Consumer goods giants accused of sourcing palm oil from ‘top deforester’

Consumer goods giants including PepsiCo, Unilever and Nestle have been accused of indirectly sourcing palm oil from a mill supplied by a producer which destroyed almost 3,000 hectares of forest in Indonesia in the first half of 2020.

Consumer goods giants accused of sourcing palm oil from ‘top deforester’

Palm oil is estimated to have been the cause of more than 5% of the deforestation to have taken place in tropical forests to date

In its latest analysis of palm-oil-driven deforestation, sustainability risk analysis organisation Chain Reaction Research (CRR) tracked the activity of key producers in Indonesia, Malaysia and Papua New Guinea using satellite imagery. It found that just ten palm oil groups were behind more than half of the 19,894 hectares of nature destruction recorded in these regions in the first half of 2020.

The worst single offender was found to be Sulaidy, which has eight concessions in Kalimantan, Borneo. Collectively, these concessions cleared forest from around 2,900 hectares between January and June, CRR believes.

While no consumer goods firms with deforestation-free, peat-free and exploitation-free (NPDE) palm oil commitments were found to be sourcing directly from Sulaidy subsidies, one of Sulaidy’s plantation companies, PT Palmdale Agrosia Lestari, was witnessed by CRR field partners delivering fresh fruit bunches to a mill operated by PT Pundi Lahan Khatulistiwa. According to CRR, that mill has contracts with Avon, Danone, Kellogg Company, L’Oreal, Mondelez, PepsiCo, Unilever and Reckitt Benckiser (RB).

Indirect supply links were also found between consumer goods giants with NPDE commitments and other palm oil producers implicated in forest loss and peatland destruction. Named producers include Mulia Sawit Agro Lestari (MSAL) Group, Ciliandry Anky Abadi (CAA) and IndoGunta. Named FMCG majors include Hershey’s, Johnson & Johnson and General Mills.

Responding to the report, a Unilever representative said that the firm had written to suppliers in April requesting the suspension of any activity with Sulaidy.

A Danone representative said the company is “investigating internally to check the veracity of the CRR report”. If it finds that the report’s findings are accurate, it says it will “notify suppliers that they are not complying with our purchasing rules and will take corrective actions if needed”.

A Nestle spokesperson said: “None of Mr. Sulaidy’s companies appear on the supplying mill lists of any of our suppliers. We are further investigating with our direct suppliers, whether PT Pundi Lahan Khalistiliwa, a mill allegedly working with one of Mr. Sulaidy’s plantation companies, is currently in our supply chain and whether the CRR report is accurate. If the findings are accurate, we will take corrective actions.”

edie has reached out to Avon’s parent firm Natura & Co, Kellogg, Mondelez, PepsiCo and RB for further comment.

Palming off responsibility

Palm oil is found in a wide range of foods and some cosmetics and household goods, but its production is often problematic. The race to satisfy growing demand over the past two decades has resulted in vast plantations replacing native forest in countries in south-east Asia, while efforts to prevent forest destruction have often been stymied by corruption or companies flouting the rules.

CDP warned late last year that just one-third of the 22 firms to have signed a joint 2020 commitment to reach zero deforestation in palm trees had deployed comprehensive management practices around forestry and land use. Unilever was praised for its efforts, while the likes of Kraft Heinz and Yum! Brands were named as laggards.

Similar research has since been conducted by WWF and Rainforest Action Network. The conclusion was the same; that the FMCG sector is off track to meeting its deforestation commitments.

The Covid-19 pandemic has caused the first global drop in palm oil demand and production since records began. As such, deforestation associated with palm oil production did drop in the first half of 2020.

Sarah George

Comments (1)

  1. Marc van der Zwan says:

    The larger companies mention are involved, but the companies that process the palm oil are also responsible one as they send the processed oil to the food companies.

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