Nestle Cancels Sinar Mas Contract After Greenpeace Palm Oil Report

Specifically, Nestle has replaced the Indonesian company Sinar Mas as a supplier of palm oil with another supplier for further shipments. The Switzerland-based company has also committed to using only "certified sustainable palm oil" in its products by 2015.

18 Mar 2010 --- Nestle has cut direct contracts to buy palm oil from Indonesia's largest producer Sinar Mas following a report by Greenpeace that the company drives rainforest destruction. In their statement, Nestle said it will make sure its suppliers, including U.S.-based global commodities giant Cargill, ''understand our demands for palm oil which is not sourced from suppliers which destroy rainforests.'' Greenpeace has started a campaign spoofing Nestle's Kit Kat bar, which contains palm oil, in which it says "give rainforests a break."

Nestle followed moves by Unilever, which canceled its $30 million contract with Sinar Mas at the end of last year, and Kraft. ''Specifically, Nestle has replaced the Indonesian company Sinar Mas as a supplier of palm oil with another supplier for further shipments,'' Nestle said in a statement. The Switzerland-based company has also committed to using only "certified sustainable palm oil" in its products by 2015.

Greenpeace claimed it received confidential information saying Cargill was a major customer of Sinar Mas' palm oil exports from Riau Province on Indonesia's Sumatra Island in 2009. Greenpeace said that other investigations have shown that Cargill is shipping Sinar Mas palm oil to India, the Netherlands, Italy and Germany. IOI (Loders Croklaan) is another important supplier of palm oil to Nestlé’s Hamburg factory where palm oil is also used in KitKat. Greenpeace says it has collected evidence revealing that IOI (Netherlands) received several shipments of Sinar Mas palm oil

According to Greenpeace, Nestle is a major consumer of palm oil. In the last three years, its annual use has almost doubled, with 320,000 tons of palm oil going into a range of products, including Kit Kats.

In the ''Caught Red-Handed'' report, Greenpeace said Nestle had been using palm oil from destroyed Indonesian rainforests and peat-lands, pushing already-endangered orangutans to the brink of extinction, threatening the livelihood of millions of people dependent on the forests and accelerating climate change.

The Greenpeace report also said there are more than 500 social conflicts in the Indonesian oil palm sector, mainly over land, labor disputes, disharmony in corporate-community partnerships and in high-profile political scandals involving illegal issuance of permits for oil palm concessions within protected areas and national parks. Greenpeace estimates that recently there are between 45,000 and 69,000 Bornean and no more 7,300 Sumatran orangutans left in the wild.

Greenpeace also claimed that Nestle is hiding behind fair-trade, with a major recent campaign for its new fair-trade brand of Kit Kat. “While laudable, the Fairtrade brand accounts for only 1% of the company’s cocoa use, and while trying to position itself as a responsible corporate citizen, Nestlé continues to ignore the social and environmental crimes of its palm oil suppliers.”

Nestlé UK responded to the Greenpeace allegations by stating that they recently undertook a detailed review of its supply chain to establish the source of its palm oil supplies and have made a commitment to using only "Certified Sustainable Palm Oil" by 2015, when sufficient quantities should be available. “As an important step on that journey, a number of Nestlé markets, including Nestlé UK, have already purchased Green Palm certificates, the certificate trading programme designed to help suppliers tackle the environmental and social problems created by the production of palm oil,” the company said in a statement.