Palm Oil Sourcing

Palm oil is used in select products and has distinctive characteristics that other edible oils cannot provide, such as containing no trans fat.

Sustainably grown palm oil can also reduce pressure on forests and biodiversity, support smallholder farmer livelihoods and improve economic development in palm-growing regions. However, Hershey recognizes that palm oil has impacts to forests, biodiversity and producer communities when not grown or sourced responsibly. While we buy a relatively small amount of palm oil, since 2014 we have committed to sourcing 100 percent responsibly grown palm oil.

Our Approach to Responsibly Sourced Palm Oil

Hershey is committed to achieving a traceable and sustainable palm oil supply chain with no deforestation, no peatland development and no exploitation of workers (NDPE) in line with our Responsible Palm Oil Sourcing Policy. To achieve this, we work with Earthworm Foundation, a nonprofit organization that helps us understand where our palm oil comes from and the associated environmental and human rights issues in our supply chain, as we contribute to the transformation of the palm sector.

Our Palm Oil Supply Chain

We currently source from seven direct suppliers: AAK, Cargill, Fuji Oil, Gemini, Bunge, ISF and Wilmar. 100 percent of the palm oil we source globally is Roundtable on Sustainable Palm Oil (RSPO) Mass Balance certified. These palm volumes have originated from mills in 14 countries—though most of the palm we source is from Indonesia and Malaysia.

As members of the RSPO, we annually report our palm oil volumes in our Annual Communication on Progress report.

Through our partnership with Earthworm Foundation, we are focused on four strategic areas:

  • Traceability: Map our palm oil sources at the mill and plantation level to understand high-risk sourcing areas in our palm supply chain and inform where in our palm supply chain we can make the biggest impact
  • Supplier Engagement: Engage with suppliers to communicate our expectations and strengthen NDPE policies, commitments and performance throughout our palm supply chain
  • Transformation: Invest in on-the-ground programs in our palm supply chain with a focus on protection and restoration of forests and biodiversity, smallholder inclusion, NDPE capacity building, and resilience and livelihoods of local palm-growing communities
  • Monitoring and Verification: Implement satellite monitoring and verification as we work toward a verified deforestation-free palm supply chain

Traceability and Risk Mitigation

To achieve a NDPE palm supply chain, we trace our supply chain and source certified palm oil to help mitigate risk and understand origin sourcing areas, including those which are high-risk sourcing areas.

Supply Chain Traceability

We work with the Earthworm Foundation to trace our palm oil and palm kernel oil supply chain to the mill and to the plantation level biannually.

In the second half of 2020, we traced 99.8 percent of our palm oil volumes to 1,293 mills. During this same reporting period, we traced 74.7 percent of palm volumes to the plantation level.

We were unable to realize our goal of tracing 100 percent of palm volumes to the plantation by 2020 and have updated our ambitions to achieve 100 percent plantation traceability by 2025. We acknowledge that the pathway to 100 percent will continue to be complex for several reasons, including challenges associated with mapping smallholders. Nonetheless, we remain committed to this goal and will continue to work with suppliers that are similarly committed.

We provide bi-annual updates on our palm oil tracing efforts on this website and annual updates through our sustainability reports to give stakeholders visibility into our ongoing progress. See our full archive of traceability data and mill lists here.

Certified Palm Oil

Hershey has been a member of the Roundtable on Sustainable Palm Oil (RSPO) since 2011. By the end of 2014, all of our palm oil purchases for North America operations were 100 percent RSPO Mass Balance-certified palm oil. By the end of 2017, all of our palm oil purchases for Global operations were 100 percent RSPO Mass Balance-certified palm oil and we remain committed to purchasing 100 percent RSPO Mass Balance-certified palm oil (for additional details, please visit www.rspo.org).

In 2020, we joined the North America Sustainable Palm Oil Network (NASPON), which works to accelerate the uptake of certified sustainable palm oil in North America.

Supplier Engagement and Collective Action

We expect all of our palm oil sourcing partners to be compliant with our Supplier Code of Conduct, uphold our Responsible Palm Oil Sourcing Policy and No Deforestation Policy, and remain compliant to our NDPE position at the corporate-group level.

Palm Oil Grievance Procedure and Log

As outlined in our Palm Oil Grievance Procedure, Hershey takes any reported grievances regarding deforestation, peatland development and exploitation in our palm oil supply chain seriously. If our direct suppliers and their parent and sister companies at the corporate-group level fail to uphold our commitments, they may be removed or suspended from our supply chain in accordance with our sourcing policy.

Listings of grievances and suspended palm companies are disclosed in our Palm Oil Grievance Log, updated on a monthly basis.

We bi-annually map our supply chain and monitor and ensure these suspensions are effectively implemented. Suspensions remain in place until we see acceptable, timebound corrective action plans with proven progress that leads to a resolution. We also encourage our suppliers to remain engaged with these suspended parties to push for meaningful and decisive correction action plans and establishment of a timeline and progress report.

Engagement for Policy Implementation

Starting in 2019, Hershey began using Earthworm Foundation’s Engagement for Policy Implementation (EPI) tool with six of our  direct suppliers. Our suppliers complete a self-assessment questionnaire focused on their palm and NDPE policies, commitments, traceability status, grievance procedure, social and environmental program investments, and monitoring and verification activities.

Through EPI, Hershey gains deeper insights on our suppliers’ practices, activities, performance and opportunities for improvement to achieve a responsible palm oil supply chain. We use this data to structure how we engage with our suppliers in order to identify gaps related to their NDPE policies and commitments. We support our suppliers to develop action plans to close these gaps.

Tools for Transformation

In 2020, we sponsored a Malaysia refiner to participate in Earthworm Foundation’s Tools for Transformation (T4T) system in order to scale best practices at the mill and plantation level. T4T’s online platform includes a self-assessment questionnaire, practical action planning, and step-by-step tools to support mills and plantations to implement NDPE.

Through this sponsorship, 90 additional Malaysian mills linked to the refiner are expected to be enrolled and understand how they can strengthen their compliance to and implementation of NDPE.

Monitoring and Verification

Monitoring―Starling

In 2020, with Airbus and Earthworm Foundation’s Starling satellite-based service, we started monitoring the supply chains of our highest volume direct suppliers, covering almost 75 percent of our palm supply chain (based on 2020 volumes). Our objective is to move our palm supply chain to 100 percent verified deforestation-free by 2025.

On a quarterly basis, we receive reports of deforestation and land clearing events captured by Starling. The report identifies:

  • Mills that have the highest deforestation alerts (by hectares) occurring within a five-kilometer radius
  • Concessions that have the highest deforestation alerts (by hectares) found within the concession boundaries

We engage with our suppliers around these deforestation events and request they investigate these findings. Our suppliers help us to verify whether the deforestation is known or new and any actions taken, progress made to date or need for further investigation. They also help us obtain sourcing information, including traceability to the plantation data and concession boundaries, and any other evidence to de-link deforestation from our palm supply chain.

Verifying—Kumacaya

In 2020, Hershey began funding Earthworm Foundation’s Kumacaya program in the biodiverse Rawa Singkil Wildlife Reserve, located in the Leuser Ecosystem, which you can find out more about under “Transformation” below.

Kumacaya enables independent monitoring and verifying of social and environmental issues by local people and civil society organizations (CSOs) and amplify their voices to speak up about how company commitments are delivered locally. Local CSOs and community members have access to Kumacaya’s online platform, which allows for anonymous reporting of impacts observed on the ground. From these reports through corporate funding, local projects are developed in consultation with and implemented by local communities and CSOs.

Due to COVID-19, the program was paused with plans to resume in 2021.

Transformation

Leuser Ecosystem

We are deeply concerned about the continued reports of deforestation and peatland development by palm oil companies in Indonesia’s Leuser Ecosystem, which is one of the most biodiverse places on earth and is home to many unique landscapes and fauna. As part of Hershey’s commitment to a responsible palm oil supply chain, the environment and human rights, the protection of the Leuser Ecosystem is a priority.

These supply chains are complex and regional structural issues, such as poverty, also mean that embedding solutions takes time. Hershey will continue:

  • Working with our direct suppliers to trace our palm oil supply chain to the mill and to the plantation levels that are located near the Leuser Ecosystem
  • Engaging our supply chain in the Leuser Ecosystem to strengthen NDPE implementation
  • Engaging our suppliers through our grievance procedure when we receive allegations of violators in the Leuser Ecosystem that are not in compliance with our Palm Policy
  • Co-funding Earthworm Foundation’s Area for Priority Transformation project in Aceh Tamiang and Southern Aceh, where it overlaps with the Leuser Ecosystem to address deforestation within the two Aceh regions and build NDPE capacity for local actors
  • Co-funding Kumacaya in the Rawa Singkil Wildlife Reserve within the Leuser Ecosystem
  • Exploring additional opportunities with Earthworm Foundation and suppliers around satellite monitoring systems and deeper engagement with nearby mills and plantations

Landscape Program

Hershey co-sponsors Earthworm Foundation’s Areas for Priority Transformation (APT) in Southern Aceh and Aceh Tamiang landscapes, which overlap with the biodiverse Leuser Ecosystem and the Rawa Singkil Wildlife Reserve, to support cross-sector efforts with Earthworm Foundation, the Government of Indonesia, civil society and other companies to reduce and prevent further deforestation.

Through APT, both landscapes are 100 percent covered by Starling satellite monitoring for forest cover change and Hershey receives these land monitoring updates as a co-sponsor. Between 2016 and 2019, both landscapes have seen a 60 percent reduction in deforestation. We won’t be satisfied until deforestation ends.

Since 2020, we increased our financial support of APT in Southern Aceh and Aceh Tamiang landscapes and now participate on the APT Member Coalition.

Smallholder Program

During 2020, Hershey contributed to Earthworm Foundation’s Rurality program in East Riau―Indonesia’s largest palm-producing area.

The Rurality program aims to address challenges facing local farmers, including old oil palm trees with low productivity, limited livelihood opportunities, deforested areas and degraded environments, long and inefficient supply chains, and more recently, human-elephant conflict. Through a multi-stakeholder approach, Rurality aims to build the resilience of palm farmers in East Riau while also building capacity of good agricultural practices to support smallholder inclusion into commercial supply chains.

Our Goals & Progress

Our Goals & Progress