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RSPO: Effect on the
Oleochemical Industry
By Dr. Surina Ismail,
“Malaysian Palm Oil, Breaking Barriers… Creating Opportunities”
POTS KL, 15 – 16 October 2012
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Content
1
1 Emery Oleochemical Group @ a Glance
2 Roundtable on Sustainable Palm Oil (RSPO) & the
Supply Chain Certification System (SCCS)
3 RSPO & The Oleochemical Industry
4 Key Points & Summary
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EMERY OLEOCHEMICAL @ A GLANCE
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OUR
VISION To become the world
leader in value add natural
based chemicals.
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Facts & Figures Emery Oleochemicals is one of the world’s largest Oleochemicals
producers with total capacity of 1 million tons
1,100 Employees
Worldwide
Company's
FACTS
Worldwide
Distribution
Network
Revenue
US$1.2bil. (2011)
5 Production
Facilities
Globally
170yrs History in natural
based chemicals
>20 Nationalities
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EMERY Oleochemicals at a Glance Understanding our Value Chain
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Our Global Footprint World scale Integrated Plants, Efficiently Operated
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ROUNDTABLE ON SUSTAINABLE PALM OIL (RSPO) &
THE SUPPLY CHAIN CERTIFICATION SYSTEM (SCCS)
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The Roundtable on Sustainable Palm Oil (RSPO) : In Brief
A multi-stakeholder which initially started in 2003, with 7 members
Promotes the growth and use of sustainable oil palm products through global standards & cooperation within the supply chain.
Among its principles:
•Respect for rights of land owners, farmworkers, smallholders and their families
•No primary forests or high conservation value areas sacrificed for new palm oil plantations
RSPO defined sustainability as:
“The Capability of meeting the needs of the present without compromising the ability of future
generations to meet their own needs." .
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RSPO Supply Chain Certification Systems (SCCS): An Overview
SCCS: A Chain of custody
• Approaches for creating links between sustainable Oil Palm Plantations,
Processors & Manufacturers and the Consumers
Purpose:
• Guarantees end-users of RSPO Certified Sustainable Oil Palm products
• The right to claim & use the trademark in the marketplace
Scope: Physical movement of certified sustainable palm oil (CSPO)
• Requirements for organizations controlling palm oil under Identity
Preserved, Segregated or Mass Balance supply chain model
Others: Paper records of transactions
• Book & Claims via Green Palm Certificates (No Physical Movement of CSPO)
• No links between the original certified oil and the final product
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• Who can claim the use of (or support of) RSPO certified palm oil?
– Downstream processors/users of RSPO certified oil who adheres to
requirements the RSPO Supply Chain Certification Systems
• Independently verified by an RSPO approved and accredited
Certification Body (CB).
• Schematic Overview of Palm Oil Supply Chain
RSPO SCCS: In Greater Detail
Source: RSPO
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RSPO SCCS: The Supply Chain Certification Procedure
Verifies movement of oil through supply chain via different RSPO
approved Supply Chain Models
• Identity Preserved (IP)
• Segregated (SG)
• Mass Balance (MB)
Step-by-step documentation
• A clearly defined Internal Control System in place ex. ISO 9000
• Details on how to: In RSPO Supply Chain Certification Systems
Third-party certification by approved Certification Bodies (CB): Ex
•Control Union Certifications.
•SIRIM QAS.
•TUV Nord Indonesia.
•Full list: http://www.rspo.org/?q=page/1512
Requirements
• Requires RSPO Membership
• Time-bound commitment
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RSPO & THE OLEOCHEMICAL INDUSTRY
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Who are the players?
• All Palm-based operators who
– Take legal ownership AND
– Physically receive RSPO CSPO/CSPKO
– Want to claim this in the market place!
• First operators: Palm Oil Mills & Refineries
• Mid-operator: Ingredient Manufacturers
– Oleochemical & its derivatives
• Last operator: End Product Manufacturers
– The manufacturers (HPC, Cosmetics, Plastics, Coatings, etc) that uses the
oleochemical products designed and intended for consumption or end–
use in any way e.g. Retailers (Walmart, Tesco, etc.)
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RSP
O C
ert
ifie
d O
il
• CSPO,CSPKO, etc.
• Palm Oil Input
Product
No
n-C
ert
ifie
d O
il
• CPO,CPKO, etc.
• Palm Oil Input
Product
Oth
er
Fa
ts &
Oil
s
• Coconut
• Soybean, Rapeseed
• Tallow
• Etc.
Primary, Semi-finished and Finished Products.
SUPPLY Chain Models:
Identity Preserved. Segregation.
Mass Balance. Book and claim
Product composition – Upstream Palm Oil Mills & Refineries
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Product Composition– Downstream
Ingredient Manufacturers – Oleochemicals & Derivatives
Oils
and
Fats
Partial Glycerides
Triacetin
Saturated Fatty Acids
Guerbet Alcohols
Fatty Alcohol Ethoxylate
Fatty Alcohol Sulfate
Esters
Alky lpoly glycoside
a-Sulfo Fatty Acid Esthers
Fatty Acid Alkanolamides
Ethoxylated Triglycerides
Hydrogenated Castor Oil
Esterification
Acetic Acid
Quarternization (N)
QAV
Conjugated Fatty Acids
Fatty Acid Esters
Amines
Esterification
Conjugation (US)
Unsaturated Fatty Acids with 2-3 Double bonds
Hardening
Guerbet Reaction
Ethoxylation
Sulphation
Esterification
Acetalysation
Sulphonation
Fatty
Alcohols
Amidation
Ethoxylation
Hydrogenation
Fatty Acid
Methyl
Esters
Hydrogenation Transesterification
Esterification
Splitting
with Methanol
Fatty Acids
Glycerol
Fatty Alcohol
Ethoxylates
Fatty Alcohol
Sulphosuccinates
Propoxylation
Butyl-cap.
Sulphation
Phosphatisation
Sulphitation
Fatty Alcohol
Ether Sulphates
Amphotherics
Esterquats
End capped Fatty
Alcohol Ethoxylates
Fatty Alcohol
Ether phosphates
Source: Cognis
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Supply Chain Models Schematic Representation of Traceability Methods
IDENTITY
PRESERVED (IP)
FULL
SEGREGATION
(SG)
MASS
BALANCE (MB)
BOOK AND CLAIM (No Physical Traceability)
(>95%)
Private & Confidential
Ph
ysic
al T
race
abili
ty
(Alo
ng
the
sup
ply
ch
ain
)
Source: Sime Darby Plantation
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Physical movement of CSPO/CSPKO Identity Preserved (IP)
• RSPO PK and CPO derivatives, delivered to
the end user are identifiable to an RSPO
certified POM and its supply base.
• All fractions and products are isolated from
all other products.
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Physical movement of CSPO/CSPKO Segregated (SG)
• The final product contains 100% RSPO
certified sustainable palm oil (or its
fractions).
• The individual product cannot be traced
to a single POM.
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Paper records of transactions Mass balance (MB)
• Allows for mixing of RSPO and non-
RSPO certified palm oil at any stage
in the supply chain provided that
overall company quantities are
controlled.
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Paper records of transactions Book and Claim (B&C)
• POM sells sustainable certificates through
the Green Palm program.
• The refinery or processing unit purchases
sustainable certificates.
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Downstream Palm Oil/Oleochemical Complexities of the Supply Chain
Plantations
Refiners & Blenders
Retailers
Mill
• Many links with potential
for mixing
• Multi-layer processes with
diverging production step
• Raw Material and layer
options
Smallholders
Various means of Transportations
Product Manufacturers
(Multiple)
(Multiple)
(Multiple)
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Example of
Oleochemical
Process Flow
22
Courtesy
BASIC
DERIVATIVES
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Ingredient Manufacturers: Oleochemicals and its Derivatives
The scope has been limited to the major primary and secondary
Oleochemicals and their derivatives to minimize complexity.
23
Source: Unilever
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Ingredient Manufacturers in HPC Products Example : Oleochemicals in Shampoo
basic surfactant
co-surfactant
thickener / auxiliaries
perfume oil
colour
preservative
Water
Basic Surfactant
Thickener/Auxiliaries
Co-Surfactant
Perfume and Colour
Basic Surfactant Basic Surfactant
Preservatives
Water
Alcohol Ethoxylates
Alcohol Ether Sulfates
Specialty Esters
Alcohol Sulfates
MES
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The Ingredient Manufacturers Ex: Home Personal Care (HPC) Market
An Illustration of the complexities of the supply chain showing the multi-
layered process & diverging production steps
HPC Manufacturer
(End-Product Manufacturers)
Ex. Unilever, P&G, J&J, etc
Retailers /Consumers
Source: BASF
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KEY POINTS & SUMMARY
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Key Points to Consider
IP/SG/MB
- Physical Traceability of both IP & SG via the SCCS will ensure that the oil is from a sustainable source
- Complexities of the Supply Chain & Low Volume demand especially for SG products can result in increase cost burden for Mid-Operators
- Unavailability of CSPO/CSPKO & poor commitment by End-product manufacturers will push most operators to utilize MB approach
Book & Claims - GreenPalm Certificates
- Use of GreenPalm certificates do not indicate that products in question contain palm oil from sustainable sources
- GreenPalm certificates are akin to offset certificates, i.e., companies pay a support fee to a sustainable grower, while continuing to buy their
oil from any non-sustainable source.
The Role of the Ingredient Manufacturers (specifically the Oleochemical Players)
- Availability of palm derivatives such as surfactants, glycerin and emulsifiers from sustainable source are critical
- As part of the supply chain, the Ingredient Manufacturers, i.e., the Oleochemical Manufacturers, need to be more involved & consulted in
order to ensure the success of the RSPO SCCS
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RSPO
Benefits of the RSPO SCCS
• Traceability of the CSPO in the downstream industries
• Broaden market access as demand for SPO products grows.
• Improve business credibility when dealing with NGOs with
environmental and social interests.
• Have a positive image of being socially responsible company
supporting SPO production and conserving environmental resources.
Commitments of the End-Product Manufacturers &
Retailers regarding use SPO Products
• Delayed commitment by End-Product Manufacturers & Retailers to
using CSPO, even as sufficient quantities of CSPO became available
• Complexities of producing traceable supply chains for SPO have many
users of palm oil opting to use GreenPalm certificates instead
• Use of SPO as opposed to RSPO CSPO by End-users
Prospects for Use of CSPO by Russia, India & China markets
• Pressure from NGOs for Governments to impose tariffs for non-SPO use
• Low level of awareness of RSPO and CSPO from Chinese buyers
Summary
Creating Value l www.emeryoleo.com
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Sustainable Palm-based
Products
COST
Environmental &
Societal NGOs;
Consumer
Awareness
Availability of CSPO
& CSPKO;
Participation along
the Supply Chain;
SCCS for Traceability
Finally,
Creating Value l www.emeryoleo.com
Who will
Pay?
Push
Effect
Requirement
to make it
work
Benefits
achieved
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THANK YOU FOR YOUR ATTENTION
• Overall Structure of UK palm supply chains including key commitments (April 2011)
• Commitments By key players to source by 2015:
– Food Manufacturers
– Supermarkets
– Health & beauty specialists
• Awareness of Sustainable Palm Oil (SPO) by key players
– Cleaning, Personal Care & Cosmetic manufacturers
– Feed Manufacturers
All Rights Reserved Creating Value l www.emeryoleo.com Source: UKpalmoil (defra)
UK Palm Oil
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