Part of From disclosure to engagement:

A guide to the SPOTT indicator framework

for assessing palm oil producers and traders

Relevant SDGs

3. Traceability

SPOTT indicators: Does the company disclose...

16) Number and names of supplier mills? traceability to plantation level?
17) See factsheet 2. Landbank and maps. 21) Percentage of supply traceable to mill level?
18) See factsheet 2. Landbank and maps. 22) Percentage of fresh fruit bunches (FFB) from
19) Time-bound commitment to achieve 100% own mills traceable to plantation level?
traceability to mill level? 23) Percentage of fresh fruit bunches (FFB) from
20) Time-bound commitment to achieve 100% supplier mills traceable to plantation level?

Context Glossary
Traceability is an important component in the implementation of sustainable Traceability
sourcing commitments as it links palm oil products with palm oil production IDH defines traceability1 as ‘knowing all palm
on the ground. Traceability allows a company to understand where it sources sources within one’s supply chain all the way
palm oil from, what the associated impacts on the ground may be and consider to plantation level (including smallholders),
potential interventions. It is relevant to palm oil companies who purchase fresh and traceability to mill as an intermediary step
fruit bunches (FFB) from smallholders, to traders and buyers who might buy in achieving full traceability. In this context
palm oil in various forms from growers, as it allows them to prioritise areas traceability is not a chain of custody concept
associated with high environmental risk. and traceable is not the same as segregated’.
It is important to recognise that, while traceability is a necessary first step in Segregated
ensuring sustainability and the effective implementation of company policies, Certified palm oil is kept segregated from non-
traceability in itself does not equate to sustainability. Palm oil producers can certified palm oil, but is blended with other batches
facilitate traceability, the verification of sustainability claims, and the fulfilment of Certified Sustainable Palm Oil (CSPO) and
of commitments by increasing the transparency of their operations, including cannot be traced back to a specific plantation.
regarding the location of their plantation and mill sites. In turn, this can
Identity Preserved
demonstrate to buyers and investors that companies are employing good
CSPO is kept segregated from all other
governance, due diligence, leadership and openness.
sources (certified and non-certified) and
a batch of certified palm oil can be traced
Obligations and expectations from plantation to factory to retailer.

While there are no legal requirements related to the traceability of palm oil,
companies suggesting or stating that their supply chains are ‘deforestation
free’ or entail ‘zero deforestation’ when this is false or misleading or where no
sufficient evidence can be produced, may be liable to claims under EU consumer
protection law and similar legislation in other jurisdictions.
Several European governments (Denmark, France, Germany, Netherlands,
Norway, UK) and sector organisations (e.g. Belgian Alliance Sustainable Palm Oil,
Danish Food and Drink Federation Initiative) signed the Amsterdam Declaration
in December 2015. The signatories are committed to support 100% sustainable
palm oil in Europe by 2020, with one of the actions focussing on “supporting
and participating in developments in the area of traceability, leading to a more
transparent and sustainable palm oil supply chain.”

1
TFT. 2015. Traceability working group [Accessed 29 September 2017].
Available from: staging.tft-transparency.org/app/uploads/2016/01/Defining-Calcuating-Mill-Traceability_June2015.pdf
From disclosure to engagement: Factsheet 3. Traceability

M&S: An approach to traceability

"The palm oil supply chain is highly complex, and as retailers we are far removed from upstream
producers and specific plantations. In partnership with other retail companies we measure and
monitor progress made by processors and importers against their own commitments. We then
evaluate how well these align with M&S policies and commitments on sustainable, deforestation-
free palm oil. As a buyer, we rely on clear and transparent reporting right through the supply
chain to provide us with confidence that suppliers are making effective progress in achieving their
traceability targets."
Fiona Wheatley, Plan A Sustainable Development Manager
MARKS AND SPENCER

Challenges
• The definition of ‘traceability’ used by a company is important.
'Traceable' may mean either that palm oil can be traced back to where
it first entered the supply chain at a mill or primary processor, or it
may mean 'traceable' back to the original farm or plantation.
• Achieving traceability poses significant challenges for companies,
particularly for traders and downstream players who try to establish
traceability back to mill or plantation level. This is due to: (1) the complexity
of the palm oil supply chain and (2) confidentiality. Therefore, to a certain
extent, downstream players rely on their suppliers’ own traceability efforts.
• The palm oil supply chain is complex, involving multiple layers of suppliers:
palm oil producers (from large plantation companies to smallholders),
crushers, refineries, traders, processors, manufacturers and retailers. Mixing
of palm oil and palm oil products may occur at each of these different
stages in the supply chain, making traceability difficult to achieve.
• Confidentiality: direct suppliers may be unwilling to disclose detailed
information to their customers about whom they buy from and how
much they buy, as this is commercially sensitive information. Suppliers
may not wish for their customers to by-pass them, making traceability
difficult. It may therefore be necessary to involve a third party, bound by a
confidentiality agreement, so that commercial information is not passed
on.
From disclosure to engagement: Factsheet 3. Traceability

Best practice for traceability

For companies that only source from their own mills and plantations,
traceability should be straightforward; however, for companies that also buy
from growers and smallholders, tracing back to mills and/or plantations is
more difficult. There are several steps that palm oil buyers should follow to
implement best practice:

• Companies should engage with their direct suppliers. The conversation

should start with companies explaining their sustainability commitments
and clarifying the need for traceability.
• Supplier workshop and/or webinars should be arranged to help suppliers
understand the concept of traceability and what is required to fulfil a
company's requirements.
• Palm oil companies should start gathering information from their direct
suppliers on where they source their palm oil and palm oil products from.
• Companies should analyse supply chain maps and categorise palm oil
sources. For example, as a first step, any product that can be traced
back to the producer, or the originating mill, can be considered a
“known source.”
• It is important to prioritise interventions in high impact sourcing areas
for improvement. This can include working with suppliers to identify
“unknown sources” or conducting field visits to validate information
from high risk sources.

Recommended resources
• The Amsterdam Declaration in Support of a Fully Sustainable Palm Oil
Supply Chain by 2020, (2015), Roundtable on Sustainable Palm Oil. RSPO
Supply Chains. [Accessed August 25, 2017]. Available from: rspo.org/
certification/supply-chains
• TFT reports on traceability methodology. [Accessed August 24, 2017].
Available from: tft-transparency.org/app/uploads/2016/01/Defining-
Calcuating-Mill-Traceability_June2015.pdf
Other SPOTT indicator framework factsheets in the series
This document is part of a series of factsheets in the publication: From
disclosure to engagement: A guide to the SPOTT indicator framework for
assessing palm oil producers and traders. Below is a full list of the factsheets:

• Factsheet 1: Sustainability policy and leadership

• Factsheet 2: Landbank and maps
• Factsheet 3: Traceability
• Factsheet 4: Deforestation
• Factsheet 5: Biodiversity
• Factsheet 6: HCV, HCS and impact assessment
• Factsheet 7: Peat
• Factsheet 8: Fire
• Factsheet 9: Greenhouse gas emissions
• Factsheet 10: Water
• Factsheet 11: Chemical and pest management
• Factsheet 12: Community and land rights
• Factsheet 13: Labour rights
• Factsheet 14: Palm oil certification
• Factsheet 15: Smallholder support
• Factsheet 16: Supplier selection
• Factsheet 17: Governance and grievances

About SPOTT
SPOTT is an online platform promoting transparency and accountability to drive
implementation of environmental and social best practice for the sustainable
production and trade of global commodities. SPOTT assessments score some of the
largest palm oil producers and traders on the public availability of corporate information
relating to environmental, social and governance (ESG) issues.
Reframed as the Sustainability Policy Transparency Toolkit in 2017, SPOTT now supports
transparency for other industries that pose some of the greatest risks to the environment,
with SPOTT assessments of timber, pulp and paper companies launched in November 2017.

For more information, visit SPOTT.org or contact [email protected].

About ZSL
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Published: November 2017