Sustainable sourcing - Unilever and the Palm Oil Problem

Doing some research for the AQA GCSE case study on Unilever, I came across this great example of how external stakeholders can influence and ultimately change the actions of a global business.

Unilever is the world’s largest purchaser of palm oil. It uses palm oil in its margarines, soups and shampoos. The multinational consumer goods company buys about 3-4 per cent of global production of palm oil, or about 1m tonnes annually. It uses six suppliers in Indonesia and Malaysia, including PT Smart - a business which environmental campaigners Greenpeace has long argued is responsible for the destruction of habitats for endangered species.

Back in 2008, Greenpeace targeted Unilever with a series of publicity stunts designed to bring attention to its use of palm oil and the environmental effects of expanding palm oil production.

This BBC video shows the demonstration in action and also provides some background explanation on the issues raised by the environmental stakeholders.

Fast forward to the end of 2009 and Unilever announces that, for the first time, it has stopped buying oil from one of its main suppliers (PT Smart) for environmental reasons.

Here is the link to Unilever’s press release about the decision

The telling paragraph in the press release is this:

“Marc Engel, Chief Procurement Officer, said: “The Greenpeace claims are of a nature that we can’t ignore. Unilever is committed to sustainable sourcing. Therefore, we have notified PT SMART that we have no choice but to suspend our future purchasing of palm oil.”