Ferrero’s new palm oil charter comprises updated targets to generate environmental, economic and social benefits across the value chain. The charter is supported by insights from stakeholders, including suppliers, NGOs and academic partners. 

Speaking to FoodIngredientsFirst, a spokesperson for the Italian manufacturer of chocolate and confectionery products shares insights into the brand’s response to current challenges weighing down the global palm oil supply.

“Changing and extreme weather conditions mean that smallholders have fluctuating yields from year to year making it difficult for them to plan for the future. These changes can also lead to increasing issues with pests and diseases that negatively affect plantation yields,” they detail.

“Smallholders are also particularly exposed and vulnerable to the volatility of commodity market prices, which deeply affect their economic resilience. We are committed to supporting smallholders in transitioning towards farming business models which aim to create greater resilience from agronomic and economic perspectives.”

Three-pronged approach
The new charter tackles  three strategic areas identified as “critical in an intricate industry” wher environmental and social issues are oftentimes deeply rooted, complex and interconnected:

1) Human Rights & Social Practices: Ferrero requires its suppliers to take appropriate measures to prevent any form of exploitation, indecent living or working conditions. The company also stresses importance that indigenous communities be fully engaged whenever agricultural land expansion may occur.

2) Environmental Protection & Sustainability: The company has expressed a goal to have a palm oil value chain that not only respects the environment, but also becomes a positive driver to regenerate biodiversity, soils, and water systems. 

Among the initiatives in this focus area, Ferrero has committed to a “no-deforestation” supply chain which includes no planting on peat, no using fire to clear land, and ensuring the protection of forests and natural habitats. It also uses the Starling Satellite Monitoring System to identify potential deforestation in the roughly one million hectares of its supply chain.

3) Supplier transparency: Ferrero shares the list of mills from which it sources its palm oil every six months. The company publishes an action plan and a yearly progress report measured against the goals outlined in the charter, as well as offering an “Integrity Helpline” to confidentially signal any potential grievances or instances of non-compliance.While deemed nutritious and highly functional, palm oil remains hotly contested against the benchmarks of environmental sustainability.As an active member of the Forum for Sustainable Palm Oil (FONAP), Ferrero has worked closely with WWF Germany, and is in direct contact with the local NGO Wild Asia to support and track progress of a project entitled “Group Scheme for Small Producers” (WAGS). 

“Supported by Ferrero since 2018, the initiative upskills smallholders by enhancing their productivity and sustainable management practices,” notes the spokesperson.

“Another example of how Ferrero Group works to empower smallholder resilience includes a Sustainable Agriculture Network (SAN) project launched in 2020, and fully funded by Ferrero, which educates and implements advanced Integrated Pest Management (IPM) and biodiversity conservation practices in Malaysian palm oil production.”

Certification schemes backing sustainable palm
While deemed nutritious and highly functional, palm oil remains hotly contested against the benchmarks of environmental sustainability as it has been frequently linked to deforestation practices over many years.

Some palm oil companies still do not report basic information on how they are monitoring deforestation in either their own or their suppliers’ operations, according to reports by the international conservation charity Zoological Society of London.

As a baseline, Ferrero sources sustainable palm oil that is 100 percent RSPO (Roundtable on Sustainable Palm Oil) Certified Segregated and traceable back to plantations. 

Ferrero’s is also an active member in POIG (Palm Oil Innovation Group) and HCSA (High Carbon Stock Approach), pegged as “one of the two of the highest value endorsement initiatives” currently available for the industry. 
The new charter has been developed with Earthworm Foundation, a non-profit organization focused on positively improving value chains.

“The Earthworm Foundation team helped us better understand the specific challenges in the palm oil sector and how to address these by benchmarking and investigating current practices,” they add.

“They also supported us in the development of the clear responsible sourcing commitments included within the charter, providing us with strategic inputs to achieve a supply chain that is fair, sustainable and transparent.”

Calls for EU-wide legislation 
Ferrero has stated its support for the European Commission’s upcoming proposals on Mandatory Due Diligence. It also backs new legislation to minimize the risk of deforestation and forest degradation linked to products distributed throughout the EU. 

EU legislation is urgently needed to tackle these issues and establish a level playing field for more sustainable ingredients, the company states. Through a public statement signed by more than 40 companies last May, Ferrero extended support for an effective EU law that will address EU-driven global deforestation.

“Our new Palm Oil Charter is an example of Ferrero’s commitment and actions towards responsible palm oil sourcing. But sector-wide change is needed,” stresses Francesco Tramontin, vice president, Ferrero Group Public Policy Center and EU Institutional Affairs.

“In this spirit, we believe that proper EU rules applicable to all relevant companies – coupled with the right cooperation framework with producing countries – can be a game-changer in driving palm oil supply chain systemic transformation, as well as preventing negative environmental and human rights impacts.”