Study shows consumers bear the cost of eco-friendly palm oil

By Simon Pitman

- Last updated on GMT

Study shows consumers bear the cost of eco-friendly palm oil

Related tags Palm oil Biodiversity Sustainability

It will be consumers who will be paying the price to harvest palm oil in an eco-friendly way, new research carried out in the US and the UK finds.

Palm oil is widely used in cosmetics and forms a basis for many products in the soap category particularly, as well as shampoos and lipstick.

However, in recent years a growing awareness of both the air pollution associated with palm oil production and the effect it has on endangered animals has bought about calls for eco-friendly and sustainable palm oil to be used in a range of consumer goods.

Sustainable palm oil driven by consumers

The study, which was published in the Proceedings of the National Academy of Sciences and encompassed researchers from the Gund Institute for Ecological Economics, underlines that the move towards sustainable palm oil production has been driven by consumers, who in turn have expressed their willingness to pay the higher price associated with sustainably harvesting palm oil.

“One way to save species and biodiversity threatened by agricultural expansion is to show companies the business case for conservation,”​ said professor Brendan Fisher of the University of Vermont's Gund Institute for Ecological Economics, study co-author.

“This study shows how important it is for industry and scientists to work together to find potential win-win solutions.”

Study looked at major palm oil producer

As part of the research project, the team looked at the finances of a major palm oil producer to assess the impact switching to sustainable palm oil had on the extra costs associated with conserving the land they harvested.

The company was based in Sumatra, Indonesia, which has suffered significant environmental damage as the tropical rainforests have been replaced by farming land for palm oil plantations.

The study then assessed the price that the company had to charge for the more sustainable palm oil to cover the additional costs.

In turn, the researchers said that the price that was added on to the consumer products “more than made up for companies’ costs of providing conservation land”.

The research also showed that this had proved to be the most effective means of ensuring the supply of eco-friendly palm oil as previous attempts to get international governments to stem the environmental damage caused by the farming had largely failed.

In the search for sustainably sourced palm oil...

Currently about 85% of the world’s palm oil comes from Indonesia and Malaysia, and with many consumer goods companies, particularly in the food and personal care arenas, under pressure to provide products containing palm oil-derived formulations from reputable and sustainable sources, the search is on for palm oil producers that can prove these credentials.

As a result, many of the leading cosmetic manufacturers, including Unilever and L’Oreal, have opted into schemes that support the sourcing of sustainable palm oil, the most high profile being the Roundtable on Sustainable Palm Oil (RSPO).

In particular pressure from the RSPO has led to a big impact on the supply chain, with palm oil producers, raw material suppliers and ingredients players having to raise their game by ensuring their processes meeting certification requirements.

Reflecting the success of this drive, GreenPalm, the certificate-trading programme for sustainable palm oil supported by the RSPO, announced in July of this year that it traded a peak-level of 11 million certificates for sustainable palm oil.

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