Quality at Heart: Our approach to sourcing palm oil

Quality at Heart: Our approach to sourcing palm oil

At Ferrero, we are committed to sourcing sustainable palm oil that is 100% RSPO Certified Segregated and traceable back to plantations. Segregated means that sustainable palm oil from certified sources is kept separately from non-sustainable palm oil, throughout the supply chain, from the plantations through to our factories and does not contribute to deforestation or animal extinction.

We are committed to playing a leading role in the sustainable transformation of the palm oil sector to benefit the environment and people living and working in palm oil producing communities in which we source.

What is palm oil and why do we use it?

Palm oil is extracted from the pulp of the palm tree fruit which is found in various equatorial zones. The trees produce reddish fruits that grow in large compact and spherical bunches that contain up to 2,000 fruit each. The palm oil is extracted by pressing the fruit pulps.

Palm oil is an incredibly efficient crop, in fact one Palm oil tree can produce 40kg of palm oil every year for over a quarter of a century – making it the most efficient vegetable oil. But not only does it use significantly less land to produce than other vegetable oils, it also provides employment for more than 4.5 million people in Indonesia and Malaysia.

At Ferrero, we use palm oil to help us achieve the right consistency in our products, and since it is odourless and tasteless after the refining process, it does not interfere with the taste of our iconic recipes. Also did you know that our sustainable palm oil has 56% less greenhouse gas emissions (vs non- certified palm oil)?

Our approach to ethical and sustainable sourcing of palm oil

We’re committed to ethical and sustainable sourcing throughout our value chains across all our key ingredients, including palm oil. For us it is crucial that we deliver on our promise to our consumers to provide products of the highest quality and freshness, produced in a responsible way.

We became one of the first global companies to source sustainable palm oil that is 100% RSPO certified segregated and we continue to do so. Our palm oil, not including recently acquired brands, is fully traceable back to plantations, which means we know exactly the origin of the fresh fruit bunches used to produce our palm oil. We also publish a full list of our mills twice a year to ensure there is transparency of our palm oil supply chain.

In 2013, we created the Ferrero Palm Oil Charter which goes beyond industry standards to address the leading causes of deforestation and social issues. In the financial year 2019/2020, we source around 220,000 metric tonnes of palm oil which is just below 0.3% of the annual global palm oil production.

We work with our suppliers and partners to ensure a palm oil supply chain that is reliable, safe and ready to innovate and improve our latest Palm Oil Charter, which we developed with Earthworm Foundation, we have further strengthened our commitments and actions, and outlined our progress of our ongoing ambition to achieve a palm oil industry that is good for both people and nature. We also launched our Palm Oil Action Plan, which sets out concrete steps that we are taking to meet our commitments in the Palm Oil Charter which addresses three strategic areas that are key in the palm oil industry:

Environmental Protection & Sustainability: actively protecting standing forests and/or restoring natural forest areas to generate positive carbon and biodiversity impacts, in partnership with our suppliers;
Human Rights & Social Practices: implementing programmes aimed at improving smallholders’ working conditions and build their resilience;
Supplier Transparency: working towards achieving full traceability for all sourcing through to the estate level, done by leveraging innovative technologies.

Our responsible approach to palm oil sourcing and our Palm Oil Charter demonstrates our ambition to continuously increase the standards in the industry. In fact, the WWF have recognised our efforts in palm oil sustainability, ranking us #3 out of 227 companies (and #1 in Manufacturing) with a score of 21.7 out of 24 in their latest Palm Oil Buyers Scorecard.

Working in collaboration

We are dedicated to continuously improving our value chain and understanding the environmental and societal challenges tied to the palm oil industry. That is why it’s important that we work with our suppliers and partners to ensure a sustainable palm oil supply chain:

• Since 2005, we have been a member of the Roundtable on Sustainable Palm Oil (RSPO), a not-for-profit that unites stakeholders from across the palm oil value chain to develop and implement global standards for sustainable palm oil;
• We are also a member of the Palm Oil Innovation Group (POIG), an initiative with multiple stakeholders involved, including the WWF. We actively support the POIG and share its vision to break the link between palm oil and deforestation, and human, land and labour rights violations.
• Ferrero is also an active member of the High Carbon Stock Approach (HCSA), which is a methodology launched by a large platform of stakeholders, including NGOs such as Greenpeace and WWF, enabling companies to determine forest areas for protection from degraded lands with low carbon and biodiversity values that may be developed.
• We work closely with the European Palm Oil Alliance (EPOA), a business initiative that educates stakeholders on the nutritional and sustainability aspects of palm oil
• In the UK, we partner with Chester Zoo to raise awareness of the importance of sustainable palm oil (SPO). Through the partnership, we help them to educate communities and students on the role of SPO through our support of their Sustainable Palm Oil Communities project, and the SPO education programme.

We will continue to actively collaborate with NGOs, key stakeholders and suppliers to have a long-lasting and positive impact on the palm oil industry.

Supporting the communities in which we operate

Responsibly palm oil sourcing requires more than just addressing environmental concerns – we must also address social impacts which are often closely linked.

We are committed to fostering a more equitable value chain for the people involved in palm oil production at every level. We are committed to ensuring fair, safe and decent living conditions, worker rights, and other social practices for palm oil workers and suppliers in Malaysia – our main sourcing country.

We also support smallholders to be part of the sustainable palm oil supply chain; we train them on the use of sustainable cultivation methods and work with independent smallholders to improve their farming practices that comply with national and international standards such as Malaysian Sustainable Palm Oil (MSPO) and the RSPO.

Ending deforestation in the palm oil sector

Not only are we committed to sustainable palm oil sourcing and supporting farmers on the ground, we are also fully committed to securing a deforestation-free palm oil supply chain. That’s why we use 100% satellite monitoring of our palm oil supply chain to help protect forests – we are in fact among the first companies to do so.

Operated by Earthworm Foundation and Airbus, the Starling monitoring technology uses a combination of satellite imagery and on-the-ground expertise to monitor land cover change and forest cover disturbance in near real time, meaning we can identify where potential deforestation occurs and enables us to take action and to drive change on the ground.

Looking ahead

We feel privileged that our brands like Nutella have become family favourites across the UK over the last 50 years. With this comes a responsibility to make products that have Quality at Heart – delivering not only a great taste but produced in a way that also protects people and our planet.

We will continue to build on our strong foundation of responsible palm oil sourcing to achieve a positive impact on the palm oil value chain and will share our progress along the way.

  • Ferrero & Palm oil

    Ferrero & Palm oil