Element 2A: Understand the supply chain: main environmental and social risks
The production of palm oil is associated with many environmental and social risks resulting from intensive production mainly in the Southeast Asia region. It is important for mid and downstream companies to understand these inherent risks within the supply chain, then identify non-compliances with their policies and plan for further engagement to address and subsequently mitigate these risks.
This briefing note outlines the environmental and social risks at production level, especially those associated with cultivation in producing countries. It provides companies with information on inherent risks and their impacts on oil palm production, which are:
Environmental threats and corresponding impacts at production level, such as land use change resulting in deforestation, biodiversity loss, peat conversion, air pollution, and ongoing production impacts such as through chemical use, emissions and water pollution;
Social issues at production level, such as labour rights (i.e. forced labour; workers’ living conditions; fair wages and income; trade union rights abuses; discrimination, gender issues and social security; and health and safety), land rights, and groups most at risk (which include children and human rights defenders).
1. Environmental threats and corresponding impacts
The expansion of oil palm plantations has led to increasing land use change in the equatorial belt, resulting in deforestation of tropical forests, conversion of peatlands, and fire use for land clearing. This in turn has created a cascading effect on the environment and the communities surrounding these plantations. Examples of impacts are biodiversity loss, soil erosion and water pollution, and greenhouse gas (GHG) emissions. Furthermore, there are also impacts from ongoing production practices in oil palm cultivation and processing, such as chemical use, scheduled waste management and mill effluent discharge. This section provides information on the main environmental threats and impacts, and the ongoing production impacts of the palm oil industry.
2. Social issues at production level
The upstream production sector of the palm oil industry (such as plantations and farms) face various human rights challenges, including risks in labour (child labour included), land rights (i.e. rights of Indigenous Peoples and local communities) and threats to human rights defenders. This section covers the existing challenges and will provide information on whose rights are being challenged, which rightsholders are most affected, and examples of how those rights are adversely impacted. Some case studies are also outlined in this section. Mapping these social risks to specific regions will support the identification of risk areas in the supply chain of a company alongside the implementation of traceability.
More information is available in the briefing note below – BN02A Understand the supply chain: main environmental and social risks
