Unilever's participation in the Roundtable on Sustainable Palm Oil - Essay Example

Unilevers participation in the Roundtable on Sustainable Palm Oil. 22nd January Roundtable on Sustainable Palm Oil Palm oil is edible vegetable oil. It is extracted from fruits of tropical olive palms, which grow along the equator line. Refined palm oil is widely used in cooking, production of various food products (margarine, chocolate, baby formula, ice-cream, pastry), soap and other detergents. It is also used in production of commercial products, like plastic materials, some metal products, paper, paint, fabric, electronic elements. Fast food industry depends on usage of the palm oil as cooking oil. Palm oil takes the second place for its popularity among edible oils after soy oil (Basiron & Weng 2004, Sustainable and responsible palm oil n.d., What is palm oil? n.d.). For the past years usage of palm oil has significantly increased and continues to grow. Today consumption of palm oil became 10 times more than it was in 1980. The World Wide Fund for Nature predicts that in 5 years the consumption of palm oil will double, thus making this industry very profitable and beneficial (What is palm oil? n.d.). Palm oil industry, being a profitable business and contributing to the economy of the producers countries, makes negative impact on environment. The main results of such impact are deforestation (the forests are cut to increase the number of palm oil plantations), climate change (as a result of deforestation), air and water pollution, soil erosion (as fire is usually a mean of deforestation, and palm oil mills produce significant amounts of effluents), species extinction (as a result of climate change and environmental pollution), human health worsening (as a result of climate change and pollution) (What is palm oil? n.d., Sustainable and responsible palm oil n.d., Palm oil n.d., Basiron 2014). Because of the negative impact of palm oil industry, the world community started to talk about the necessity to attract attention of this business to the problems, make it sustainable and encourage the corporations, which deal with palm oil industry, to be responsible for their actions. Corporate social responsibility (CSR) can be viewed as a concept, according to which enterprises take into account interests of society, where they operate, and take responsibility for the influence of their activity on environment, society, workers and other stakeholders. This responsibility goes beyond the measures of legislation, and assumes that an organization voluntarily undertakes the measures to improve lives of its workers and society on the whole (Broomhill 2007). Thus a SCR initiative is a voluntarily action, made by an organization or group of organisations, which concerns satisfaction of interests and improvement of lives of their workers and/or society. One of the CSR initiative in the field of palm oil is The Roundtable on Sustainable Palm Oil. The Roundtable on Sustainable Palm Oil (RSPO) is a non-profit organization, which consolidates all stakeholders, who deal with palm-oil industry from all over the world. The history of the RSPOs establishment dates back to 2001-2002, when the informal discussions of the palm oil sustainability problems and the possibility to organize an NGO, that would deal with the problems, were held by Unilever (one of the world biggest producer of consumer goods), the Aarhus United UK Ltd (one of the biggest world manufacture of vegetable fats), Migros (Swiss retailer, one of the biggest palm oil buyer), Malaysian Palm Oil Association (association of the palm oil plantation industries in Malaysia), and World Wide Fund for Nature (Sustainable palm oil: available from Migros n.d., Bakery Fats n.d., Sustainable Palm Oil n.d.). The RSPO officially was organized in August 2004, when 47 different organizations from all over the world signed a Statement, which stated their intention to take part in the Round Table. In 2005 the Principles and Criteria document was adopted. The main goal of the organization is to promote the use of sustainable palm oil products. According to the organization it can be attained through cooperation of all the stakeholders, who take part in the supply, production and distribution chain. RSPO Certification provides organizations with opportunity to sell their products with reference that it contains palm oil, received from sustainable sources. Almost 20% of world palm oil is certified by this organization. The palm oil, which is certified by the RSPO comes mostly from Indonesia (51%) and Malaysia (42%) (Roundtable on Sustainable Palm Oil 2014). Besides certification system, RSPO also discusses the main problems, which deal with sustainability of the industry and its impact on environment, and suggests the best practices of production and usage of palm oil through its Principles and Criteria (Roundtable on Sustainable Palm Oil n.d.) Today there are more than 2000 members of the Roundtable on Sustainable Palm Oil. Members include producers of palm oil products; companies, which use palm oil products in their production processes; traders; retail dealers; investors; social and environmental organizations, activity of which is connected to the usage of palm oil and its impact on environment and peoples health (Roundtable on Sustainable Palm Oil 2014). Unilever was one of the initiators of RSPO establishment and is a present member of the organization. One of Unilevers directors – Jan Kees Vis, who is responsible for sustainable development of the company and preparations of proposals on sustainability issues, – actively participated in establishment of the RSPO and was a President of the RSPO Executive Board (Jan Kees Vis, Unilever n.d., RSPO European Summit programme 2013). According to Jan Kees Vis, the company got involved in the RSPO initiative, because Unilever recognizes its dependence on natural resources and the necessity to be responsible for its activity and impact on environment. Unilever runs several programmes, which deal with sustainable development. Besides, the companys Vitality strategy states that "Unilever’s aim is to help people feel good, look good and get more out of life" (Vis n.d.). The company believed, that the impact of usage of palm oil on environment could be controlled through the CSR initiatives, which would cover the whole sector (Vis n.d.). Another reason, why Unilever took part in this initiative, is because they believed that the local governments did not have enough competence and capabilities to regulate the palm oil industry properly, and the attention was given rather to economic indicators increase, than to environmental protection (Roundtable on Sustainable Palm Oil n.d.). The RSPO was one of the effective efforts to create sustainability standards for the usual commodities, the amount of usage of which in the world is significant. Unilever buys about 80% of total RSPO certified palm oil. Today its biggest suppliers are RSPO members and those companies, which have RSPO certification. The company planned to use sustainable palm oil as its only source for its products by 2015. (Citron 2011, Unilever n.d.). However, Unilever achieved this goal in 2012 (Unilever 2013). 2. Levy and Kaplan’s theories on CSR initiatives David Levy and Rami Kaplan use the "global governance" term while describing CSR. They use global governance as a very wide term, which covers not only agreements and regulations on national and international levels, but also norms, standards, frames, rules, codes of conduct, and other private mechanisms and instruments (Levy & Newell 2006). CSR, being also a system of norms, standards, frames, rules, and expectations, can serve as an example of the global governance (Levy & Kaplan 2009). Levy and Kaplan (2009) assumed that there should be different reasons, why a great number of companies from all over the world accept the necessity to show responsibility to the society for their activity without any financial incentives or even bearing additional costs. Therefore they suggested to look at the CSR from two broad aspects. The first aspect reveals CSR as "more democratic governance", which arises from the civil society. The second aspect shows CSR as a "privatized system of corporate governance", which does not really have public answerability. CSR as "more democratic governance" is examined together with civil society. Civil society can be viewed as a sphere, where individuals, groups of individuals, non-commercial and voluntarily established associations self-develop and seek to attain the same or shared goals (Putnam, Leonardi & Nenetti 1994). According to this, any CSR initiative can be viewed as demonstration of the interests of civil society and its efforts to reach its goals. Levy and Kaplan note that civil society becomes an important constituent of global governance (Levy & Kaplan 2009). Peter Haas (2004) states, that rapid growth of the NGOs, associations and networks, which deal with environmental issues, is todays characteristic of geopolitical actuality. Thus, any NGOs, other associations and networks, which are established to attain the interests and goals of society (social, environmental, educational, those, which deal with human rights, etc.), are the result of civil society activity. CSR can be viewed as an example of corporate unselfishness (as part of civil society, but not as business initiative) and attempt to contribute to societys development and goals attaining. CSR as a "privatized system of corporate governance" attracts attention to the fact, that the CSR initiatives originate from corporate sector, and civil society has little impact on them. Any sustainability or CSR initiatives are examined in the light of economic incentives of a company, rather than its concern about social and/or ecological problems (Levy & Kaplan 2009). Morten Ougaard (2006) notes, that when businesses get involved in voluntarily activities, they usually decide how to allocate recourses, which are needed for public purposes. Besides, there are world known CSR initiatives (for example, ISO 14001), which were started as private initiatives, but later were developed and transformed to broad regulatory frames (Levy & Kaplan 2009). From this perspective, NGOs, associations and networks, for the most part, are established by companies and businesses to ensure their activity framework; and CSR initiatives are mostly the reaction of business to the pressure of society. 3. Application of Levy and Kaplan’s framework to RSPO case RSPO case as a CSR initiative can be viewed as a privatized system of corporate governance, but not as democratic governance. This initiative came from the group of businesses, which deal with palm oil, so one of the reasons to organize the RSPO was to establish the activity framework for the industry stakeholders. RSPO deals mostly with economic issues, trying to organize the supply chain of the palm oil, produced by the companies, who were certified by the RSPO. The RSPO members encourage other palm oil industry stakeholders to get RSPO membership and join the sustainable palm oil supply chain. However, the critics of the RSPO state, that the organization does not actually contribute to the cleaning of the palm oil, and it does not prohibit its members from expanding their activities, which means deforestation and degradation of environment (Greenpeace 2013). Some of the RSPO members were exposed as child labour abusers, which contradicts the general CSR principles (International Labor Rights Forum and Sawit Watch 2013). The promotion of the use of sustainable palm oil products by the RSPO does not really express the goals of the civil society, and so this CSR initiative cannot be viewed as democratic governance. Defining the type of the global governance according to Levy and Kaplan’s framework can help us to understand its effects on society and environment. References Bakery Fats n.d., AAK (UK) Limited, viewed 21 January 2015, Basiron, Y. & Weng, C. K 2014. The oil palm and its sustainability. Journal of Oil Palm Research, vol. 16, no. 1, pp. 1-10. Basiron, Y 2014. No deforestation campaign is a slogan with no evidence, viewed 21 January 2015, Broomhill, R 2007. Corporate Social Responsibility: Key Issues and Debates. Dunstan Paper, No. 1, 60 p. Citron, Nicole 2011, Jan Kees Vis. Leadership Award Recipient, viewed 21 January 2015, Greenpeace 2013, Certifying Destruction. Why consumer companies need to go beyond the RSPO to stop forest destruction, viewed 22 January 2015, Haas, P. M 2004. Addressing the global governance deficit. Global Environmental Politics, vol. 4, no. 4, pp. 1-15. International Labor Rights Forum and Sawit Watch 2013, Empty Assurances: The human cost of palm oil, International Labor Rights Forum, viewed 22 January 2015, Jan Kees Vis, Unilever n.d., viewed 21 January 2015, Levy, D. L., & Kaplan, R 2009. CSR and Theories of Global Governance: Strategic Contestation in Global Issue Arenas, in: A Crane, A McWilliams, D Matten, J Moon and D Siegel (ed.), The Oxford Handbook of CSR, Oxford University Press, Oxford. Levy, D. L., & Newell, P 2006. Multinationals in global governance?, in S Vachani (ed.), Transformations in global governance: Implications for multinationals and other stakeholders, Edward Elgar, London. Ougaard, M 2006. Instituting the power to do good?, in C May (ed.), Global corporate power. Boulder, Lynne Rienner, CO. Palm oil n.d., The World Wildlife Fund, viewed 21 January 2015, Putnam, R.D., Leonardi, R., & Nenetti, R. Y 1994, Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, New Jersey. Roundtable on Sustainable Palm Oil 2014. 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