Interview: Partnerships with customers to address challenges in the palm oil industry
In Blogs, Communities, Environment, Smallholders, Supply Chain / By Lim Shu Ling / 426 views / Posted: December 15, 2016
Since the launch of the UN’s Sustainable Development Goals nearly a year ago, we in the corporate sector have been hearing more and more about the 17 SDGs which range from eradicating poverty to tackling climate change and preserving biodiversity.
One GAR initiative already aligned with the SDGs is partnering with other stakeholders to promote sustainable development. GAR recently signed an MOU with major customer, Neste. The two parties will collaborate on helping independent smallholders achieve certification for sustainable palm oil. Independent farmers face obstacles in gaining access to international markets which have stringent requirements such as certification. They also often lack the financial means and knowhow to adopt better, sustainable practices. This project aims to address these shortcomings, as both GAR and Neste work together to map and identify and help train independent farmers to improve their practices and become certified.
Aside from this project, GAR is also actively in discussions with other customers who’re interested in supporting our community livelihood programmes; our peat rehabilitation project in West Kalimantan; working with indigenous communities; and Innovative Financing. To find out more, I spoke to my colleague, Ian Suwarganda who’s been spearheading this collaboration for the past year.
Q: How did these partnerships come about?
We built on the existing commercial relationship and added a sustainability dimension. By that I mean both parties wanted to improve the sustainability of the supply chain and were willing to commit resources to realise this.
GAR is an attractive partner because it has a strong sustainability policy, GSEP, and a competent team to implement it. For example, GAR has committed to 100 percent traceability to plantation by 2020 and we expect to have identified all independent smallholders who supply to us. This in turn, presents the opportunity for customers to work with GAR on the challenge of including smallholder in the supply chain and their development.
Q: Why do you think customers are more interested these days in this kind of collaboration – is this just a way for them to improve their “sustainability credentials”?
The customers who have approached GAR for collaboration already have strong sustainability practices in their own operations. For them, it is not about boosting credentials.
The supply chain – from palm fruit to customer factory – is really complex and it takes time for specific issues to trickle down to customers. So it is rather a case of customers needing time to complete a learning curve about their supply chain before they can effectively engage with it.
Q: Will this collaboration make much difference on the ground?
Whatever the scale of the project, it makes a difference to the individual smallholder and the larger community. We see this on the ground, where thanks to GAR programmes children have access to education, families can afford a better house and communities enjoy good infrastructure. Admittedly, more people can be helped, but GARs reach is limited. That’s why the support from customers is so valuable.
Q: Do you think more customers will join?
So far, customer queries are encouraging. The majority of queries are about project involving independent smallholders.
I hope that in 2017 customers will balance the smallholder focus with conservation efforts, specifically community-based conservation. I would like to work with a customer who buys the carbon emissions reductions from community-based conservation and whose funds support community livelihood programmes.