Palm Oil: What is it Used For?

Photo:raysto, Creative Commons, Flickr
Palm oil is raising environmentally-friendly investing questions.

One of the questions I received recently from Dave Neubert was this: What is palm oil used for?

The impetus for this question comes from a post I wrote recently on efforts made by Greenpeace to raise awareness regarding the environmental problems with palm oil. Like other biodiesels, palm oil has started getting slack because the attendant destruction to growing it may prove more damaging to the environment than can be offset by using it. But palm oil is more than just a thought for biodiesel, for years it has been a major ingredient in a large portion of what we use everyday. The International Herald Tribune reports:

Palm oil is an ingredient in cooking oil, cosmetics, soaps, bread, chocolate — in fact, in about one in every 10 products on the supermarket shelf. It also is used as an industrial lubricant.

Companies like Nestle (NESM.F) and Cadbury (CSG — although Cadbury includes a warning about the impact of palm oil on the environment) use it to make their chocolate. And it's in all sorts of household and beauty products from companies like Proctor & Gamble (PG) and Unilever (UL). Indeed, from Whole Foods (WFMI — who claims its products containing palm oil come only from sustainable sources) to Wal-Mart (WMT), you'd be hard-pressed to find a store that doesn't sell some palm oil products.

And this is where the hard work comes in. If you want to invest in an environmentally responsible way, you need to track down where companies are getting the palm oil they plan to use. Is it coming from plantations in Indonesia and Malaysia that wreak havoc on rainforests? Or is it coming from small-scale facilities that employ sustainable practices in growing and harvesting the plants that provide palm oil?

These are home questions. One thing that might be helpful is a forthcoming palm oil labeling effort. The idea is to label products containing palm oil according to whether sustainable sources are in the picture. If you are interested in limiting the damage done to the environment by palm oil, consider your investing dollars, and even your buying habits.

Disclosure: I do not invest in any of the companies listed above. I am interested in environmentally friendly investing, and try to focus on companies that encourage sustainable practices. In going through my medicine and food cabinets and looking at my beauty products, though, I have found some products containing unsustainable palm oil. I am currently reconsidering some of my buying habits.

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Palm Oil
Photo:Norm & Debra, Creative Commons, Flickr