Unilever Bets on Blockchain Tech for Deforestation-Free Certified Palm Oil

Summary

Unilever has launched a pilot project using SAP blockchain tech­nol­ogy to cer­tify the ori­gin of its palm oil, aim­ing to enhance trans­parency and sus­tain­abil­ity in the pro­duc­tion process, par­tic­u­larly involv­ing small-scale pro­duc­ers in the coun­tries of ori­gin. The project aims to address the issue of uncer­tain ori­gins of palm oil, which has been linked to defor­esta­tion activ­i­ties, and com­ply with upcom­ing European reg­u­la­tions requir­ing cer­ti­fi­ca­tion and trans­parency in the sup­ply chain.

Unilever, one of the world’s largest food pro­duc­ers, has announced a pilot project based on SAP blockchain tech­nol­ogy to cer­tify the ori­gin of its palm oil.

According to the com­pany, the project could open the door to a new era for trans­parency, trace­abil­ity and sus­tain­abil­ity of palm oil pro­duc­tion, with the involve­ment of small-scale pro­duc­ers in the coun­tries of ori­gin.

The uncer­tain ori­gins of palm oil have been asso­ci­ated with mas­sive defor­esta­tion activ­i­ties.

“Raw mate­ri­als like palm oil are often mixed with phys­i­cally iden­ti­cal raw mate­ri­als from ver­i­fied sus­tain­able and non-ver­i­fied sources after the ​‘first mile’ of the sup­ply chain, caus­ing the ori­gin infor­ma­tion to be either hid­den or lost,” Unilever said in a press release.

The need to cer­tify and ver­ify the ori­gin of palm oil is due to the grow­ing inter­est shown by con­sumers world­wide regard­ing the envi­ron­men­tal impact of food.

It is also due to stricter reg­u­la­tions increas­ingly enforced at an inter­na­tional level. For exam­ple, the European Commission has recently con­firmed that it is work­ing to halt all imports of goods linked to defor­esta­tion.

Unilever’s pilot project in Indonesia deployed the GreenToken blockchain tech­nol­ogy to source more than 188,000 tons of palm fruit.

According to the com­pany, Unilever’s palm fruit sources cre­ated tokens that ​“mir­ror the mate­r­ial flow of the palm oil through­out the sup­ply chain and cap­ture the unique attrib­utes linked to the oil’s ori­gin.”

As a result of this process, Unilever could track, ver­ify and report the ori­gin of the prod­uct and its pro­cess­ing through­out the sup­ply chain.

Andrew Wilcox, senior man­ager at Unilever, told FoodNavigator that the new sys­tem ​“lever­ages exist­ing busi­ness processes like cre­at­ing pur­chas­ing orders, good receipts and weigh­bridge logs, to orig­i­nate and trans­fer these indi­vis­i­ble and unre­pro­ducible com­mod­ity tokens and keep the account­ing trans­par­ent at each stage of the sup­ply chain.”

This infor­ma­tion allows the com­pany to com­ply with the incom­ing European reg­u­la­tions, which will require pro­duc­ers to vol­un­tar­ily cer­tify and offer com­plete access to infor­ma­tion such as the type of com­mod­ity, pro­duc­tion vol­umes, involved sup­pli­ers and the coun­try of pro­duc­tion.

According to the com­mis­sion, exporters will have to spec­ify the exact geo­graphic coor­di­nates of the pro­duc­tion and cer­tify that their prod­uct chain abides with local laws.

According to Nitin Jain, gen­eral man­ager of SAP GreenToken, the plat­form allows com­pa­nies ​“to bring the same trace­abil­ity and sup­ply chain trans­parency to bulk raw mate­ri­als that you get from scan­ning a bar or QR code on any con­sumer prod­uct.”

“Our solu­tion allows com­pa­nies to tell what per­cent­age of palm oil prod­ucts they pur­chased from a sus­tain­able ori­gin and track it to the end con­sumer prod­uct,” he added.

Unilever has noted that it plans to achieve a defor­esta­tion-free sup­ply chain by 2023.

The company’s part­ners, such as Golden Agri-Resources, said the new plat­form enhances the trans­parency of their oper­a­tions and facil­i­tates the flow of infor­ma­tion between dif­fer­ent sup­ply chain actors.

According to Wilcox, blockchain tech­nol­ogy could sig­nif­i­cantly impact trop­i­cal forests where small­hold­ers ​“are often located next to the plan­et’s most excep­tional bio­di­ver­sity, the most car­bon-rich forests and peat­lands and often the most endan­gered ecosys­tems where their pro­duc­tion deci­sion have the most out­sized impacts.”

Unilever said the new plat­form could prove ​“trans­for­ma­tional” for small­holder inclu­sion since they could access cer­ti­fi­ca­tion both of their sus­tain­able prac­tices and how they progress over time.

“This vir­tual seg­re­ga­tion enabled by blockchain, and paired with the fist-mile trace­abil­ity data, can cap­ture infor­ma­tion about the small­hold­ers’ farm­ing prac­tices and envi­ron­ment to show the effort and progress made by small­hold­ers towards sus­tain­abil­ity,” Wilcox told FoodNavigator.

While many coun­tries on four con­ti­nents pro­duce palm oil, the largest pro­ducer remains Indonesia which, accord­ing to the United States Department of Agriculture (USDA), accounts for 59 per­cent of global pro­duc­tion. About 40 per­cent of Indonesian pro­duc­tion comes from small-scale farm­ers.

The USDA esti­mates that in 2022/23, pro­duc­tion will grow to 46 mil­lion tons in Indonesia, 500,000 tons more than the pre­vi­ous year, due to ​“favor­able weather and higher prices for pro­duc­ers.”

According to the USDA, exports in the period should rise to 30 mil­lion tons due to grow­ing demand from China and India.

The United Nations Food and Agriculture Organization (FAO) has esti­mated that between 1990 and 2020, 420 mil­lion hectares of for­est were glob­ally lost to defor­esta­tion.

Even count­ing the newly planted or regen­er­ated for­est, which can only par­tially com­pen­sate for the loss, 178 mil­lion hectares were lost in that period, an area approx­i­mately large as the whole of the U.S. state of North Dakota.

• Unilever
• Food Navigator
• USDA