Palm oil: to ban or not to ban?

Written by Rebecca Jones on 14th Nov 2018

Iceland has scored big PR points for its plans to remove all palm oil from its own brand products, but with palm oil in just about everything, is this really the best way to save rainforests?…,

Palm oil has been thrown into the spotlight this week after frozen food chain Iceland posted its banned TV advert online, creating a viral Twitter storm of Trump-like proportions.

The animated feature, produced in collaboration with Greenpeace, tells the story of Rang-tan, a cartoon orangutan that invades a young girl’s bedroom as his own habitat is being destroyed by bulldozers making way for palm oil plantations.

Voiced by esteemed British actress Emma Thompson, the advert is a highly emotive piece of PR for Iceland, who in April announced its intention to remove palm oil from all of its own-brand products.

(As a side note, the budget supermarket has also teamed up with Selfridges this Christmas – a bizarre pairing if ever you saw one – to produce a line of palm oil free mince pies. Yum.)

What is palm oil?

If you’ve never heard of palm oil before, you might be shocked to discover that it’s basically in everything. Take a look on the back of any packet of biscuits in your cupboard, for example, and you’re fairly certain to spot it as a main ingredient. Ditto for shampoos, soaps and even pet food.

Neil Brown, investment manager on the Liontrust Sustainable Future team and a long-term activist in the palm oil space explains why: “Palm oil is tremendously useful in so many things. It grows very fast and is stable at room temperature.

“This makes it easier to transport and means food products, shampoos etc. maintain their consistency. It is a very versatile and high yielding product, which is both its strength and – for areas where it shouldn’t be planted – its weakness.”

As such, governments and growers in palm oil producing regions have been keen to cash-in on global demand, with the production of palm oil playing a key role in the economic growth of many developing regions. This, in turn, has helped to drag millions out of poverty.

Development downsides

However, this development has come at a cost. While palm oil farming causes less than 0.5 per cent of all deforestation globally, in parts of the tropics it accounts for as much as 50 per cent.

In Indonesia and Malaysia – home to the Borneo rainforest – more than 3.5 million hectares of forest have been lost to palm oil plantations, ruining – as Iceland’s ad points out – almost 80 per cent of orangutan habitat.

The great apes are now on WWF’s ‘critically endangered’ list, with fewer than 120,000 left in the wild. Elephants, rhinos and tigers are also at risk, while the fires that are set to clear forests have also led the loss of thousands of human lives.

Environmental backlash

Accordingly, concern over the use of palm oil has mounted in recent years, often leading to calls for palm oil to be banned. Indeed, in the UK Iceland’s campaign follows palm oil initiatives from Marks and Spencer in 2010, Sainsbury’s in 2013 and many more.

However, investors like Brown believe that – over the long term – the answer is not a ban, but to ensure that palm oil production is sustainable. This requires stricter criteria around production that suppliers must be held accountable to.

“Palm oil production creates serious environmental issues, but we also need to consider the social aspects and the very real need for many countries to develop sustainably. It’s juts not as straight forward, in our view, as saying ‘ban palm oil,’”says Brown.

The good news is that a lot is being done to make palm oil work for both people and the environment. This week, in-fact, the Roundtable on Sustainable Palm Oil (RSPO) is meeting in Indonesia to discuss imposing stricter criteria on suppliers looking to claim they are sustainable.

Even better news is that this has come as a result of increased investor pressure, with huge institutions including Aviva Investors, M&G Prudential and Aegon – which together run billions of pounds in UK pension money – urging the RSPO to fix the “disconnect between corporate policy and RSPO standard.”

On a consumer level, a number of retailers have been working hard to ensure that supply lines are sustainable, with the aforementioned supermarkets scoring full marks on WWF’s Palm Oil Buyers Scorecard for their strong and constructive work in this area.

Palm oil potential

This is an urgent and important mission on a number of levels, not least of which is saving the few remaining wild animals we have left and the planet and the Co2 beating rainforests they live in.

However, if done right, there is also huge potential in palm oil. Palm crops use less than half the land required by sunflower, soybean or rapeseed, for example, to produce the same amount of oil. This means just 5.5 per cent of the land used to grow vegetable oil is palm, yet it produces more than any other crop.

“This is a very high yielding crop so, if done properly, it could use less land than other crops – this obviously has big implications for sustainable agriculture. The key being ‘if done properly’, and that’s what we need to work towards.”

As appalling as the reality that lies behind Iceland’s campaign is, then, the answer many not be a ban. Rather, careful and productive engagement may bear more fruit – both for orangutans and humans.

Sign up to our weekly newsletter

Get better with money, in every way.