Unilever refuses to reinstate IOI contracts until ‘tangible progress’ is shown

Consumer goods giant Unilever has announced that it will not reinstate the Malaysian palm oil supplier group IOI as a contractor until "tangible progress" is made evident of the groups desire to implement a new ethical sustainability action plan.

Unilever cancelled its contracts with the IOI Group in April, after the Roundtable on Sustainable Palm Oil (RSPO) suspended the suppliers when it was found that the group was contributing to deforestation in West Kalimantan, Indonesia.

However, earlier this month, the RSPO revealed that they would reverse the suspension and reinstate the IOI Group, claiming it was “satisfied” with IOI’s actions to improve sourcing practices since the suspension.

While Unilever – considered one of the world’s biggest palm oil buyers – has acknowledged the RSPO’s decision, the consumer goods firm claimed that it would withhold from conducting business with the group until the action plan delivers results.

“While we acknowledge the action taken by the RSPO, we do not intend to resume sourcing palm oil products from IOI until we see tangible progress and on-the-ground implementation of their declared action plan,” a statement from Unilever read. “We reiterate that we expect the highest standards from all of our suppliers and only source from suppliers who demonstrate strict adherence to the Unilever Sustainable Palm Oil Policy.”

“We will keep the dialogue with IOI open to encourage positive action and adoption of sustainable practices. As always, we continue to work closely with our suppliers, NGOs, governments, and other stakeholders to drive change in the industry and make sustainable palm oil commonplace. We are strongly convinced that we can make this happen through constructive dialogue and close cooperation among all stakeholders.”

Business backlash

Unilever aren’t the only business standing by this decision. The company’s decision aligns with those of big-name food brands such as Nestlé, Kellogg and Hershey’s as well as healthcare company Johnson and Johnson, in refusing to amend business relations with the IOI Group.

The decision from the RSPO to reinstate the IOI Group was met with controversy and criticism from green groups such as Greenpeace, which questioned the sincerity of the IOI group’s promises. WWF has also waded-in on the debate, calling on businesses to break the link between the use of palm oil in everyday products and deforestation.

Even Golden Agri-Resources (GAR) – the world’s second largest palm oil company, managing more than 480,000 hectares of plantation – is unable to escape from the issue. Despite completing the mapping and traceability of its supply chain through to each of its 489 mills in Indonesia earlier this year, GAR recently told edie that it is engaging with individual supplier mills which have allegedly been using ‘tainted and illegal’ palm oil sources, in an attempt to clarify revelations uncovered in a recent report.

Alex Baldwin & Matt Mace

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