An effective public campaign (on palm oil)

June 29, 2010

     By Duncan Green     

PalmoilYou know you’ve had an impact when the Economist devotes three pages to your campaign, so hats off to Greenpeace and the other organizations featured in this week’s spread on palm oil. Here are some excerpts:

“Palm oil is a popular, cheap commodity, which green activists are doing their best to turn into a commercial liability. Companies are finding them impossible to ignore.

Early on April 21st 2008, Greenpeace activists dressed as orang-utans stormed Unilever’s headquarters in London to draw attention to the damage done to Indonesian tropical rainforests by the production of palm oil, an ingredient in many of Unilever’s products. It was effective: soon after the orang-utan invasion the company said it would draw all its palm oil from “sustainable” sources by 2015.

The charges against palm oil are serious: environmental groups regard it as a danger not only to Asian wildlife but also to the health of the planet. Between 1967 and 2000 the area under cultivation in Indonesia expanded from less than 2,000 square kilometres (770 square miles) to more than 30,000 square kilometres.

In Sumatra and Borneo, palm-oil expansion threatens elephants, tigers and rhinos, as well as orang-utans. Enormous amounts of carbon dioxide are released as forests and peatlands are destroyed. Deforestation makes Indonesia one of the world’s largest carbon-dioxide emitters. On the bright side, it is true that palm oil has contributed to economic growth in the countries that produce it. But even that has been tarnished in some cases by social conflict, for example when locals or indigenous groups have been turfed off their land to make room for plantations.

Such matters are increasingly difficult for buyers of palm oil to ignore. Even though it takes only 4% of the global total, Unilever is the world’s biggest buyer, making it an obvious target for activists. Kraft and General Mills, two big American food companies, HSBC, a huge bank, and Cargill, an American agribusiness giant, have also come in for criticism. In the past few months, Nestlé, another food giant, has been attacked in a spoof online advertisement that shows an office worker eating a finger of KitKat. The chocolate digit turns out to belong to an orang-utan, with bloody consequences.

These attacks are proving potent. Nestle suspended purchases from suspect suppliers after the KitKat video had been viewed 1.5m times and prompted 200,000 e-mails of protest. According to Daniela Montalto of Greenpeace, “We had been asking Nestlé to stop buying products from rainforest destruction for two years before we launched our campaign. Nestlé cracked within just two months because the overwhelming public response made the company listen.

Companies are changing their buying policies in response, and paying more attention to the distant reaches of their supply chains. And the lessons may reach far beyond palm oil. With oil of a different type continuing to spew into the Gulf of Mexico, companies’ environmental responsibilities have never been more public.

Because of palm oil’s connection to deforestation, environmentalists are unlikely to reduce the pressure on companies that use it. WWF publishes an annual scorecard of the palm-oil policies of 59 European companies. At the bottom are companies such as Danone, a French dairy-goods company, and E. Leclerc, a hypermarket chain. Some, such as Aldi, a German retailer, and Géant Casino, another French hypermarket group, decline to answer questions about their palm-oil policies.

The Forest Footprint Disclosure project, supported by the British government and several charitable foundations, has just started an annual call for companies to indicate the extent to which their procurement policies for palm oil, soya, timber, beef, leather and biofuels are linked to deforestation. In the first year most companies chose not to respond. However, the project has the endorsement of institutional investors holding assets of $4 trillion. These sign a letter requesting disclosure, which will be sent annually to several hundred companies. This might become influential, especially now that the Gulf of Mexico oil spill has focused fund managers’ minds on environmental risks. In June a group of British MPs of green inclination called for pension funds to be forced to reveal more about such risks.

There are other forces at work besides pestering from greens and governments. One is attitudes within companies. Mr Poynton believes an important reason why Nestlé changed its policy was the opinion of its staff. For years companies have been saying that a commitment to corporate social responsibility (CSR) can improve the quality of staff that they can recruit. It follows that these recruits then care about the behaviour of the company that employs them.

What happens from now on will depend on whether pressure is kept up on all parts of the industry. Clearly, the industry would not have moved so far, so fast, without pressure from green activists. Several companies have learned that they are vulnerable, politically and therefore commercially, when they do not control the distant ends of their supply chains. Mr Poynton may be overstating the case when he says: “Most of the environmental and social issues are embedded in products at extraction, at the resource level.” But he is surely right when he adds: “It is no longer possible to ignore that end.””

And here’s the highly effective (and truly revolting) Kitkat ad