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Palm Oil

Hershey uses palm oil in select products because 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 specific confectionery applications.

When sustainably produced, palm oil cultivation requires less land than other edible oils, which reduces pressure on forests and biodiversity, supports smallholder farmer livelihoods, and improves economic development in palm growing regions.

Hershey recognizes that palm oil has impacts on forests, biodiversity and producer communities that make it a challenge to grow and source responsibly. While we buy a relatively small amount of palm oil, we are committed to the highest standards in responsible and sustainable palm oil sourcing.

This is why, since 2014, Hershey has been committed to sourcing 100% responsibly grown palm oil.

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. Together, this helps secure a sustainable palm oil supply chain that is free from deforestation, peatland development and worker exploitation.

100%

RSPO certified palm oil sourced for global operations since 2017

99.6%

of palm and palm kernel oil traceable to the mill in the first half of 2020

70.7%

of palm and palm kernel oil traceable to the plantation in the first half of 2020

Our Palm Oil Supply Chain

In 2019, we sourced 28,400 metric tonnes of palm oil and palm kernel oil from seven direct suppliers: AAK, Cargill, FUJI Oil, Gemini, Bunge, ISF and Wilmar. 100% of the palm we source 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.

See our Palm Oil Supply Chain Traceability section below for more information on our tracing of our palm volumes to the mill and plantation bi-annually.

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 (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 is coming from and the associated environmental and human rights issues in our supply chain, and to contribute to the transformation of the palm sector. Through our partnership with Earthworm Foundation, we are focused on four strategic areas:

  1. 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
  2. Supplier Engagement: Engage with suppliers to communicate our expectations and strengthen NDPE policies, commitments and performance throughout our palm supply chain
  3. 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
  4. Monitoring and Verification: Implement satellite monitoring and verification as we work towards a verified deforestation-free palm supply chain

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. Together, this helps us focus our engagement, programs and investments in our palm supply chain so we can make the biggest impact.

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. This helps us better understand if the palm oil we source is linked to areas or palm companies involved in sustainability concerns, such as deforestation, peatland development or exploitation of workers. 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.

In the first half of 2020, we sourced from seven direct suppliers: AAK, Cargill, FUJI Oil, Gemini, Bunge, ISF and Wilmar.

During this reporting period, we traced 99.6% of our palm volumes to 1,309 mills.

In the first half of 2020, we increased our percentage of our palm volumes traceable to the plantation to 70.7%, up from 52.3% in the second half of 2019. We improved our plantation traceability by reallocating volume to suppliers more committed to traceability.

We remain fully committed to achieving supply chain traceability to the plantation level and having full transparency of our supply chain.

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. 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% RSPO mass balance certified palm oil. By the end of 2017, all of our palm oil purchases for Global operations were 100% RSPO mass balance certified palm oil and we remain committed to purchasing 100% 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.

Our suppliers are critical in delivering a NDPE palm supply chain. Through our own commercial relationships and multi-stakeholder programs and initiatives led by Earthworm Foundation, we engage our direct and indirect suppliers to strengthen NDPE compliance across the palm sector. Our suppliers help cascade our NDPE expectations to refiners, mills and plantations with whom they have commercial or more direct relations.

Palm Oil Grievance Procedure & Log

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 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 and indirect suppliers to uphold our commitments may lead to their removal or suspension 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.

Through Hershey’s bi-annual mapping of our palm oil supply chain (please see the “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.

Engagement for Policy Implementation

Starting in 2019, Hershey began using Earthworm Foundation’s Engagement for Policy Implementation (EPI) tool with six of our seven 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 have 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 which 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.

Hershey invests in on-the-ground programs and multi-stakeholder initiatives in high-risk sourcing areas beyond our own supply chain through Earthworm Foundation that support the protection and restoration of forests and biodiversity, smallholder inclusion, NDPE capacity building, and resilience and livelihoods of local palm growing communities.

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% 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% reduction in deforestation. We won’t be satisfied until deforestation ends.

In 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

In 2020, Hershey began to contribute 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.

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.

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 collaboration across a range of stakeholders. Hershey will continue:

  • Working with our direct suppliers to trace our palm oil supply chain to the mill and to the plantation level 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 who 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

We look forward to continued engagement with a range of stakeholders to address the environmental challenges in the Leuser Ecosystem.

Hershey is investing in Starling satellite monitoring and on-the-ground programs to help us achieve a verified deforestation-free palm supply chain. In addition, we are working in coordination with our suppliers and other Earthworm Foundation members to accelerate efforts. We also engage with NGOs with eyes on the ground who proactively monitor landscape changes.

Monitoring - Starling Satellite

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 about 67% of our palm supply chain (based on 2019 volumes). Our objective is to move our palm supply chain to 100% verified deforestation free.

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, and
  • 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 in their supply chain in line with our Palm Oil Grievance Procedure and disclosed in our Palm Oil Grievance Log. 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.

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 community and CSOs.

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

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