Iceland leaves its influence at the door

Friday 13th April

Iceland made headlines this week for ditching palm oil. Paul Codd provides his take on what this means for efforts to halt deforestation and the reputational challenges facing other retailers.  


What happened?

Iceland announced on the 10th April that it will be the first UK supermarket to remove palm oil from its own-brand products. It will continue to sell palm oil in the form of branded products.

In line with an earlier commitment to remove plastic from its own-brand packaging, the retailer positioned the move as “the right thing to do”. Iceland was until now at the very bottom of the Rainforest Foundation’s guide to brands acting responsibly in their palm oil supply chains, scoring poorly on purchases of certified sustainable palm oil, transparency and supply chain engagement.

The UK Managing Director, Richard Walker, explained to Jeremy Vine on BBC Radio 2, that he was not “anti-palm oil, but anti-deforestation”, and that the move had in part been inspired by a personal trip to Kalimantan. His view is that “Certified sustainable palm oil does not currently limit deforestation…so until such a time as there is genuinely sustainable palm oil that contains zero deforestation, we are saying no to palm oil.”

Palm oil in Iceland’s own-brand products is to be replaced by other vegetable oils.

Why is it important?

This debate cuts to the core of the issues of ownership, influence, responsibility and control in the supply chain.

Sourced from the fruit of the oil palm, the combination of the high yields per hectare of the oil palm and its sheer versatility, means that palm oil is found in supply chains for everything from biscuits to soap and even biodiesel. It is also, crucially, a common foodstuff in its own right in its domestic markets, especially in Indonesia.

The issue is that the oil palm grows in tropical regions, and as a result, demand for farmland is putting pressure on the world’s remaining rainforests. It’s worth noting, as Richard Walker of Iceland alluded to, that this is more about farming practices in tropical regions, than palm oil per-se. Should farmers in tropical regions switch wholesale to growing other vegetable oils like coconut, sunflower or rapeseed, then the same challenges would likely remain. Arguably, given lower yields and higher water, pesticide and fertilizer consumption, it might even get worse.

This debate is really about how to best effect change in the practices of farmers. The palm oil industry has transformed in recent years, with most major consumer brands and integrated palm oil producers and traders at various stages of implementing ‘no deforestation, no peat, no exploitation’ (NDPE) policies, but critics are increasingly frustrated at perceived slow progress. Greenpeace, in a related broadside to the FMCG industry on the 18th March, claimed a failure to achieve results on the ground.

Palm oil producers, traders and refiners have noted the inherent complexities of changing the practices of millions of smallholders and smaller estates, far removed from the supply chain. Add to that, the additional challenges of production in countries where the perspective and the priorities of the respective national government can be very different, and you have a issue which likely sets the benchmark for “conflicted”.

From the perspective of a FMCG brand or retailer, there’s a choice to be made. Is as Iceland suggests, washing your hands of the issue the right thing to do?

What has the reaction been?

Superficially positive for Iceland. The Times in an editorial stated that the “chain is right to take palm oil out of its products” despite being a little stumped on alternatives.

Yet, those a little closer to the issue sounded a cautious note, Dr Emma Keller of the WWF explained that it was better to continue to support sustainably certified palm oil as “alternative oils can actually be worse for the environment because some require up to nine times as much land to produce.”

Even Greenpeace, part of the inspiration for Iceland’s move, advised consumers that a ban isn’t necessarily the right move “Not necessarily. If all consumer goods companies stopped using palm oil, demand would switch to another vegetable oil – perhaps soy, rapeseed or sunflower. When grown in vast quantities all of these alternative oils have serious environmental problems, including rainforest destruction. The reason palm oil’s popularity rocketed in the first place was due to it being a very land-efficient crop. You get a lot of oil per hectare, it requires relatively few pesticides and it’s highly versatile.”

Best quote

“It’s easy to “cut #PalmOil” as a PR move. But time and again, studies have shown that other vegetable oils are more resource intensive. And the uptake of palm oil certified by RSPO (or other progs that actually ban deforestation) is slow because buyers won’t pony up the cash.” – Vaidehi Shah, ex Assistant-Editor, Eco-Business

What next?

For FMCG brands and retailers, the reputational challenge of palm oil continues to grow. The challenge is facing up to the reality that with 60 million tonnes of annual production, and only around 10-15% of that headed to the EU, there’s a lot more influence to be gained by acting as a responsible buyer.

The difficult, but right thing to do is to invest in understanding the supply chain, communicate progress and challenges to consumers and ultimately, being prepared as a buyer to pay the premium that sustainable palm oil deserves. Sustainability in palm oil is a problem of a lack of demand.

Iceland’s 500 tonnes per year might be a relative drop in the ocean, but that’s 500 tonnes of demand that could have been used to drive change.


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