Aidenvironment Pivotal in Overseeing NDPE policies in Palm Oil Industry
No Deforestation, No Peat, No Exploitation (NDPE) policies have now been adopted by most large companies in the palm oil industry, including oil palm plantation developers, traders/refiners, consumer goods companies, and financial institutions. Aidenvironment’s comprehensive database of concession maps and corporate ownership data and our regular monitoring of deforestation make us pivotal in implementing these policies.-
NDPE policies have four main components that relate to the preservation of biodiversity on oil palm concessions: No clearing of High Carbon Stock (HCS) areas, no clearing of High Conservation Value (HCV) areas, no burning, and no new peatland development regardless of depth. In some markets and sectors, these policies dominate and the share of the market that operates outside these policies, referred to as the leakage market, is small.
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What made the adoption of NDPE policies so significant was that they apply both to companies’ own operations and those of their third-party suppliers. The application to third-party suppliers was key because of the specific way the global palm oil market functions. The market bottlenecks in the middle, where just a few dozen trader/refiners source from thousands of palm oil mills and then in turn supply thousands of consumer goods companies. By targeting these comparatively few trader/refiners it is possible to influence the entire palm oil supply chain.
The key to policy implementation is knowledge. Companies that want to rid their supply chains of deforestation-linked palm oil often do not know who they are buying from, nor whether their suppliers have sustainability issues. Aidenvironment has always advocated NDPE policies being applied at group level. As oil palm trees take about three years to start bearing fruit, mills are usually not linked to active deforestation. To stop active deforestation, it is essential to identify the owner of the mill and look at their entire holdings, specifically their land bank, and any proposed new developments. Companies can then use their purchasing power and the threat of supply chain suspension to stop any deforestation.
Since 2014, Aidenvironment has worked with a select group of trader/refiners that have shown real commitment to policy implementation and industry transformation. Every month we monitor deforestation in Indonesia, Malaysia, and Papua New Guinea. Overlaying the deforestation alerts with our concession boundaries allows us to identify which concessions are clearing. Checking this against our corporate database then allows us to link it to a corporate group. Public mill supplier lists, a key component of NDPE policies, mean the corporate groups can be linked to international supply chains. We then work with select trader/refiners to engage with these corporate groups to implement stop work orders, conduct remedial action to restore deforested areas or suspend the group from supply chains.
In 2019 alone, Aidenvironment detected around 90,000 ha of deforestation in concessions owned by 115 corporate groups. Of this 90,000 ha, just 10 companies were responsible for 44% (39,500 ha). These 10 companies supply to as many as 32 trader/refiners and consumer goods companies with NDPE policies. Of course, there are limits to what the private sector can do, and industries need the backing of governments and civil society to fully eradicate deforestation. By working with palm oil companies and helping them implement their NDPE policies, Aidenvironment is joining other like-minded organizations in transforming the palm oil sector.
For more information, please contact Christopher Wiggs