Palm oil and its derivatives that are
certified by the RSPO can be purchased
through three main supply chain systems:
Segregated, Mass Balance and
Book and Claim.
What are the sustainable palm oil supply chains?
The 3 systems ensure that claims made by the retailers or consumer goods manufacturers about their use of Certified Sustainable Palm Oil (CSPO) remain transparent and accurate.
All 3 supply chains have the same starting point—a plantation is successfully audited against the RSPO principles and criteria and the total volume of CSPO that it can produce a year is established.
All 3 supply chains have the same starting point—a plantation is successfully audited against the RSPO principles and criteria and the total volume of CSPO that it can produce a year is established.
Segregated CSPO
As the name suggests, this is certified palm oil that is physically
separated from non-certified palm oil all the way from the certified mill to the end
user. This option guarantees that the end product contains CSPO. However, this
approach can be expensive because the two streams of certified and non-certified oil or
derivatives need to be kept apart throughout the entire supply chain.
Segregated
Mass Balance CSPO
This option allows companies along the supply chain, such as traders or refiners, to mix the certified palm oil with non-certified to avoid all the costs of keeping the two entirely separate (as in Segregated).
Each company handling Mass Balance CSPO is only allowed to sell the same amount of certified palm oil drawn from the “mixed” oils that they originally bought as certified.
Each company handling Mass Balance CSPO is only allowed to sell the same amount of certified palm oil drawn from the “mixed” oils that they originally bought as certified.
Mass Balance
Book and Claim CSPO
This option is also known as GreenPalm after the name
of the company managing the system for the RSPO. It is a certificate trading system
separate from the physical trade in palm oil. The retailer or manufacturer purchases
palm oil from an established supplier, along with a certificate for each tonne of palm oil
being used. A payment from each certificate goes directly to the producer of CSPO.
Book and Claim
The benefit of the Book and Claim system is that no paper trail or physical separation of oil along the supply chain is needed, and therefore it is a much cheaper option. It also means that companies that are using derivatives of palm oil that are not yet available as CSPO can still buy certificates to support the production of CSPO.
The drawback is that a company using Book and Claim may still be using oil that comes from unacceptable sources, and may therefore still be supporting producers that are not acting responsibly.
Until global volumes of CSPO grow to a much higher level, and until entire supply chains from refiners through to end users can switch to only using CSPO, there will remain a need to offer Book and Claim CSPO, especially for products that use complex derivatives of palm oil.
But this should not stop buyers from pushing their suppliers to begin sourcing traceable palm oil.
The drawback is that a company using Book and Claim may still be using oil that comes from unacceptable sources, and may therefore still be supporting producers that are not acting responsibly.
Until global volumes of CSPO grow to a much higher level, and until entire supply chains from refiners through to end users can switch to only using CSPO, there will remain a need to offer Book and Claim CSPO, especially for products that use complex derivatives of palm oil.
But this should not stop buyers from pushing their suppliers to begin sourcing traceable palm oil.
