The European Union (EU) parliament passed the highly controversial Deforestation Regulation (EUDR) on September 13 2022, which has been subject to intense and continuous scrutiny and protests ever since from many parties, particularly producer nations of commodities such as palm oil, coffee, cocoa and more.
The EUDR has been accused of many things from being a protectionist ploy to the potential catalyst of a new trade war between the EU and South East Asia, with Indonesia and Malaysia also having put aside their differences to present a joint front to the World Trade Organisation (WTO) in protest of it.
The food and beverage sector is expected to be one of the most heavily-hit by this regulation given the commodities in question, but amid the ongoing debate Nestle has broken silence to reassure consumers and investors that it is ‘well placed’ to deal with any requirements the EUDR may bring to its supply chain.
“Nestle has worked for over a decade to address deforestation in our palm oil supply chains and all other major supply chains [and] this strong foundation means we are well-placed to address the new law,” Nestle CEO Mark Schneider told FoodNavigator-Asia.
“We have assessed our palm oil supply chain with external partners and found these to be 95.6% deforestation-free as of the end of 2022, and continue to be vigilant in maintaining this level of performance.
“We have also found technology to be key to preventing deforestation [such as] satellite-based system Starling which we use to monitor our palm oil supply chains, as this helps us to identify deforestation risks and cases around the mills from which we source as well as deforestation patterns, which in turn supports us in prioritising actions on the ground where they are most needed.”
He identified Indonesia as one of the key areas where this is being done, with some of the firm’s most intense sustainability and deforestation prevention initiatives taking place in this market.
“In the Aceh and Riau provinces of Indonesia, Nestlé is collaborating with partners to drive sustainable production, forest conservation as well as good social and labour practices; as well as working with the government on integrated land use planning and supporting a ‘No Deforestation, No Peatland, No Exploitation’ policy,” Schneider added.
“New satellite monitoring information has helped us identify and expand the scope of this work to the East Kalimantan province.”
Although the firm has not decried the EUDR outright - instead choosing to approach this in terms of being prepared for its impacts - it was also highlighted that palm oil should not be pinpointed as the villain in the whole deforestation story given not only its importance to the industry but its natural role in sustainable agriculture as well.
“Palm oil requires four to 10 times less land to produce the same amount of oil as other plants [and is in fact] highly versatile [in terms of planting and application],” he said.
“Replacing it is not the answer – neither for the environment, nor for the millions of farmers whose livelihoods depend on it. That is why we are going ever further to make palm oil production truly sustainable, for both forests and communities.”
One of the reasons the EUDR is undergoing such intense dissent from producer nations is the accompanying hefty costs that are predicted to arise as a result of being labelled countries that are ‘high risk’ for deforestation, which is expected to heavily impact palm oil producers and especially smallholders.
Smallholder farmers make up some 40% of the palm oil supply globally, and many palm oil industry organisations from the Roundtable on Sustainable Palm Oil (RSPO) to Malaysian Palm Oil Council (MPOC) have previously stressed that these are the parties requiring the most help to improve sustainable practices as well as to deal with any impacts arising from the EUDR implementation.
F&B MNCs have been called upon time and time again to play a larger role in helping these smallholders, and Nestle has attempted to answer this call in its own way, according to Schneider.
“Nestlé recently helped launch a Smallholders Hub in Aceh, Indonesia that trains farmers on good agricultural practices and helps them increase their yields from existing farmland,” he said.
“This reduces the risk of encroachment into protected areas. Similar programs are being rolled out in other landscapes.
“We are also going beyond deforestation to conserve and restore natural ecosystems whilst promoting sustainable livelihoods and respecting human rights – this was recognised in this year’s Forest 500 report, where we came in third among companies exposed to deforestation for efforts to tackle this issue.”