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Palm Oil SUSTAIN – A Traceability Solution With Blockchain

By November 13, 2018No Comments

If you have been following Apical’s sustainability journey closely, you might have already heard of the newly-formed alliance known as SUSTAIN (Sustainability Assurance & Innovation Alliance). A little over a month old, you may wonder what the value of this initiative is and if this alliance is really going to help solve the traceability and sustainability issues faced by the palm oil industry.

Although still in its infancy stage and fresh from the excitement surrounding its launch, there has been mixed buzz in the industry about the robustness of SUSTAIN – with many sharing a keen sense of interest and others preferring to adopt a wait-and see stance. Perhaps a breakdown of this joint effort can give you better standing to perceive for yourself.

What is SUSTAIN?

A newly-formed group of oil palm growers, palm oil processors, consumer goods manufacturers, not-for-profit organisations and technology leaders that have come together in a formal partnership, made official on 7th September 2018, with the common goal to improve traceability of palm oil production and push forth the implementation of No Deforestation, No Peat and No Exploitation policies across complex supply chains.

Although the palm oil industry’s transformation towards sustainability gained traction in 2013 when many major South East Asian palm oil traders and refiners embraced NDPE sourcing policies, unsustainable practices still continues to take place which causes ‘leakages’ into the sustainable supply chain today.

Companies who have officialised their partnership in SUSTAIN include well-established industry leaders such as:

Apical – headquartered in Singapore, it is one of the largest traders and exporters of palm oil in Asia

Asian Agri – one of Asia’s largest palm oil producers based in Indonesia

Neste – Finland-based renewable oil producer, refiner and marketer with operations in 14 countries and over 5,000 employees

KAO Corporation – global consumer goods manufacturer with over 120 years of history headquartered in Japan

Facilitation team CORE (Proforest and Daemeter) – world-leaders in supporting sustainable management and sourcing of natural resources that offer technical and advisory services to businesses, governments and NGOs

Technology partner SAP – German-based world-leader in enterprise applications for software with offices in over 180 countries

What is SUSTAIN’s Goal?

These major organisations have joined hands to address landscape-level sustainability issues and create synergy among the top brass of palm oil. And this is done by establishing a common blockchain-based platform for palm oil.

With the super rapid evolvement of technology, you may be forgiven for asking yourself, “What exactly is a ‘blockchain’?”

Here’s a simple breakdown: A blockchain is basically a growing list of records of data (each known as blocks) – where each block is linked to the other (using cryptography) and contains information of the previous block including a timestamp and transaction data. A blockchain is resistant to modification and is an open, distributed ledger that allows the record of transactions between two parties in a way that is efficient, verifiable and permanent. Each transaction is digitally signed for authenticity and to ensure it is not tampered with, so the ledger and the transactions that take place within it are understood to be of high integrity.

How can blockchain help the palm oil industry?

SUSTAIN pioneers envision an open access system with downloadable tools that can be used by a wide range of users including dealers and smallholders. The tools can be utilised by all parties to establish traceability, monitor policy compliance, efficiently trade FFBs (fresh fruit bunch), obtain best practice guides, and access innovative ESG-linked micro-financing.

SUSTAIN has ascertained the advantages of blockchain technology in establishing industry-level collaboration and wide adoption of a common platform. This is seen as a practical solution to push for supply chain transformation and improve market access for palm oil products.  The initiative is one that is inclusive and acknowledges the critical roles of palm oil mills, dealers, agents, and smallholders in the supply chain to improve traceability and management of sustainable sources.

SAP Leonardo, the innovation platform supporting new technologies such as Machine Learning, Artificial Intelligence and Blockchain, will be used as the platform for SUSTAIN.

What’s Next for SUSTAIN?

On 16th October 2018, the members of SUSTAIN held their inaugural steering committee meeting in Singapore to discuss latest updates, the group’s formalised structure, corporate governance and the formation of dedicated working groups to undertake various pilot projects within the alliance.

The collaboration has generated significant interest among additional stakeholders including national government ministries in South East Asia that promote sustainability and environmental management among others.

At this stage, SUSTAIN is still accepting additional companies and stakeholders who are keen to contribute and join them as a member.

Further updates on the project’s progress will be forthcoming here.

At Apical Group, our commitment to sustainability stems right from the top. Apical’s President is supported by the Director of Sustainability and various business heads, to ensure sustainability is integrated within business and functional units, and embedded in the company’s core values and initiatives.

Sustainability topics are discussed at Board meetings held quarterly. We also have dedicated Sustainability teams based in Kuala Lumpur, Malaysia, and Pekanbaru, Dumai, Medan, Jakarta and Balikpapan in Indonesia. The Sustainability teams are tasked with implementing and monitoring our commitments through constructive stakeholder engagement and collaboration.

In addition, there is also a dedicated Social, Security and Licensing (SSL) department in each refinery we own, to handle social and licensing matters in compliance with national regulations as well as Apical Sustainability Policy. The team also oversees Corporate Social Responsibility (CSR) programmes to support better livelihoods in local communities.

Achieving sustainability goals requires more than just collaboration with our key stakeholders. Collaboration across industries and peer companies is also crucial and hence, we constantly look for and participate in new partnerships, relevant industry membership and certification schemes.

We participate in industry membership and certification schemes such as the Tropical Forest Alliance 2020, Roundtable on Sustainable Palm Oil (RSPO), including the RSPO P&C Review Taskforce and the RSPO Indonesia National Interpretation Working Group, the International Sustainability and Carbon Certification (ISCC), and the Indonesian Sustainable Palm Oil (ISPO)

Dato' Yeo How

APICAL GROUP PRESIDENT

Di Apical Group, komitmen kami terhadap keberlanjutan didukung penuh dimulai dari jajaran managemen teratas. Presiden Apical didukung oleh Direktur Keberlanjutan bersama seluruh kepala bisnis, memastikan keberlanjutan terintegrasi dalam unit bisnis dan fungsional, dan tertanam dalam nilai dan inisiatif inti perusahaan.

Topik keberlanjutan dibahas pada rapat dewan yang diadakan setiap tiga bulan. Kami juga memiliki tim keberlanjutan yang berdedikasi berbasis di Kuala Lumpur; Malaysia, dan Indonesia; Pekanbaru, Dumai, Medan, Jakarta dan Balikpapan. Tim Keberlanjutan ditugaskan untuk menerapkan dan memantau komitmen kami melalui keterlibatan dan kolaborasi pemangku kepentingan yang konstruktif.

Selain itu, kami didukung penuh oleh departemen Sosial, Keamanan, dan Perizinan (SSL) khusus di setiap unit bisnis yang kami miliki, untuk menangani masalah sosial dan perizinan sesuai dengan peraturan nasional serta kebijakan keberlanjutan Apical. Tim juga mengawasi program Tanggung Jawab Sosial Perusahaan (CSR) untuk mendukung penghidupan yang lebih baik di masyarakat setempat.

Mencapai tujuan keberlanjutan membutuhkan lebih dari sekadar kolaborasi dengan pemangku kepentingan utama kami. Kolaborasi lintas industri dan perusahaan sejenis juga penting dan karenanya, kami terus mencari dan berpartisipasi dalam kemitraan baru, keanggotaan industri yang relevan, dan skema sertifikasi.

Kami berpartisipasi dalam skema keanggotaan dan sertifikasi industri seperti Tropical Forest Alliance 2020, Roundtable on Sustainable Palm Oil (RSPO), termasuk P&C Review Taskforce RSPO dan National Interpretation Working Group RSPO Indonesia, International Sustainability and Carbon Certification (ISCC), dan Indonesian Sustainable Palm Oil (ISPO).

Dato' Yeo How

PRESIDEN APICAL GROUP