Palm oil – what is it and can it be sustainable?

Telling it like it is: why we choose to finance palm oil companies Watch the video

"Palm oil is bad for the planet, but fortunately not anything to do with me." Not so fast: you may believe that’s true, but palm oil is a lot closer than you think.

What products contain palm oil?

No less than half of all supermarket products have palm oil in them, from shampoo to crisps, to chocolate, margarine, bread, baby formula and soap. It’s very hard to do without – at the moment, at least. That’s why ABN AMRO chooses to finance only palm oil companies that meet very strict sustainability requirements.

What is palm oil and why is it used in so many products?

Palm oil is a vegetable oil that is easy and cheap to produce, with crop yields per hectare considerably higher than for sunflower or olive oil, for instance. As it doesn’t taste of much and makes products smooth and spreadable, palm oil has made its way into countless products and the average Dutch person consumes no less than 16 litres of it a year. And because it’s a vegetable oil, it used to be thought to be much healthier than animal oils and fats. Some doubts have emerged, though, as there’s a lot of saturated fatty acids in palm oil.

So why the bad rep?

The oil palm originally hails from Central and West Africa, where it’s been grown for centuries on a small scale. Over the past decades, though, large oil palm plantations have been created in, for instance, Indonesia and Malaysia. Large swathes of rainforest have been hewn down to accommodate this, with orang-utans losing a significant proportion of their natural habitat in the process. Indigenous people have also frequently been removed and resettled from their villages and living environment. Worse, labour conditions on the plantations often don’t pass muster.

So palm oil is invariably bad for people and planet?

It’s very hard to find a good alternative to palm oil, as such oils as rape oil or sunflower oil require up to five times more agricultural land to produce the same volumes. Land being scarce, any alternatives will nearly always hit vulnerable local communities.

RSPO membership

For these reasons, ABN AMRO has thrown its weight behind making the palm oil industry more sustainable. We have joined the Round Table for Sustainable Palm Oil (RSPO), whose other members also include the World Wildlife Fund. Together, RSPO members develop standards for sustainable palm oil, and we tightened up our requirements for sustainable palm oil companies at the end of 2018. Palm oil companies that are RSPO members respect human and labour rights, do not engage in deforestation, keep their carbon emissions to a minimum and comply with a whole host of other rules. ABN AMRO only finances palm oil companies that have joined the RPSO. As a consumer, you can promote sustainable palm oil by only buying products that carry the RSPO logo. That does require you to do a bit of sleuthing, though: most companies do not include the RSPO logo on their packaging because their products often only contain a small amount of palm oil. But you can check out the WWF Palm Oil Scorecard to see exactly which companies use sustainable palm oil, or you can ask your supermarket to only sell products that contain sustainable palm oil..

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Jan Raes

Jan Raes

Sustainability Advisor +31 (0)20 383 1753