How Unilever is Creating a Sustainable Palm Oil Supply Chain

Unilever is firmly committed to addressing environmental issues within the palm oil sector.

This involves intricate collaborations and advanced technologies to ensure a future where people and planet thrive together.

One of the most significant partnerships enhancing this sustainably-driven infrastructure includes Unilever’s alliance with PT. Perkebunan Nusantara IV (PTPN IV), a state-operated plantation firm in Indonesia.

This collaboration has matured over nearly ten years, evolving towards a more sustainable and efficient palm oil procurement that aligns with both environmental stewardship and community well-being.

"Over the years, we have worked together to improve traceability and transparency of our supply chain," explains Willem Uijen, Chief Supply Chain Officer at Unilever.

"Today, we took a step forward to further deepen the integration of our value chains by signing a long-term contract for the supply of palm to Unilever and a mutual commitment to expand PTPN IV’s asset base to produce more sustainable volumes in the future.

"In the past 10 years, Unilever has invested over US$360m in building a world-class oleochemicals facility in Indonesia for the production of sustainable and traceable palm oil derivatives. This deal helps Unilever to continue to leverage this facility to deliver products in line with our people and nature goals.

"This purpose-driven, public-private partnership is key to making the palm oil supply chain more efficient and sustainable, while bringing everyone, including smallholders, along."

Traceability at the heart of operations

Transparency is a pivotal part of Unilever's strategy.

It allows stakeholders to assess, critique and validate the company’s efforts in real-time.

Unilever achieves such transparency by publicly sharing detailed lists of mills and primary-tier suppliers, alongside their refineries and facilities engaged in their supply chain.

Moving past the traditional certification processes which are often limited in scope, Unilever is now focusing on sourcing directly from independent mills and smallholder farmers, previously marginalised within the industry.

These farmers receive direct support from Unilever, increasing sustainability, enhancing supply transparency and improving overall supply chain visibility.

Since 2016, Unilever has supported more than 21,000 independent smallholders in Indonesia and Malaysia, offering training in good agricultural practices.

This not only helps improve their yields and income but also ensures they contribute quality, sustainable palm oil to the market.

The farmers also receive training in business management and financial acumen, empowering them with the tools for enduring success.

Supporting smallholders

Unilever’s hands-on approach extends to creating 'smallholder hubs' in Indonesia which aim to support an added 40,000 farmers through new centres developed in regions like Aceh and North Sumatra.

In 2023, Unilever began collaborating with the first groups of smallholders.

These hubs help collect vital data, including tree quality, soil condition and other agricultural challenges.

This helps Unilever provide targeted support, unlocking significant economic value for the smallholders.

By facilitating access to certifications, these farmers can obtain better funding for essential activities like replanting — a costly yet crucial aspect of sustainable farming.

Through partnerships with entities like Fortasbi and IDH, and tech solutions from companies like PemPem — which digitalises transaction data and tracks the produce flow from smallholders to mills — Unilever is setting a precedent in digital innovation for sustainability in the palm oil industry.

So far, Unilever has helped more than 8,000 independent smallholders gain certification from the Roundtable on Sustainable Palm Oil (RSPO).

It remains one of the largest buyers of Independent Smallholder RSPO credits, purchasing more than 100,000 ISH credits in 2023, generating additional income for farmers.

Digital tools enhance supply chain visibility

With pioneering digital tools, Unilever is meeting the challenges of traceability head-on.

By using applications like Premise, and collaborating with tech partners like PemPem, Unilever brings transparency to the forefront, ensuring suppliers adhere to sustainable practices at every step of the supply chain.

These tools also empower smallholder farmers by granting them access to fairer market prices and more transparent trading environments.

Consequently, this boosts their economic stability and contributes to broader, community-wide benefits.

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