oil in EuropeProgress report on the use of sustainable palm oil - April 2016

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IntroductionThis Sustainable Palm Oil in Europe progress report is brought to you by the European Palm Oil Alliance (EPOA) MVO ndash The Netherlands Oils and Fats Industry and The Sustainable Trade Initiative (IDH)

The report intends to increase transparency and give insight on the status of the road towards lsquo100 sustainable palm oil in Europe by 2020rsquo Although data on sustainable palm oil is far from complete and monitoring methods are differing per country this progress report gives an overview of all the latest figures on the use of sustainable palm oil in food in Europe Together with its stakeholder EPOA IDH and MVO will continue to work on more elaborative reports during the course of 2016

ldquoTOWARDS 100 SUSTAINABLE PALM OIL IN EUROPE BY 2020rdquo

Sustainable palm oil Palm oil is the most produced and traded vegetable oil in the world It is a versatile ingredient used in different food feed and fuel or oleochemical applications Palm oil is derived from the fruits of the oil palm trees that are grown in the tropical regions around the world More than 85 of the global production takes place in Indonesia and Malaysia Europe is the third user of palm oil after Indonesia and India Since 2000 the production of palm oil has doubled and it is expected to increase even more in the near future as worldwide demand for vegetable oils is growing If not carefully managed increased production could come at the expense of forests and biodiversity and ignite social conflict However a sustainable management and production of palm oil with environmental protection and socio-economic benefits is possible

Certified sustainable palm oilSustainable palm oil is defined in multiple certification standards This progress report aims to incorporate all sustainable palm oil standards in the various applications to provide a comprehensive overview In food the main certification standard used is the Roundtable for Sustainable Palm Oil (RSPO) standard The RSPO certified palm oil is produced according to the principles and criteria of the RSPO and can be traded according to one of the four RSPO approved trading models BookampClaim Mass Balance Segregated or Identity Preserved Other sustainability certifications on palm oil in food are Rainforest Alliance and International Sustainability and Carbon Certification (ISCC) Plus

Biofuel applications criteria for sustainable palm oil are lined out in the EU Renewable Energy Directive (RED) These guidelines are mandatory for companies using vegetable oils such as palm oil to produce biofuel The International Sustainability and Carbon Certification (ISCC) is the main certification system used and accredited for the EU RED system

Indonesia and Malaysia have also developed their own standards for certified sustainable palm oil The respective Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) are important steps towards a more sustainable palm oil supply chain The standards focus on smallholder development reducing greenhouse gasses and draw attention to environmental issues The ISPO standard is mandatory for palm oil producers in Indonesia Until now there has not been considerable demand by the European market for these certification schemes

Food

Feed

Non-Food

Bioenery

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The Palm Oil Supply Chain

Palm Oil Applications

Sustainable palm oil Palm oil is the most produced and traded vegetable oil in the world It is a versatile ingredient used in different food feed and fuel or oleochemical applications Palm oil is derived from the fruits of the oil palm trees that are grown in the tropical regions around the world More than 85 of the global production takes place in Indonesia and Malaysia Europe is the third user of palm oil after Indonesia and India Since 2000 the production of palm oil has doubled and it is expected to increase even more in the near future as worldwide demand for vegetable oils is growing If not carefully managed increased production could come at the expense of forests and biodiversity and ignite social conflict However a sustainable management and production of palm oil with environmental protection and socio-economic benefits is possible

Certified sustainable palm oilSustainable palm oil is defined in multiple certification standards This progress report aims to incorporate all sustainable palm oil standards in the various applications to provide a comprehensive overview In food the main certification standard used is the Roundtable for Sustainable Palm Oil (RSPO) standard The RSPO certified palm oil is produced according to the principles and criteria of the RSPO and can be traded according to one of the four RSPO approved trading models BookampClaim Mass Balance Segregated or Identity Preserved Other sustainability certifications on palm oil in food are Rainforest Alliance and International Sustainability and Carbon Certification (ISCC) Plus

Biofuel applications criteria for sustainable palm oil are lined out in the EU Renewable Energy Directive (RED) These guidelines are mandatory for companies using vegetable oils such as palm oil to produce biofuel The International Sustainability and Carbon Certification (ISCC) is the main certification system used and accredited for the EU RED system

Indonesia and Malaysia have also developed their own standards for certified sustainable palm oil The respective Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) are important steps towards a more sustainable palm oil supply chain The standards focus on smallholder development reducing greenhouse gasses and draw attention to environmental issues The ISPO standard is mandatory for palm oil producers in Indonesia Until now there has not been considerable demand by the European market for these certification schemes

Food

Feed

Non-Food

Bioenery

next page gtgtltlt previous page sustainable palm oil in europe - progress report on the use of sustainable palm oil

The Palm Oil Supply Chain

Palm Oil Applications

next page gtgtltlt previous page sustainable palm oil in europe - progress report on the use of sustainable palm oil

Innovative policies Next to the current certification standards for sustainable palm oil initiatives to work on sustainable palm oil have also been developed by individual companies Palm oil producers and global manufactures using palm oil have their own policies for sustainable palm oil A number of palm oil producers stress the need to combine their commitments in the Sustainable Palm Oil Manifesto (SPOM) and the Indonesian Palm Oil Pledge (IPOP) for additional requirements for sustainable palm oil such as lsquono deforestation no peatland use and no exploitation of human rightsrsquo The SPOM also conducts a High Carbon Stock (HCS) study to define what areas are suitable for sustainable production and which are not This topic is also part of the Palm oil Innovation Group (POIG) a coalition between international NGOrsquos producers and manufactures that aim to improve the RSPO criteria

Next stepsRecently the RSPO has created RSPO Next With RSPO Next the RSPO now incorporates criteria such as lsquono deforestation no peatland use and traceabilityrsquo This voluntary standard can be supported by both palm oil producers and downstream manufacturers to build upon the already existing RSPO certification It is expected that the RSPO Next credits will be available later this year

General ResultsLargest market for Certified sustainable palm oil The largest markets for certified sustainable palm oil (CSPO) are in Europe Importing over around 12 of the global palm oil production a year (Oil World Annual 2015) Europe has an important role to transform the global palm oil supply chain European reporting figures show that in 2015 57 of the physical palm oil flowing into Europe was certified as sustainable palm oil This is an increase of 11 compared to 20141 The reported share is equivalent to 21 million tonnes of sustainable palm oil representing around 80 Segregated and Identity Preserved and 20 Mass Balance supply chain models (Fediol 20152016)

Industry initiativesTo increase the uptake of sustainable palm oil it is essential for industries in the palm oil supply chain to join forces To this end more and more companies and sector associations are working together in lsquonational alliances on sustainable palm oilrsquo These alliances are now widespread in western and northern Europe committing many companies and sectors to use sustainable palm oil National alliances are also emerging in southern Europe with the launch of the lsquoItalian Union for Sustainable Palm Oilrsquo being the latest in 2015 All national alliances have a commitment to use 100 certified sustainable palm oil with many alliances also moving towards additional criteria and the continuous improvement of certification standards These commitments are all combined in the lsquoCommitment to Supportrsquo which was presented at the lsquoEU conference on Global Value Chainsrsquo in Amsterdam on December 7 2015 The commitment aims to increase and align the demand for sustainable palm oil in Europe by working together with the European sector associations organised in the European Sustainable Palm Oil Advocacy Group (ESPOAG) and certification standards such as the RSPO

GovernmentGovernments have an important role to support and motivate the palm oil industry to use sustainable palm oil Biofuel applications criteria for sustainable palm oil are outlined in the EU Renewable Energy Directive (RED) The Dutch ministry of Foreign Affairs has the ambition to combine trade with development and is supportive towards sustainable palm oil use in Europe The ministry supports initiatives on sustainable trade via IDH The sustainable trade initiative which is also active on palm oil During the Dutch EU presidency in 2016 the Dutch government

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

46 57

Physical certified sustainable palm oil into Europe

2014 2015

1 Based on reported import volume of 35 million MT and only represents Mass Balance Segregated and Identity Preserved supply chain models

Sustainable palm oil Conventional palm oil

all volumes are in Metric

Tonnes

next page gtgtltlt previous page sustainable palm oil in europe - progress report on the use of sustainable palm oil

declared together with four other EU member states their support for more sustainable palm oil This lsquoAmsterdam Declaration in Support of a Fully Sustainable Palm Oil Supply Chain in 2020rsquo supports the above described lsquoCommitment to supportrsquo During the Dutch presidency the Dutch ministry of foreign affairs will engage with more member states to gain support for the declaration

Civil society organisationsCivil society had an important role in the establishment of the RSPO and continue to push and support companies to use more sustainable palm oil A number of civil society organisations are also involved in and actively taking part in discussions to improve sustainable criteria They can and should play a constructive role in stimulating companies to use sustainable palm oil

Palm Oil Trade Flows

Click on the image to view the full version

Initiatives and results per countryMonitoring the use of sustainable palm oil is not straightforward Its widespread use complex supply chain and variety of derived products make it difficult to specify exactly how much sustainable palm oil or fractions are used Nevertheless many national alliances have been monitoring the use of palm oil in their country or the use by their members Although

monitoring methods and scope may be differing the outcomes give a good overview on the status and progress of sustainable palm oil in Europe The following map presents an overview on the most recent monitoring results by the respective national initiatives in Europe Further details on the usage of sustainable palm oil in each country is highlighted below

Sweden It is estimated

that the members of the Swedish food industry

used around 97 CSPO in 2014

Netherlands 72 of the total food

industry used CSPO in 2014

Belgium all company

members of the Belgian Alliance on

Sustainable Palm Oil only use CSPO for the Belgian market from

December 2015 onwards

Germany 54 of the total food industry used CSPO

in 2013 All members of the German Forum on sustainable palm oil used 100 CSPO

in 2014

UK Between 72 and

93 of the palm oil imported into the UK was supported by sustainability certification in

2014

INTRA EU EXPORT PALM OIL THE NETHERLANDS

INTRA EU EXPORT PALM OIL GERMANY

Main Trade Flows

0

50

100

150

200

250

Germ

any

Franc

e

Spain

UK Polan

d

Italy

Portu

gal

Belgi

um-Lu

xemb

ourg

Roma

nia

Austr

ia

Swed

en

Polan

d

Denm

ark

The N

etherl

ands

UK Belgi

um-Lu

xemb

ourg

Swed

en

Hung

ary

0

40

80

120

160

Palm Oil

Palm Kernel Oil

PALM OIL EXPORT TO THE EU

PALM KERNEL OIL EXPORT TO THE EU

Indon

esia

Malay

sia

Papu

a New

Guine

a

Thail

and

Other

Indon

esia

Malay

sia

Papu

a New

Guine

a

Other

01000200030004000

0

100

200

300

PALM OIL BALANCE PALM KERNEL OIL BALANCE

Germany Italy The Netherlands Spain UK

Total Import

Domestic Use

0500

1000

1500

2000

2500

0

100

200

300

400

PALM OIL AND PALM KERNEL OIL IN EUROPE

PALM OIL USE IN THE EU

1990 1994 1998 2002 2006 2010 2014

80007000600050004000300020001000

0

BioenergyapplicationsFood feed

and other515

1281

1756

LegendReference year 2014 Source Oil World Annual 2015All volumes are in thousand metric tonnes European Palm Oil Import Intra European Palm Oil ExportEU the European Union (28)

1191

23784141 3220 UK

Spain

Italy

Germany3RD USER OFPALM OILTHE EU IS THE

IN THE WORLD

PALM OIL WILL CONTINUE TO BE THE MOST FAVOURABLE OF

ALL VEGETABLE OILS IN

EUROPE

The Netherlands

Germany Italy The Netherlands Spain UK

EU PALM OIL AND PALM KERNEL OIL IMPORT

PALM OIL ANDPALM KERNEL OIL

IN EUROPEFacts and Figures on

Trade Flows and Sustainability

SUSTAINABLE PRODUCTIONPRINCIPLES OF THE ROUNDTABLE ON

SUSTAINABLE PALM OIL

COMMITMENTS ON SUSTAINABLE PALM OILCURRENT NATIONAL INITIATIVES OR

WHAT IS PALM OIL

WHERE DOES IT COME FROMIndonesia Malaysia Thailand

WHY IS PALM OIL SO POPULAR

THE MOST WIDELY USED VEGETABLE OILBROUGHT TO YOU BY

copy 2015

TOWARDS 100 SUSTAINABLE PALM OIL

IN EUROPE BY 2020

COMMITMENT TO TRANSPARENCY - COMPLIANCE WITH APPLICABLE LAWS amp REGULATIONS - COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY - USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS - ENVIRONMENTAL RESPONSIBILITY AND

CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY - RESPONSIBLE CONSIDERATION OF

EMPLOYEES AND OF INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS - RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS - COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY

20 OF PALM OIL GLOBALLY IS CERTIFIED BY THE RSPO

bull VERSATILITYbull FUNCTIONAL BENEFITSbull WIDESPREAD AVAILABILITYbull EFFICIENT

COMING FROM PALM FRUIT

EACH FRUIT CONTAINS

30-35 OILPALM OIL IS THE MAIN

GLOBAL SOURCEOF NATURAL SOLID FAT

ALL OF THE WORLDS PALM FRUIT GROWS HERE

Other

World Production Palm Oil

in 1000 tonnes

World Production Palm Kernel Oilin 1000 tonnes

Matured Areain 1000 ha

59229 6521 16472

OIL PALMS ONLY USE 6 OF THE GLOBAL CULTIVATED

LAND DEDICATED TO VEGETABLE OIL PRODUCTION WHILE IT IS

DELIVERING 32OF THE TOTAL VEGETABLE OILS

VOLUME

50unsaturated

fatty acids

50saturated fatty acidsGROWING

IN BUNCHES ON PALM OIL

TREES

HOW IS IT USED

FOOD FEED NON-FOOD BIOENERGYAPPLICATIONS

REGIONS AROUND THE EQUATOR

France All members of the French Alliance used 96 CSPO in

2015

next page gtgtltlt previous page sustainable palm oil in europe - progress report on the use of sustainable palm oil

BelgiumBelgium uses around 6 of all the palm oil that is imported into Europe To support the use of sustainable palm oil the stakeholders in the Belgian palm oil supply chain established the lsquoBelgian Alliance Sustainable Palmrsquo (BASP) in 2012 All company members of the BASP achieved their 2015 commitment to only use RSPO certified sustainable palm oil in their food products destined for the Belgian market as from 1 December 2015 There are 9 companies and 5 federations participating in the alliance representing in total around 80 of the Belgian food market The Belgian cosmetics and detergents association DETIC has also joined the BASP in 2015 The members of the Belgian Alliance now focus on expanding their coverage of the Belgian market and work on their 2020 commitment that integrates lsquotraceability preservation of high carbon stock and peat land areas and the development of smallholder farmersrsquo

DenmarkDenmark is the main importer and distributor of palm oil in Scandinavia It uses around 2 of the palm oil imported in Europe The Danish Food and Drink Federation leads the initiative on sustainable palm oil in Denmark The members that endorse the initiative commit to a minimum to cover all palm oil by GreenPalm certificates by 2016 No later than the end of 2018 the initiative aims to have 100 RSPO (or equivalent) segregated certified palm oil

The NetherlandsThe Netherlands are the main importer of palm oil in Europe Importing more than a third of the total palm oil use the Netherlands have an important role to push the European supply chain towards more sustainable palm oil Some 18 of the palm oil in Europe stays in the Netherlands to be processed in food or non-food applications The Dutch Alliance Sustainable Palm Oil (DASPO) is a collaboration between eight food and feed associations that encourage the use of sustainable palm oil in the Netherlands The DASPO is the successor of the Task Force Sustainable Palm Oil established in 2010- the first European national commitment to use 100 RSPO (or ndashequivalent) certified sustainable palm oil by the end of 2015 The Task Force reported 72 RSPO certified sustainable palm oil processed in the Netherlands in 2014 and expects the 2015 results mid-2016 (Task Force 2015)

website

website

website

050000

100000150000200000250000300000350000

Use of sustainable palm oil in the Dutch food industry (2014)

2011

30

53 6172

2012 2013 2014

0

20000

40000

60000

80000

100000

Use of sustainable palm oil in the Dutch food sector (2014)

Sustainable palm oil Conventional palm oil

potato

snack

milk and dairy

margarine

bakery and confectionary

sauce

other

Sustainable palm oil Conventional palm oil

all volumes are in Metric

Tonnes

next page gtgtltlt previous page sustainable palm oil in europe - progress report on the use of sustainable palm oil

FranceFrance uses around 6 of all the palm oil in Europe Founded in 2013 the French Alliance for Sustainable Palm Oil brings together companies and professional organizations to move towards more sustainable palm oil Its aim is to increase the use of sustainable palm oil Sustainable means no deforestation environmental friendly and respectful of biodiversity and local populations Its members reported 96 use of sustainable palm oil in their products by the end of 2015 and have committed to even more stricter conditions for 100 of their supplies by 2020 (French Alliance 2016)

ItalyItaly is second largest importer of palm oil in Europe Most of the palm oil imported stays in Italy to be processed into a food or non-food application In total Italy uses around 24 of the palm oil that is imported in Europe Established in 2015 the lsquoItalian Union for Sustainable Palm Oilrsquo is the most recent national initiative in Europe and is active since the beginning of 2016 It brings together companies and sector associations committed to 100 certified sustainable palm oil by 2016 The members of the Italian Union also aim for more stricter definition of sustainable palm oil in 2020 To start promoting the use of sustainable palm oil the Italian Union has launched a consumer campaign to explain the role of palm oil in our diet and its sustainable production

GermanyGermany is one of the biggest palm oil importers and distributors in Europe Some 12 of the European palm oil is used in Germany in food or non-food applications The German Forum on Sustainable Palm Oil (FONAP) was established in 2013 and is a collaboration between private sector companies including retailers NGOs and the German Government In 2013 the total German food industry used 54 certified sustainable palm oil (FONAP 2015) The margarine and bakery sectors yielded highest percentages used All members of the German Forum achieved 100 certified palm oil at the end of 2014 They have further committed to a publicly available road map with intermediate goals to achieve 100 physical supply latest in 2020 Additionally they demand voluntary add-on criteria to further strengthen certification systems

website

0

100000

200000

300000

400000

500000

600000

Use of sustainable palm oil in Germany (2013)

food HPC totalfeed chemicalpharmacy

0

20000

40000

60000

80000

100000

120000

Use of sustainable palm oil in German food sector (2013)

margarine confectionary meatreplacement

out of home

bakery convenience food

other fast food restaurants

website

website

Sustainable palm oil Conventional palm oil

Sustainable palm oil Conventional palm oil

all volumes are in Metric

Tonnes

next page gtgtltlt previous page sustainable palm oil in europe - progress report on the use of sustainable palm oil

United KingdomThe UK are the fifth biggest importer of palm oil in Europe Much of the palm oil imported stays within the UK and represents around 7 of the palm oil used in Europe In 2012 the Department for Environment Food and Rural Affairs (DEFRA) published a joint statement together with key palm oil using trade associations NGOs and others who committed to ldquoworking towards achieving 100 sourcing of credibly certified sustainable palm oil in the UK by the end of 2015rdquo The UK statement covers a wide range of sectors including food and drink manufacturers retailers oil processors and distributors government zoos and aquariums animal feed manufacturers cleaning products industry hospitality sector chemical specialities renewable energy and NGOs such WWF and ZSL The latest figures available indicate that in 2014 either 72 (scenario 1) or 93 (scenario 2) of UK palm oil imports were supported by RSPO certification depending on the trade data source used by Oil World and FEDIOL The reason for the differences in percentages is FEDIOL uses EUROSTAT data without any further revision whilst Oil World uses trade intelligence to further refine their estimates of Palm Oil and Palm Kernel Oil data including imports into the UK Results for 2015 will not be known until later in 2016

SwedenSweden uses around 2 of the palm oil imported in Europe The Swedish Initiative for Sustainable Palm Oil is coordinated by the Swedish Food Federation and aims to use exclusively certified palm oil that is in line with RSPOrsquos criteria in food by the end of 2015 It is estimated that itrsquos members use 97 of certified sustainable palm oil with Book amp Claim being the dominant supply chain model (The Swedish Food Federation 2015) The Swedish cosmetics and detergents sectors organised in the lsquoKemisk- Tekniska Leverantoumlrfoumlrbundetrsquo (KTF) launched a similar initiative to start using CSPO at the end of 2015 Both commitments are working to join forces on a national level

website

0

10000

20000

30000

40000

50000

60000

70000

80000

Use of sustainable palm oil in Swedisch food sector (2014)

website

Book amp Claim

Segregated and Mass Balance

Conventional

0

100000

200000

300000

400000

500000

600000

Use of sustainable palm oil in the UK (2014)

scenario 1 scenario 2

Sustainable palm oil Conventional palm oil

all volumes are in Metric

Tonnes

ltlt previous page

Brought to you by

website

website

website

European Palm Oil Alliance ndash EPOA aims to create a balanced and objective view on the nutritional and sustainability aspects of palm oil by providing science-based information EPOA works in cooperation with its stakeholders to facilitate and support national industry alliances on sustainable palm oil

MVO ndash The Netherlands Oils and Fats industry ndash MVO represents the interests of the Dutch oils and fats supply chain MVO works on an international competitive sector and has a special focus on sustainable sourcing

IDH the Sustainable Trade Initiative accelerates and up-scales sustainable trade by building impact oriented coalitions of front-running multinationals civil society organizations governments and other stakeholders Through convening public and private interests strengths and knowledge IDH programs help create shared value for all partners Driving sustainability from niche to norm and delivering impact on the Sustainable Development goals

Sources

DEFRA 2015 Annual review UK Consumption of Sustainable Palm Oil October 2015 FONAP 2015 Analyse des Palmoumllsektors in

Deutschland Ergebnispraumlsentation

Oil World Annual 2015 Volume 1 ndash up to 201415

The Swedish Food Federation 2015 The Implementation of Swedish Food Federation Initiative on Sustainable Palm Oil Monitoring Report 2015

Task Force 2015 Task Force Sustainable Palm Oil Annual Report 2014

Fediol 2015 Fediol statement 18 November 2015 Certified sustainable palm oil use on up-wards trend in EU

ContactFor more information please contact infomvonl

copy April 2016

Bilan 2013-2015 de lrsquoAlliance Franccedilaise pour une Huile de Palme Durable et ses perspectives agrave lrsquohorizon 2020

Fediol 2016 Fediol Factsheet 16 March 2016 2015 Palm Oil Monitoring