Kao joins Geno-Unilever’s US$120M biotech palm oil venture enhancing resilient supply chains

29 Sep 2022 --- Geno is welcoming Kao to its US$120 million venture to scale and commercialize plant-based alternatives to controversial palm kernel oil, joining Unilever as a founding member. Kao highlights that the venture will strengthen supply chain resiliency in the US$652 billion home and personal care industries.

The move is also expected to increase the global supply of responsibly sourced palm oil alternatives to the market to meet the growing global demand for the same.

Bolstering the Green Deal
Geno’s venture aims to bring together value-chain partners to scale environmentally sustainable solutions that support traceable and responsible sourcing. 

“Together, we will increase the supply chain resiliency our planet and people need today and for the future,” says Christophe Schilling, CEO at Geno.

The partnership is a significant step toward achieving Geno’s goal to reduce greenhouse gases by 100 million metric tons in the upcoming years.

The collaboration is a strategic decision for Kao to meet its climate goals, which include reducing its carbon dioxide emissions to zero by 2040 and becoming a carbon-negative company by 2050.

Both the companies are moving toward one of the commitments of the European Green Deal for zero emissions of greenhouse gases by 2050.

Kao has joined Geno’s US$120 million venture to scale and commercialize plant-based alternatives to palm kernel oil.Reducing carbon footprint
According to Kao, initial research has shown that companies can reduce the carbon footprint of palm-derived ingredients by up to 50% with Geno’s technology-driven, plant-based alternative.

In Kirei Lifestyle Plan – Kao's annual ESG report – published in June, the company highlighted that by 2025, it aims to only use palm oil that has been RSPO approved for both consumption and industrial uses.

Unilever partnered with Geno amid a global oil crisis earlier this year to invest in its “largest” collaboration in biotechnology alternatives for environmentally unsustainable ingredients.

According to a previous interview with Richard Slater, chief research and development officer at Unilever, palm oil provides 39% of the global production of vegetable oil while only occupying 7% of agricultural land for oil seeds, making it an affordable feedstock to create ingredients like the fatty alcohol that goes into surfactants.

Global corporate responsibility 
In its latest report, titled ‘measuring progress towards a sustainable palm oil supply chain,’ non-profit organization CDP flags that only 22% of companies sourcing or producing palm oil in Indonesia have implemented no deforestation policies.

“Companies must increase engagement with supply chains. Currently, only 35% of companies provide financial and technical assistance to direct suppliers, and only 53% of companies engage with suppliers beyond their first tier,” it states.

The report acknowledges the action taken by companies so far. However, they “need to go further” to set policies and commitments to integrate environmental and social issues – tied with measurable targets. 

The study also found that “44% [74 out of 167] of companies reported over US$18 billion worth of risk related to sourcing and producing palm oil from Indonesia, but the cost for early action to manage identified risks disclosed by 40% of companies was a fraction of the risk value, estimated at US$656.4 million.”

Palm oil shortages
Earlier in May, Indonesia imposed a sudden ban on the export of palm oil, only to lift it less than a month later with a domestic market obligation ruling that requires 10 million metric tons of oil to stay grounded in Indonesia at any given time, eight million for consumption and two million for reserves.Initial research has shown that companies can reduce the carbon footprint of palm-derived ingredients by up to 50%.

While Indonesia was banning exports, Malaysia set out to capture market share in the palm oil industry by reducing taxes on its exports and boosting production. 

Following suit, India plans to acquire almost five million metric tons of palm oil from Malaysia by the end of this year. This is a 20% increase compared with the first six months of 2022, when palm oil prices skyrocketed and marked price records. 

Furthermore, cheaper oil is expected to flood Asian markets as inventories are packed to the brim.

With the continued global interest in palm oil as raw material, in June, Members of Action for Sustainable Derivatives, Estée Lauder Companies Charity Foundation, Natura & Co, Seppic and other healthcare and oleochemical companies collectively formed the ASD Impact Fund.

The fund was used to support the Inobu Mosaik Initiative, which aims to create ecosystems for environmentally sustainable and scalable palm oil production while supporting local communities in Indonesia.

By Radhika Sikaria