The major commitment from the world’s second largest plantation company will create complete transparency for its supply chain of seven million tons of palm oil, tracing its product back through 489 mills to the point of origin, and is likely to drive further change across the industry more broadly.
Agus Purnomo, the company’s MD for sustainability and stakeholder engagement, gave Cosmetics Design an insight into the driving factors behind this ambitious shift towards fully traceable palm oil, citing the growth of global consumer demand and the reduction of supply chain risk as key motivators.
Consumers driving global demand
One of the main factors behind the industry-wide increase in sustainable palm oil sourcing is without doubt the rising consumer consciousness when it comes to sustainability, Purnomo explains.
“Across the industry, we see growing interest in traceability from international brands and consumers: ultimately, consumers do care about what’s going into their beauty products.
“There is therefore a clear commercial incentive for both GAR and our suppliers to further establish our reputation for providing a quality, sustainable product,” he says.
Until recently, demand for sustainably-sourced palm oil has been driven by consumers and brands in Europe; however, Purnomo observes that it is now rising internationally.
“Traditionally most demand for sustainable palm oil has been from Europe, but as a trend we see interest in sustainable sourcing growing globally as concerns about sustainable agriculture and climate change grow,” he confirms.
Lowering supply chain risk
Purnomo explains that for Indonesia-based GAR, this pledge towards traceable palm oil is only partly about demand: the company is equally keen to tap into the improvements to operations that traceability offers.
“There’s a much wider argument to be made in terms of the benefits to our supply chain,” he says. “Our view is that by investing in and gaining better knowledge of our supply chain, we’ll be better placed to address challenges and minimise risks both for GAR and for the suppliers we work with.”
The MD explains that this improved supply chain ultimately comes back round to benefit consumers, fostering a win-win situation of improved sustainability and better-secured supply: “There’s value in that relationship for everyone, not in the least terms of a stable supply for our customers in the cosmetics industry.”
Palm oil, palm kernel oil and its derivatives are used in approximately 70% of personal care and cosmetics products, so ensuring this mainstay raw material is sourced in an eco-friendly way is crucial.
The implementation of GAR’s traceable supply chain will be rolled out in two distinct phases, the company states: firstly, it will establish traceability for the 44 mills that it owns directly (40% of its total palm oil supply); then it will achieve sustainability for all independent third-party mills with which it works, reaching completion in 2020.