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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.