Unilever cancels palm oil sourcing contracts over deforestation concerns

Global consumer goods firm Unilever has cancelled its contracts with a Malaysian-based palm oil producer and trader which has been suspended over deforestation and community conflict issues.

In response to the suspension, IOI has denied all wrongdoing and is in the process of appealing the decision

In response to the suspension, IOI has denied all wrongdoing and is in the process of appealing the decision

Unilever – considered one of the world’s biggest palm oil buyers – has cancelled supply contracts with palm oil producers the IOI Group, which was suspended by the Roundtable on Sustainable Palm Oil last week, after a year-long investigation found that the group was contributing to deforestation in West Kalimantan, Indonesia.

A Unilever statement read: “Unilever takes the allegations against IOI and its suspension from the RSPO extremely seriously. We expect the highest standards from all of our suppliers and strict adherence to the Unilever Sustainable Palm Oil Policy.

“This suspension puts IOI in breach of our policy. In line with our grievance procedure, we are now in the process of disengaging with the supplier and have set a time bound plan to do this over the next three months.”

Unilever – along with M&S - has already agreed to source palm oil from countries and regions with ambitious climate and forestry initiatives, and has also pledged to sustainably source 100% of its wood-based packaging five years ahead of schedule. In response to the suspension, IOI has denied all wrongdoing and is in the process of appealing the decision.

Along with 13 other major brands including Nestlé and P&G, Unilever’s palm oil sourcing model was recently scrutinised by Greenpeace. The activist group released a ‘scorecard’ for palm oil reporting, transparency and sourcing, with Unilever given room to improve after ranking as ‘decent’.

Commenting on the company’s decision to cancel contracts with IOI, Greenpeace Indonesia’s forest campaigner Annisa Rahmawati said: “For the past eight years, NGOs have painstakingly documented IOI’s destruction of peatland forest and orangutan habitat in West Kalimantan. IOI has been given every opportunity to reform and has repeatedly refused to do so, even though its actions were contributing to the fire and haze crisis.

“Unilever is the first customer to cancel contracts with IOI. Other companies should follow its lead. If IOI wishes to regain its customers, it must take immediate and significant action to address its legacy by restoring and protecting the peatland forests it has destroyed. It must also address the serious social, labour and environmental issues that continue to taint its supply chain.”

Sustainable shift

Government figures have suggested that up to 93% of pure palm oil imported into the UK could come from sustainable sources, putting the UK close to a target of 100%. This target could become achievable as more brands and palm oil producers pledge to introduce sustainable initiatives.

Earlier this year, the world's second largest palm oil plantation company, Golden Agri-Resources (GAR), completed the mapping and traceability of its supply chain through to each of its 489 mills in Indonesia.

Matt Mace


| palm oil | supply chain | traceability | unilever


CSR & ethics
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