Table of contentsIntroduction and economic factors for the development of a responsible sourcing policyAssessment of case studiesIssues and challenges surrounding the development of “responsible policing” in the palm oil industryImplementation and monitoring of a responsible sourcing policyConclusion and recommendationsReferencesIntroduction and business drivers for the development of a responsible sourcing policy. The supply chain is one of the organization's most strategic resources. Supply chain is a very detailed process used by all types of organizations to obtain goods from suppliers, use them for production, and then deliver the final product to the end user. An optimized supply chain creates value for the organization throughout its lifecycle by not only reducing costs and optimizing budget, but also helping to generate greater commercial and operational efficiency (Glass, Achour, Parry and Nicholson, 2012). Recent globalization and industrialization have brought changes to the business environment, forcing organizations to redefine their approach to sourcing for greater sustainability. Specific factors such as environmental degradation, increasing stakeholder expectations, cost volatility and compliance standards pose numerous risks to organizations, motivating them to shift to more sustainable sourcing. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayA responsible sourcing policy refers to “the integration of social, ethical and environmental performance factors in the development of the supply chain policy” (Pagell and Wu 2009). , p37). The objective of a responsible sourcing policy is to act as a scale of continuous improvement that serves as a benchmark for sourcing practices. Companies engage in responsible sourcing to guide decision-making and practices in purchasing and supply chain management with the goal of creating competitive advantage and improved environmental outcomes (Skinner, 2013). Developing responsible sourcing policies encourages suppliers to adopt more environmentally friendly raw material production standards, allowing organizations to push for better environmental outcomes. (Glass, Achour, Parry and Nicholson, 2012) The objective of this report is to analyze two case studies involving responsible sourcing policy in the palm oil industry. One of the case studies will involve the analysis of Unilever, as an organization with good control strategies, while the other case analysis will evaluate Mondelez, a company with poor control strategies with respect to palm oil. Both companies deal with the production and distribution of food and beverage products and are therefore suitable for case analysis. The case analysis will lead to an analysis of the issues and challenges associated with palm oil sourcing. Evaluation of case studies. Sensible policing has been used as a tool to encourage progress towards reduced deforestation and improved standards of palm oil production (Carlson and Curran, 2013, p347). Unilever is a British company with headquarters in London, United Kingdom and Rotterdam, United Kingdom.The Netherlands. The company engages in the production and distribution of “food, beverages, cleaning products and personal care products (Unilever, 2018). According to the company's website, the company's ambition is to be a global leader in the development of responsible sourcing policies. The company hopes to conduct its business in a way that generates positive environmental outcomes, achieves its economic objectives and improves social well-being. One of the areas covered by this responsible oversight is the sourcing of palm oil, used in the production of all Unilever products. Unilever is currently phasing out suppliers without evidence of “no-deforestation policies,” thereby encouraging suppliers to adopt more sustainable production methods (Lim, Parish, & Suharto, 2017). The goal of responsible policing is to ensure that all palm oil comes from suppliers that are not linked to deforestation. As part of this policy, the company must fully disclose its palm oil sourcing. The accountability measures led the company to achieve a sustainability rate of 88.5%, which is considerably high (Mclean, 2017). Unilever's responsible sourcing policy is based on twelve core principles and is also strategically aligned with the overall strategic plan. of the company. (Glass, Achour, Parry and Nicholson, 2012) For Unilever, reducing the environmental footprint is not only seen as a platform for business growth and competitive advantage, but also as a platform to encourage sustainability and supply chain efficiency (Unilever, 2018). The policing framework is based on three major aspects of performance, namely: mandatory requirements, good and best practices. Mandatory procurement policy requirements require all suppliers to be accountable for their palm production practices. All suppliers must be accredited for safe palm oil supply and also have a “no deforestation policy”. Suppliers must also be willing to adhere to the core principles developed by Unilever for sustainable supply chain practices. The aspect of good and best practice is based on a commitment to ensuring socially responsible behavior from the point of supply to the point of sale (Unilever, 2018). The Fundamentals outline the mandatory requirements that suppliers must meet to work with Unilever. The fundamental principles underpinning the Responsible Sourcing Policy are designed flexibly to ensure continuous improvement in response to an ever-changing business environment. The principles state that all business must be conducted lawfully and with integrity. All suppliers must have clear and effective guidelines outlining their expectations for business integrity. The guidelines and policies presented must be consistent with the regulatory environment and describe the criteria for handling situations involving conflicts of interest. Unilever and suppliers must have a plan to provide annual training to employees to ensure they reflect the organization's culture of sustainability in their decision-making (Unilever, 2018). Any form of non-compliance results in sanctions and termination of contract. Suppliers must disclose adequate and well-maintained financial records and statements, demonstrating compliance with standard financial standards and procedures. Employees must workfreely but according to the agreed conditions of employment. All staff members must be treated equally and fairly, regardless of their abilities, profession or background. All workers must be paid in full and must be respected despite their age. It is not a good thing to impose work on any employee. Community well-being will be encouraged at all times, including indigenous communities. All business operations must be conducted in a manner that respects the environment and promotes sustainability. This means that “operations, sourcing, manufacturing, distribution of products and provision of services must be carried out with the greatest respect for the environment” (Unilever, 2018). The second aspect of the policy framework is the implementation of good practices. The Good Practices Doctrine requires that all guidelines and procedures regarding the Responsible Sourcing Policy be provided to all employees in a practical manner. Unilever must engage in active monitoring, evaluation and management of supplier activities directly associated with supplier operations. The policy states that Unilever must establish adequate procedures with respect to monitoring the ethical and compliance standards of all suppliers and their workers. To ensure good practice, regular reviews should be conducted with suppliers with the aim of continuously assessing their level of compliance and ethical conduct (Unilever, 2018). Ongoing training and development should be provided to all employees to ensure strong decision-making skills for more sustainable results. All complaints regarding sustainable practices should be escalated to the supplier's executive director and the organization should also practice open communication to encourage employees to contribute and comment on sustainability efforts. To achieve best practices, additional policies must be generated in collaboration with relevant stakeholders with the objective of ensuring that non-compliance risks are avoided and that the implementation of organizational policies is practical and viable. (Glass, Achour, Parry, & Nicholson, 2012) Implementing best practices also requires all entrepreneurs to train and develop their employees with the goal of orienting them toward the organization's culture of sustainability. The identities of individuals reporting concerns about this practice remain anonymous and will not be available for victimization purposes. The business plan should include goals for achieving environmental sustainability to ensure that the organization remains focused on achieving these standards. However, for a company like Mondelez, the official producer of 'Oreo' and 'Nut Butter', has had poor supply oversight. palm oil, achieving a sustainability score of 30% according to EcoWatch statistics (Mclean, 2017). According to the Greenpeace organization report (2017), Oreo buys its palm oil from Wilmar. Wilmar is ranked as the poorest and most unethical palm oil producer in the world. Although Mondelez made commitments to sustainability in 2007, the implementation of a responsible sourcing policy has not been achieved at a system level as the company has regularly received complaints from consumers regarding their products. use of bad palm oil. While most responsible and committed organizations are part of an initiative to only use palm oil whose sourceis certified by the RSPO, Mondelez was not part of this initiative. Mondelez and Wilmar have failed to respond to cries from consumers and stakeholders to clean up their supply chains in a bid to reform the palm oil industry. Wilmar International obtains 80% of its palm oil from third-party suppliers who are not monitored or audited since the company has no criteria for doing so (Bai et al 2017, p.93). The company promised to clean up its supply chain in 2007 and even developed a responsible sourcing plan aimed at guiding more sustainable practices. Mondelez has, however, persisted in sourcing unethically produced palm oil by sourcing from companies that continue to engage in clearing forests for palm oil production (Greenpeace organization , 2017). Issues and challenges in developing "responsible policing" in the palm oil industry The development of responsible sourcing policy around palm oil has been a controversial issue. Modern organizations have regularly been accused of not seeking alternative means of production while increasing production of consumer goods, which has instead put pressure on palm oil suppliers to increase production. More than half of all human consumer goods are made from palm oil, making it a very valuable input in various organizations (Brack, Glover, and Wellesley 2016). Palm oil is used in many consumer products and is therefore in high demand all over the world. However, palm oil only works well in tropical regions such as Southwest Asia, where 85% of the world's palm oil comes from (Hidayat, Offermans and Glasbergen 2018, p232). The remaining 15% is grown in regions of Africa and South America, where the climate is favorable. As organizations strive to increase their profitability, increasing production capacity plays a major role in increasing the sales amount leading to increased revenue. (Bai et al 2017, p.95) This means that even though sustainability efforts towards palm oil production exist, the demand for palm oil has continued to increase. Traditional farms can no longer meeting demand, a factor that has motivated various producers to seek unethical ways to produce more palm oil. The palm oil trade is very lucrative and has prompted more suppliers to destroy forests in an effort to create more land for palm cultivation. According to Bai et al (2017, p.93), palm oil production is expected to double from current production levels by 2050, putting even greater pressure on vulnerable environmental resources. Inconsistency in government regulation against palm oil due to economic dependence on the product has encouraged the growth of poor palm oil production practices. Companies like Wilmar and Sime Darby have a very poor reputation for environmental sustainability, but have since secured contracts to expand their operations in parts of Uganda, Liberia and South Africa. Some palm oil companies are run and operated by senior government officials and other elite figures, making control very difficult. (Skinner, 2013) According to Dixon (2016), 11% of palm oil production in Indonesia is controlled by the government. Unfortunately, palm oil is responsible for deforestation and the destruction of peatlands inregions like Indonesia where it is mainly produced. Palm oil production has also been associated with the loss of indigenous communities, poor working conditions, and child labor (Department of Labor, 2013). Indonesia's forests are vast and are considered a powerful weapon against climate change. Forests are also home to some endangered species such as “Sumatran tigers, elephants and orangutans” (Schlegel, 2016). Indonesia is the world's largest producer of palm oil and so far 31 hectares of forest land have been destroyed in a bid to pave way for more oil palm plantations. Indonesia is considered the country with the highest rate of deforestation. In Malaysia, 10 million hectares of formerly forested land have been used for palm oil production. (Glass, Achour, Parry, & Nicholson, 2012) Across the Southeast Asian region, it is estimated that more than ten million people depend on the palm oil industry for their livelihoods (Brack, Glover and Wellesley 2016). Activists are calling for more sustainable practices, but there is much uncertainty about alternative sources of income and what people would do if they did not engage in palm oil production. The existing conflict of interests between environmental sustainability and economic sustainability has led people to focus more on their economic interests. The GDP of countries like Indonesia, Singapore and Malaysia is strongly supported by palm oil production. According to Brack, Glover, and Wellesley (2016), palm oil accounts for almost half of Malaysia's national GDP in terms of production and manufacturing of palm oil-related products. In Indonesia alone, more than 4 million people are employed in the palm oil industry. Palm oil production is a pillar of economic performance as palm oil production and manufacturing contributes 30% to GDP, which significantly boosts economic performance (Ministry of Forests, 2014). In 2014, Indonesia reached a GDP of $878 billion, ranking 16th in global GDP (Dixon 2016). Singapore is considered the financial hub for palm oil producers and manufacturers in neighboring countries, as the country provides financial resources, loans and investments of all kinds. Switching to an alternative source of palm oil and elements is not a solution, making sustainability efforts even more important. uncertain (May-Tobin et al, 2012). Palm oil is the most efficient and economical vegetable oil to produce. The use of palm oil is also intertwined with consumer goods in the global market, meaning that massive organizations would have to collapse if palm oil were to take over production. Palm oil accounts for 50% of all consumer packaged goods, meaning that 100% elimination of palm oil cannot be considered (May-Tobin et al, 2012). The debate therefore remains between the use of bad and good palm oil. Good palm oil is produced in drylands while bad palm oil is produced in forest areas. The irony of palm oil sourcing is that even though some suppliers are supposed to act ethically, the land used to grow palm oil in the modern world was still forested areas a decade ago. Major brands such as Nestlé, PepsiCo, Colgate, General Mills and others source their products from suppliers who were actively clearing forests over theearly years of the 21st century (Environmental Protection Agency, 2013). Despite responsible police oversight, businesses grew thanks to the economic benefits resulting from the expansion of the palm industry. Additionally, research by Glass, Achour, Parry, and Nicholson (2012) showed that switching to other oil sources could lead to 4 to 5 times the land area currently used for palm oil production , in order to meet current demand. Switching to alternatives would therefore mean more deforestation and land destruction in more parts of the world. Consumer product manufacturers in regions like Malaysia and Singapore have also established poor records when it comes to palm oil sustainability. This is a significant challenge given that Malaysia and Singapore are also a source of palm oil for the global market. While most global organizations have been motivated to redefine their supply chain to meet the expectations of their stakeholders, organizations in Malaysia, Singapore as well as other regions are not incentivized to develop supply chain policies. sustainable sourcing and production. According to Schlegel (2016), one of the main motivations for adopting an open responsible sourcing policy is the emergence of ethical consumerism. Ethical consumerism has become a consumer trend in most countries, signifying consumers' preference for products that are ethically produced and safe for the environment. As organizations strive to maintain their competitive advantage, they have been heavily incentivized by changing consumer behaviors (Bessou et al, 2017). However, statistics from Malaysia and Singapore have shown that consumers are not aware of the need to promote sustainable organizational practices, making local organizations very reluctant to promote sustainable palm oil sourcing practices ( Hong 2017). A survey by Hong (2017) showed that consumer interest in sourcing sustainable palm oil was low and provided little incentive for local organizations to adopt sustainable palm oil, as it is considered expensive . Implementing and monitoring a responsible sourcing policyTo support due diligence and compliance assurance processes through a responsible sourcing policy, it is necessary to carry out different types of audits to ensure that organizations remain committed to achieving their sustainable development goals (Thompson et al 2013). Organizations should begin by conducting a risk impact assessment with the goal of identifying suppliers associated with the highest risk. Suppliers with higher risks should undergo documentary audits, assessing their policy and procedural frameworks as well as their level of compliance with relevant laws and requirements (Schlegel 2016). An on-site audit must be carried out on all raw materials and finished products to ensure that high quality and environmentally friendly products are obtained. Employees are identified as the drivers of the organization's goals. An organization cannot achieve its business goals or objectives without the support and collaboration of employees. The implementation of the responsible policing process should involve a supportive, collaborative and participatory change management process, as well as motivational strategies aimed at inspiring professional employee involvement (Bessou et al, 2017). Quality change management offers atraining employees on the new philosophies, methods and procedures involved in a policy that eliminates resistance to change. Motivational strategies, on the other hand, inspire positive work behaviors and attitudes that encourage employees to be engaged in their work. Involved employees care more about their productivity because it is seen as part of their personal identity and will therefore strive to be productive. The successful implementation of a plan is strongly determined by employees' perceptions and attitudes toward the policy. Since implementation cannot be done without employee collaboration, promoting a healthy work environment should be a priority to ensure successful implementation of the policy. Additionally, leaders should promote a supportive organizational culture that emphasizes the need for ethics, professionalism, and diversity (Schlegel 2016). Organizational culture provides a favorable environment for policies to operate and can therefore constitute a favorable basis for the implementation of a responsible sourcing policy. Organizations must maintain good relationships with suppliers and contribute to their development. To ensure proper implementation and monitoring, purchasing organizations should make recommendations for improvement and even participate in collaborative employee training and development to promote a culture of cooperation (Bessou et al, 2017). Buying organizations can also share technology resources and directly fund research and development projects aimed at improving supplier sustainability practices. The provider must also be given the opportunity to reform and correct its policies before receiving sanctions. If an audit reveals a lack of compliance with agreed terms, the supplier must be prepared to develop an immediate corrective action plan to correct the situation, failing which the supplier will be charged with breach of contract (Thompson et al, 2013) . Management must design strategic tools aimed at measuring the actual performance of policy objectives against expected results. Continuous monitoring of performance indicators can help identify weaknesses and opportunities in the supply chain, enabling proactive risk management and opportunity capitalization (Hidayat, Offermans and Glasbergen 2018, p232). Performance assessment tools include sustainability dashboards designed to assess a company's environmental performance across various business areas. Keep in mind: this is just a sample. Get a personalized document from our expert writers now. Get a Custom Essay Conclusion and Recommendations Palm oil is a valuable commodity to the global economy as it contributes to the production of a variety of consumer goods, supports economies and creates jobs. However, palm oil production contributes significantly to the destruction of forests, loss of biodiversity, loss of indigenous communities and encouragement of poor labor practices. As organizations move towards more sustainable models, it is very important to adopt responsible policing to facilitate sustainable development. A responsible sourcing policy will provide organizations with a rationale to follow when making supplier decisions, which will in turn help shape supplier production practices. To limit the negative effects of palm oil production, it isadvised all brands that use palm oil to take responsibility for developing their policy to ensure it supports sustainable supply chains. The goal should be to avoid all companies that use forest areas to grow and produce palm oil and only work with those that do not destroy forest land. Organizations can also launch palm oil sustainability campaigns as part of their policy implementation, to help encourage ethical consumerism and environmental awareness. References Bai, B., Wang , L., Lee, M., Zhang, Y., Alfiko, Y., Ye, BQ, Wan, ZY, Lim, CH, Suwanto, A., Chua, NH and Yue, GH, 2017. Identification with genome-wide markers to select for higher oil content in oil palm. BMC Plant Biology, 17(1), p.93.Brack,D., Glover, A. and Wellesley, L., 2016. Agricultural raw material supply chains. Available at: https://www.chathamhouse.org/sites/files/chathamhouse/publications/research/2016-01-28-agricultural-commodities-brack-glover-wellesley.pdfBessou, C., Rival, A., Levang , P., Feintrenie, L., Bosc, PM, Cheyns, E., Djama, M., Wohlfahrt, J., Marichal, R., Roda, JM and Caliman, JP, 2017. Summary of the sustainable production project Palm Oil: Understanding and Anticipating Global Challenges (Vol. 165). CIFOR. Carlson, K.M. and L.M. Curran. 2013. Refined carbon accounting for oil palm agriculture: Unraveling the potential contributions of indirect emissions and smallholder farmers. Carbon Management 4(4):347–349. Department of Labor, 2013. List of goods produced by child labor or forced labor. Washington, DC. Online at www.dol.gov/ilab/reports/child-labor/list-of-goods Dixon, KD, 2016. Palm oil expansion in Indonesia and further contribution to economic fragility. Environmental Protection Agency (EPA). 2013. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2011. EPA 430-R-13-001. Washington, DC. Online at www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2013-Main-Text. pdf, Glass, J., Achour, N., Parry, T. and Nicholson, I., 2012. Engaging small businesses in sustainable supply chains: responsible sourcing practices in the Kingdom construction industry -United. Greenpeace organization (2017), Oreo: Stop destruction of the tropical forest! Tell Oreo to ditch the dirty palm oil. Available at: http://www.greenpeace.org/?_ga=2.16604543.871775990.1546945687-1190573608.1546945687Hidayat, NK, Offermans, A. and Glasbergen, P., 2018. Sustainable palm oil: a public responsibility? On the governance capacity of the Indonesian Standard for Sustainable Palm Oil (ISPO). Agriculture and Human Values, 35(1), pp.223-242. Unilever (2018), Our Responsible Sourcing Policy in action, available at: https://www.unilever.com/sustainable-living/enhancing-livelihoods/fairness -in-the-workplace/advancing-human-rights-with-suppliers-and-business-partners/our-responsible-sourcing-policy-in-action/ Hong, TH 2017, Bad answer for sustainable palm oil, available at: https://www.minimeinsights.com/Lim, KH, SS im, F. Parish and R. Suharto. 2017. RSPO Handbook on Best Management Practices (BMP) for Existing Peat Oil Palm Cultivation. Kuala Lumpur: Round table on sustainable palm oil. Online at www.rspo.org/file/RSPO_BMP_1_Update_24_April_2013_small.pdf, accessed January 19, 2014. Margono et al., 2014. Loss of primary forest cover in Indonesia between 2000 and 2012. Natural climate change. www.nature.com/nclimate/journal/v4/n8/full/nclimate2277. May-Tobin, C., D. Boucher, E. Decker, G. Hurowitz, J. Martin, K. Mulik, 5(19):1–11.