Sustainable Palm Oil
The Challenge
As the most widely used vegetable oil in the world, with by far the highest yield per hectare, palm oil is likely to remain a crucial part of food production in the future and an important means to support rural development and livelihoods in producing countries. As such, the challenge to produce it fairly and sustainably is the object of significant efforts.
Our Approach
We are committed to sourcing palm oil in a traceable and sustainable way. We don’t own oil palm plantations or mills, instead, we source palm oil to be processed at our refineries or sold onward to our customers.
As non-producers, we believe we can play a pivotal role in driving sustainable palm production by ensuring that work conditions, agricultural practices and business ethics in our supply chain meet essential sustainability standards, and through promoting sustainable practices across our supplier network.
Our Policy
Our Palm Sustainability Policy affirms our commitment to No-deforestation, No-peat, No-exploitation (NDPE).
In compliance with this policy, we commit to:
- Comply with all applicable laws and regulations, and uphold business ethics;
- Safeguard all high conservation value (HCV) lands and high carbon stock (HCS) areas;
- Leave all peat untouched, regardless of depth;
- Uphold the rights of workers, local communities and indigenous people;
- Support smallholder inclusion and adoption of sustainable practices;
- Ensure supply chain traceability and transparency;
- Manage grievances effectively.
In line with our corporate deforestation- and conversion-free (DCF) commitment and our commitment to the Agricultural Sector Roadmap, we are working to eliminate deforestation from our palm supply chain by the end of 2025.
To deliver on our commitments, we collaborate closely with key stakeholders within and beyond the palm value chain, and in particular with our suppliers.
Our Progress Toward Palm Oil Traceability & Transparency
Traceability is a vital first step to evaluate supply chain performance and support continuous improvement. We aim to trace 100% of our palm oil back to mill level, and aspire to achieve full plantation-level traceability for mills supplying our refineries.
60
Direct Supplying Mills
1,245
Indirect Supplying Mills
100%
Traceability to Mills
92%
Traceability to Plantations for Refineries
For more information regarding traceability, download our latest traceability report with mill list: Palm Traceability to Mill List
Sourcing Responsibly
To ensure the palm we source has been produced responsibly, we collaborate closely with our suppliers and key stakeholders to uphold compliance with our Palm Sustainability Policy.
Our Priorities
Supply Chain NDPE Due Diligence
LDC has a very extensive palm oil supply chain, and we view this as an opportunity to influence our direct and indirect suppliers toward sustainable palm production and sourcing, with the ultimate aim of sectoral transformation.
Our Progress in 2024
100%
Suppliers covered by NDPE Risk Assessment
88%
Suppliers with NDPE Commitment
90%
Purchased Volumes Verified as Deforestation-Free*
*We apply the NDPE Implementation Reporting Framework (IRF) as the tool to measure our deforestation-free progress.
Our NDPE Principles
We expect all our suppliers to uphold the same NDPE principles as ourselves. We ensure this through contractual obligations or by encouraging suppliers to publish their own NDPE commitments.
We deploy various tools to assess supplier NDPE compliance and potential gaps, including:
- Potential Supplier NDPE Due Diligence, applied to all potential palm suppliers and ensuring those with severe LDC policy violations cannot enter our supply chain.
- Supplier Self-Assessment Questionnaire, applied to all palm suppliers to provide information on their relevant NDPE policies and practices.
- Supplier NDPE Risk Profiling, developed with the support of Proforest, applied to all our trading counterparties to assess their relevant NDPE policies, governance, practices, grievance management and reporting. Those with significant gaps will be engaged individually to develop transformation plans and timeline.
Supplier Capacity Building
Supplier capacity building is a key pillar of our palm sustainability program. We actively communicate our NDPE expectations with our suppliers and support them in building capacity to mitigate deforestation, peat development and human rights risks in their own operations and supply chains.
Each year, we deliver in-person training workshops in Indonesia and Malaysia, in collaboration with technical partners, covering topics such as deforestation and peat monitoring, fire management, carbon measurement, and human rights due diligence. Case studies and peer exchanges are effective ways to share best practices.
Additional tools and resources are also used to help suppliers improve their practices, such as the Palm Oil Collaboration Group Human Rights Due Diligence Library of Tools.
Supply Base Monitoring & Grievances
We actively monitor land use change in our global palm supply base, with near real-time satellite monitoring in partnership with Satelligence. We receive regular land use change alerts from Satelligence, which are then validated by our inhouse GIS expert to see whether the land use change has taken place within our supplier’s concessions, peatland or protected areas. We actively engage with our suppliers to validate identified issues and develop corrective action plans if required.
To ensure transparency and accountability, we have implemented a Palm Grievances Protocol to address identified supplier chain non-compliances and concerns raised by stakeholders, with timely and public updates on resolution progress. For validated grievances, suppliers are expected to implement a time-bound corrective action plan to remediate the environmental or social harm.
If unwilling or unable to execute such an action plan, suppliers are put on our Consult Before Trade list or, eventually, our Suspension list. Suspended suppliers need to comply with our Re-entry Criteria, in order to resume a business relationship with LDC.
Partnerships for Progress
As part of our commitment to responsible sourcing of palm, we work with a wide range of stakeholders in key sectoral initiatives, including:
Since 2021, LDC has been a member of the Palm Oil Collaboration Group that brings together companies across the palm oil value chain to accelerate effective implementation of NDPE commitments and tackle common sustainability priorities.
In 2021, we signed the Agricultural Sector Roadmap for palm, with commitment to eliminate deforestation from our palm supply chain by end of 2025 and reduce greenhouse gas emissions from supply chain land use change, in line with the Paris Agreement.
In 2022, we signed Colombia’s Zero Deforestation Agreement, a multi-stakeholder initiative to eliminate deforestation for palm oil production in the country, and an opportunity for collaboration with peers and value chain stakeholders toward more sustainable production.
Case Studies
LDC works to support palm farmers to improve their livelihoods by adopting sustainable practices that meet NDPE standards.
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