Hershey’s Commitment to Responsibly Sourced Palm Oil
Since 2014, Hershey has been committed to sourcing 100 percent responsibly grown palm oil that protects forests and peatlands and is free from exploitation.
Hershey buys a relatively small amount of palm oil which is used in select products. For example, Hershey’s Milk Chocolate bars do not include palm oil.
Nonetheless, we are committed to the highest standards in responsible and sustainable palm oil sourcing because we do use palm oil, the number one produced edible oil in the world, for a variety of reasons.
It is versatile and has distinctive characteristics that other edible oils cannot provide. For example, palm oil does not contain trans-fat and it has unique texture and taste characteristics when used in coatings. In addition, palm fruit is a very efficient crop. It produces a much higher oil yield on less land than any equivalent vegetable oil crop such as soybean or coconut oil. Production and cultivation of palm oil also supports millions of smallholder farmers’ livelihoods globally.
However, Hershey recognizes that palm oil has impacts on forests and biodiversity. We may only reap palm oil’s benefits to the environment and livelihoods when its sustainably and responsibly sourced. This is why Hershey has committed to sourcing 100 percent responsibly grown palm oil for more than five years and participates in industry and cross-sector initiatives aimed at sustainable transformation of the palm oil supply chain.
Read more about our commitment in our Responsible Palm Oil Sourcing Policy
Palm Oil, the Environment and Human Rights
The Hershey Company is deeply committed to the protection of the environment and human rights across our entire value chain. We understand the detrimental environmental and social impact that palm oil can have on ecosystems and communities when it is not sustainably produced and responsibly sourced. To ensure we are doing our part, we are committed to responsible sourcing standards, partnerships, and programs and initiatives as well as upholding our suppliers to a rigorous Responsible Palm Oil Sourcing Policy in order to secure a sustainable palm oil supply chain.
Roundtable on Sustainable Palm Oil (RSPO)
The Hershey Company 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 Mass Balance RSPO-certified palm oil. By the end of 2017, all of our palm oil purchases for Global operations were 100 percent Mass Balance RSPO-certified palm oil. We remain committed to purchasing 100 percent Mass Balance RSPO-certified palm oil. We continue to support the work of the RSPO, by adhering to the standards of the RSPO Supply Chain Certification Standards (for additional details, please visit www.rspo.org).
Partnership with Earthworm Foundation
The Hershey Company is a member of Earthworm Foundation (formerly The Forest Trust), a non-profit organization that is helping us achieve a traceable supply chain that adheres to our Responsible Palm Oil Sourcing Policy.
Through this partnership, we are working on the following:
- Trace our palm and palm kernel oil supplies to the mill and to the plantation level (please see the “Palm Oil Supply Chain Traceability” section below for more details)
- Formalize our grievance mechanism and grievance log for all reported allegations in our palm oil supply chain that are in direct violation of our Responsible Palm Oil Sourcing Policy
- Strengthen understanding of our direct suppliers’ No Deforestation, No Peatland Development, No Exploitation (NDPE) policies, commitments and programs to deepen our engagement with and support of our direct suppliers to achieve a NDPE palm oil supply chain, particularly in Indonesia and Malaysia
- Co-sponsor Areas for Priority Transformation (APT) in Southern Aceh and Aceh Tamiang landscapes, in and around the Leuser Ecosystem and the Rawa Singkil Wildlife Reserve, to support cross-sector efforts with Earthworm Foundation, Government of Indonesia, civil society and other companies to reduce and prevent further deforestation. Through APT, we receive land monitoring updates for both landscapes through Starling satellite monitoring system
Palm Oil Supply Chain Traceability
We work with the Earthworm Foundation (formerly The Forest Trust) to trace our palm oil and palm kernel oil supply chain to the mill and to the plantation level. This helps us better understand if the palm oil we source is linked to areas or supply chain actors involved in sustainability concerns, such as deforestation, peatland development or exploitation of workers.
In the second half of 2019, we maintained 99.8 percent palm oil and palm kernel oil traceable to the mill. We traced our palm and palm kernel oil to 1,474 mills. During this reported period, we sourced palm oil from seven direct suppliers: AAK, Cargill, FUJI Oil, Gemini, Bunge, ISF and Wilmar. For the full year of 2019, we maintained 99.8 percent palm oil and palm kernel oil to the mill.
Tracing to a mill location provides information about where palm oil was harvested and can indicate whether it came from an area where there are social or environmental risks. It also enables us to have constructive conversations with our suppliers about environmental and social concerns and how these can be remediated and properly addressed.
During the second half of 2019, we increased our percentage of palm oil and palm kernel oil traceable to the plantation to 52.3 percent. We improved our plantation traceability by reallocating volume to suppliers more committed to traceability. For the full year of 2019, we achieved 49.98 percent palm oil and palm kernel oil traceable to the mill, an increase from 26.75 percent in 2018.
We continue to learn a great deal about this supply chain and the challenges inherent to tracing palm oil back to the plantations. We remain deeply committed to pushing all stakeholders to accelerate traceability and bring full transparency to this supply chain. We remain fully committed to achieving supply chain traceability to the plantation level by the end of 2020.
We will continue to provide bi-annual updates on our palm oil tracing efforts on this website and annual updates through our Sustainability Report to give stakeholders visibility into our ongoing progress.
Taking Action – Updates on Palm Oil Sourcing Grievances
We expect all of our palm oil sourcing partners to be compliant to our Supplier Code of Conduct, uphold our Responsible Palm Oil Sourcing Policy and remain compliant to our No Deforestation, No Peatland Development, No Exploitation (NDPE) position.
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.
Failure of our direct suppliers or other supply chain actors to uphold our commitments could lead to their removal or suspension from our supply chain in accordance with our sourcing policy. We have done this a number of times in the past and will do so as we uncover any linkage or ties to NDPE violators.
Listings of grievances brought to our attention are posted in our Palm Oil Grievance Log.
Updates on Actions Taken
In 2018 and 2019, prior to implementation of our formal grievance mechanism, we suspended or removed from our palm oil supply chain the following suppliers who violated our NDPE requirements.:
- February 2018 - In early 2018, we learned of ongoing violations of workers’ rights on Indofood Agri Resources’ plantations. While we do not directly source palm oil from Indofood Agri Resources, we instructed our direct sourcing partners to remove Indofood’s oil from our supply chain until further notice. Should Indofood’s situation change, we will re-evaluate this position.
- November 2018 - We learned of repeated NDPE violations by Surya Panen Subur (SPS / SPS II) which led to immediate investigations with our supply chain partners. As a result, we instructed our suppliers to remove PT Surya Panen Subur (SPS / PT SPS II) from our overall supply chain, effective immediately until further notice.
- December 2018 – Following the Roundtable for Sustainable Palm Oil (RSPO) suspension of FGV Holdings Berhad (formerly Felda) for illegal labor practices, we instructed our direct suppliers to remove FGV from our supply chain as well. We continue to uphold this suspension.
- September 16, 2019 - After investigating the latest allegations that 12 producers are contributing to deforestation in the Leuser Ecosytem, we reviewed our 2018 supply chain traceability data and determined that potentially two of the 12 companies are indirectly connected to our supply chain. As a result, we are working with our suppliers to confirm their awareness of these allegations, verify whether the palm oil from these producers is in our supply chain and obtain details about what actions they have taken with these companies to address and correct the issues.
Through Hershey’s bi-annual mapping of our palm oil supply chain (please see the “Palm Oil Supply Chain Traceability” section for more details), we monitor and ensure these suspensions are effectively implemented. These suspensions will remain in place until we see acceptable, timebound corrective action plans with proven progress that leads to a resolution. We continue to 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.
Commitment to the Leuser Ecosystem
We remain deeply concerned about the continued reports of deforestation and peatland development by palm oil companies in Indonesia’s Leuser Ecosystem. The Leuser Ecosystem, known as one of the most biodiverse places on earth, 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 to us.
Due to the complexity of the palm oil supply chain, the deforestation trends in the region as well as larger structural issues, such as poverty facing the communities, solutions will take time and require cross-sector collaboration. Hershey will continue:
- Working with our direct suppliers to trace our palm oil supply chain to the mill and to the plantation level and help our suppliers engage with any of the parties in our supply chain that are located near the Leuser Ecosystem around their NDPE policies, commitments and activities to protect and restore this area.
- 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.
- Exploring additional opportunities with Earthworm Foundation and suppliers around satellite monitoring systems and deeper engagement with nearby mills and plantations.
We look forward to continued engagement with a range of stakeholders to address the environmental challenges in the Leuser Ecosystem.