A Learning Journey: Wendy’s & Palm Oil

Managing a supply chain for more than 6,500 restaurants globally is no easy task, but it’s a skill we’ve honed as our brand has grown over the last four decades. Some parts of that task are harder than others. And interestingly, sometimes the most challenging links in our supply chain are the smallest. Palm oil is a perfect example, and tackling this important environmental issue has been and continues to be a learning journey for us.

So What is Palm Oil, and Why is it a Big Deal?

That’s where we started on this journey not very long ago.

First, some background. Palm Oil is an agricultural product. It comes from palm fruit, which grows on tropical trees in clusters (the clusters kind of remind me of giant pomegranates without their skin).

The palm kernels are pressed and palm oil is extracted from that process. It is a common ingredient in a whole host of everyday products like soap and cosmetics. And in the world of food, palm oil is used as a cooking or frying oil, and as an ingredient in more foods than I could count.

This oil has increased in popularity for a few reasons. It tastes good, has desirable nutritional qualities like Vitamin E, and is a very functional product for cooking and baking. Farmers have also found that it’s incredibly efficient, producing high yields on less land than other vegetable oil crops require.

High demand for palm oil supports millions of farmers and their families in palm oil producing countries. But palm oil production has significant challenges too, and some production methods are linked to natural resource and wildlife damage, as well as negative social impacts.  There is a ton of information available online on this topic. Here are a couple links:

• http://www.theguardian.com/sustainable-business/series/palm-oil-debate

• https://news.wbhm.org/npr_story_post/2015/palm-oil-plantations-are-blamed-for-many-evils-but-change-is-coming/

A number of organizations exist who are dedicated to promoting the sustainable production of palm oil.  These proponents want producers to continue to use and cook with palm oil, but to do so in a responsible and sustainable way. The most prominent is the Roundtable on Sustainable Palm Oil, which urges companies to purchase from those farmers and growers who are doing it in a sustainable way to support years of palm oil production to come, protecting the environment and preserving natural habitats.

Making Sense Of It All

All of that makes sense to us at Wendy’s, but until recently, it wasn’t high on our radar screen because we aren’t a large user of palm oil.  Of all the oil we purchase in North America, palm oil makes up less than 1%.

…this is on average by weight…if you want to get technical...

So back to my original point: sometimes the smaller links in our supply chain are more difficult to tackle than the large ones. Why? Because we have more expertise – and more in-house resources – focused on the ingredients that make up substantial parts of our menu.

If you want to know about beef…no problem. We have lots of folks who have dedicated their entire careers to that topic – how cattle are raised; producing the best beef patty; cooking a perfect hamburger every time – we have decades of experience in all of these areas. But palm oil is an ingredient we don’t buy in North America...where 95% of our restaurants are located.

And where we do have palm oil in our North American supply chain, it’s a minor ingredient in products like breaded cod (which we serve during Lent across the U.S. and year-round in a few parts of the country), and biscuit gravy, which we serve in a few hundred restaurants that serve breakfast. In those products, our suppliers typically aren’t even buying the palm oil. The oil is purchased further back in the supply chain, several links removed from us and the finished products we buy.

As a result, when others started talking about palm oil, we initially didn’t have much to say. Over time, we’ve come to understand more about this important topic, and we’re trying to do the right thing. We’ve adopted changes to our product development process so we have heightened awareness when palm oil is used as an ingredient, and we’re working to educate our suppliers about it so we can partner together to get to a more sustainable place.

Our Public Commitment

We’re on a journey, and we’re committed to source only sustainably grown palm oil. Earlier this year we did a couple of things to make our commitment public.  We:

• Made a Commitment to Learn and Report: We applied for and were accepted to the Roundtable for Sustainable Palm Oil (RSPO), and we agreed to report our palm oil usage on an annual basis starting in 2016.

• Surveyed our Supply Chain: We completed Wendy’s first inventory of all palm oil used in the US and Canada.

• Took Short-Term Steps: We joined GreenPalm to participate in the “Book & Claim” program, and we purchased GreenPalm Book & Claim certificates to cover our entire North American supply chain use of palm oil. (We understand that this is not an ideal long-term solution, but we felt that purchasing credits in the short-term was better than doing nothing. So this is our approach while we work to incorporate sustainable palm oil purchasing into our product development standards).

• Began our International Journey: We also completed the Company’s first inventory of supply chain data for international markets to identify status of palm oil used for cooking (Internationally, we have approximately 220 restaurants in 10 different countries that use palm oil as a cooking oil).

Last week, we completed our first report that will become public. We submitted our 2016 Roundtable on Sustainable Palm Oil Annual Communications of Progress and the 2016 World Wildlife Fund Palm Oil Buyers Scorecard which summarizes our use of palm oil and announces our commitment to achieve 100% certified sustainable palm oil in North American products by 2022.

We’re going to be continuously evaluating and improving when it comes to this topic. And it will be a journey for us. Our international supply chain will be more difficult to tackle than our North American business given how fragmented our footprint and global supply chains are. But we’re going to keep working on it.

Look for us to share more about this topic in the coming months.  And for our official-official statement, feel free to view it here: https://www.wendys.com/csr-what-we-value/food/safety-qa/supplier-code-conduct/human-rights-labor-practices

Liliana