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 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

Worldwide
1,100 Distribution
Employees Network
Worldwide

Revenue
>20 Company's
FACTS
US$1.2bil.
Nationalities
(2011)

170yrs 5 Production
History in natural Facilities
based chemicals Globally

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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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 RSPO SCCS:
In Greater Detail
• 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

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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 Product composition – Upstream
Palm Oil Mills & Refineries

Other Fats & Oils

RSPO Certified Oil

Non-Certified Oil
• CSPO,CSPKO, etc. • CPO,CPKO, etc. • Coconut
• Palm Oil Input • Palm Oil Input • Soybean, Rapeseed
Product Product • Tallow
• Etc.

Primary, Semi-finished and Finished Products.

SUPPLY Chain Models:
Identity Preserved. Segregation.
Mass Balance. Book and claim
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Product Composition– Downstream
Ingredient Manufacturers – Oleochemicals & Derivatives

Glycerol Esterification
Partial Glycerides

Acetic Acid Triacetin

Splitting

Amines Amphotherics

Quarternization (N) Esterquats

QAV
Fatty Acids
Esterification Fatty Acid Esters
Unsaturated Fatty Acids with 2-3 Double bonds

Oils
Conjugation (US)
Conjugated Fatty Acids

Hardening Fatty Alcohol

Saturated Fatty Acids
Propoxylation Ethoxylates
Esterification Guerbet Reaction Guerbet Alcohols

and
End capped Fatty
Ethoxylation Fatty Alcohol Ethoxylate Butyl-cap. Alcohol Ethoxylates
Fatty Alcohol
Transesterification Fatty Acid Hydrogenation Fatty Sulphation Fatty Alcohol Sulfate Sulphation
Methyl Alcohols Ether Sulphates
with Methanol
Esters Esterification Fatty Alcohol

Fats
Esters Phosphatisation
Ether phosphates
Acetalysation Alky lpoly glycoside Fatty Alcohol
Sulphitation Sulphosuccinates
Sulphonation a-Sulfo Fatty Acid Esthers

Amidation Fatty Acid Alkanolamides

Ethoxylation Ethoxylated Triglycerides

Hydrogenation Hydrogenated Castor Oil

Source: Cognis

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15
Supply Chain Models
Schematic Representation of Traceability Methods

IDENTITY
PRESERVED (IP)
Physical Traceability
(Along the supply chain)

(>95%)
FULL
SEGREGATION
(SG)

MASS
BALANCE (MB)
BOOK AND CLAIM
(No Physical Traceability)
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
• Many links with potential Smallholders
for mixing
• Multi-layer processes with Plantations
diverging production step
• Raw Material and layer
options

Mill
Various means of Transportations

(Multiple) (Multiple)
Product Retailers
(Multiple) Manufacturers
Refiners &
Blenders
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 Example of
Oleochemical
Process Flow
BASIC

Courtesy

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.

Source: Unilever

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Ingredient Manufacturers in HPC Products
Example : Oleochemicals in Shampoo

Alcohol Ethoxylates

Alcohol Ether Sulfates Water

Water
BasicSurfactant
Basic Surfactant
Specialty Esters
Preservatives
preservative
Perfume and Colour
Alcohol Sulfates
colour
MES perfume oil
Thickener/Auxiliaries
thickener /
auxiliaries
Co-Surfactant
co-surfactant

basic surfactant
Basic Surfactant

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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
Source: BASF

Retailers /Consumers
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25
 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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 Summary
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

RSPO
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
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 Finally,
Availability of CSPO
& CSPKO; Requirement
Environmental &
Push Societal NGOs;
Participation along to make it
the Supply Chain;
Effect Consumer SCCS for Traceability work
Awareness

COST

Who will
Pay?

Sustainable Palm-based Benefits

Products achieved
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 THANK YOU FOR YOUR ATTENTION

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 UK Palm Oil

• 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

Source: UKpalmoil (defra)

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