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How Musim Mas navigates palm oil's bad reputation
[SINGAPORE] Deforestation can drive wildlife to the brink of extinction, trigger transboundary haze from the fires set to clear the vegetation, and contribute to forced labour – and its association with palm oil accounts for the industry's bad reputation.
The director of sustainable supply chain at palm oil conglomerate Musim Mas does not deny it. 'Unfortunately,... we are still at that stage of saying 'We are not as bad as people think',' said Olivier Tichit.
'But if you go and ask a palm oil farmer what he thinks about palm oil, a (different picture emerges). The farmer does not understand why palm oil is demonised, and the consumer might not understand why farmers or companies are still turning to palm oil. So I think we still lack that connection between palm oil farmers and the global markets.'
Information gaps exist in other aspects of the sector too. In 2021, the Indonesian government reported that deforestation rates had fallen by three-quarters to their lowest levels since 1990, when tracking such data began.
But two years later, French geospatial company The TreeMap found that deforestation caused by single-crop palm oil plantations was once more on the rise.
To address such discrepancies, Musim Mas, one of the largest integrated palm oil players, was the first from Indonesia to join the Roundtable on Sustainable Palm Oil (RSPO), noted Tichit. Formed in 2004, the non-profit group facilitates the exchange of information on sustainability among stakeholders. It has more than 5,000 member organisations globally.
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Tichit admitted, however, that 'while we have 98 per cent traceability to plantations, it is very hard to get to 100 per cent because of the dynamic nature of the supply chain'.
Tichit says that since the suppliers are usually one or two steps removed from the company, they may not see the need to disclose certain information – or they may view the process of reporting their emissions as daunting. PHOTO: MUSIM MAS
Musim Mas conducts its primary operations in Indonesia, working with third-party suppliers and has trained almost 47,000 smallholder farmers.
This increases its exposure to Scope 3 emissions significantly, said Tichit, referring to indirect greenhouse gas (GHG) emissions that occur along a company's value chain.
Given that 91 per cent of what the Singapore-headquartered company processes is from third parties, it is vital for it to monitor and control Scope 3 emissions in order to meet its 'net-zero by 2050' goal, he added.
The main challenge to doing that comes from the lack of clarity on these emissions. Tichit said that since the suppliers are usually one or two steps removed from the company, they may not see the need to disclose certain information – or they may view the process of reporting their emissions as daunting.
Getting a better view
Musim Mas thus spends 'an inordinate amount of time' engaging with its suppliers, especially those who are not RSPO-certified, and explaining to them what deforestation and peat are.
'What we can do is to be clear about what compliance is, and how you address it when there is an issue,' he added.
Tichit said that when the company needs information from its partner farms, it helps to frame the questions differently. 'For example, instead of asking them when their land use changed (and whether they have) high or low land use... often, what we need from them is just: 'Was there a crop before? When did you plant?''
Musim Mas also relies on satellite imagery to track the extent of deforestation caused by its partner farms. It also conducts risk assessments on its suppliers, based on what they disclose and the credibility of this information.
The company then assigns its many suppliers 'risk levels', which indicate which of them are trustworthy, and whether their actual emissions can be monitored in real time. 'We are trying to be as conservative as we can, without making it impossible for us to buy from anybody,' noted Tichit.
He added: 'We need to ensure that it is easy for the information to come to us, so we can translate it into what the actual emissions are, how we assess them, and when we need to intervene.'
The company also utilises the PalmGHG Calculator, developed by RSPO to help palm oil producers estimate and monitor their GHG emissions.
Musim Mas has ventured into impact investing as well, through its initiatives with the smallholder farmers who are integrated into its supply chain, said Tichit. These programmes include training the farmers on good agricultural practices. These investments are set to grow.
'We are looking beyond tomorrow – how do we keep the youth now on the farm? How do we make it so that they will have a good living income and be better equipped to be better farm managers? These are some of the programmes that Musim Mas has invested in to prepare itself and the industry for the future.'
