Major brands dump palm oil supplier IOI following RSPO suspension

By David Burrows

- Last updated on GMT

Nestlé, Mars, Unilever and Kellogg have ditched palm oil producer IOI following acts of deforestation. © iStock
Nestlé, Mars, Unilever and Kellogg have ditched palm oil producer IOI following acts of deforestation. © iStock
Four of the world’s biggest food companies have moved swiftly to cease trading with Malaysian firm IOI after it fell foul of sustainable palm oil rules, but NGOs say it’s too little too late.

And then there were four. Nestlé has joined Mars, Unilever and Kellogg in cutting back supplies of palm oil from IOI, one of the founding members of the Roundtable on Sustainable Palm Oil (RSPO).

In an email to FoodNavigator, corporate spokesperson Meike Schmidt confirmed Nestlé will cease sourcing from specific plantations where concerns have been raised about IOI’s activities, but it is watching developments closely. Schmidt said the feedback so far indicates that IOI is committed to acting and to making progress on all of the issues raised.

On April 1, the RSPO announced the suspension of IOI, the Malaysia-based group, for non-compliance of certain principles and criteria within the palm oil certification scheme. This followed a year-long investigation into allegations the company had failed to protect forests and peat areas.

Indeed, satellite images and on-the-ground investigations by NGOs showed extensive deforestation and fires in peatland areas that are of high conservation importance or carbon storage importance. Some land was also illegally occupied, according to reports filed to the RSPO.

Swift shift

The suspension certainly creates a headache as major manufacturers must not look for RSPO-certified volumes of an essential ingredient elsewhere. But the speed with which they have reacted underlines how commercially sensitive palm oil procurement has become – and highlight a desire amongst some not to have their fingers burned again.

All four of the major companies mentioned above said IOI has not only fallen foul of RSPO guidelines, but their company policies had been broken too. In less than 24 hours three companies had distanced themselves from IOI.

Unilever said the suspension put the supplier in breach of its supplier policies and it is now in the process of “disengaging​” with IOI over the next three months.

Kellogg also wasted no time in taking action – 67% of the palm oil supplied by IOI’s affiliated supplier Loders Croklaan has already been moved to other suppliers​, and the remaining supplies will be within the next three months.

Mars’ update​ confirmed that it will not source palm oil from IOI Loders Croklaan while the suspension is in place.

Mondelez said it doesn’t comment on individual suppliers but a statement sent to FoodNavigator suggests it will be looking elsewhere for palm oil too. “While RSPO certification alone does not meet our sustainability principles in full, suppliers must maintain their RSPO certification to comply with our action plan,”​ a spokesperson explained.

"Nestlé confirmed it will cease doing business with IOI for the time being, but it is watching developments closely.​ Schmidt said the feedback so far indicates that IOI is committed to acting and to making progress on all of the issues raised.

“We will keep a close eye on progress, and if we are not satisfied with the situation at the end of June 2016 we will move additional volumes from IOI to other suppliers,” ​she explained.

RSPO not so rapid

The suspension, which came into effect on 4 April, will be in place until the RSPO has accepted an action plan submitted by IOI on 23 March.

IOI said it has “taken corrective actions to review and enhance our sustainability practices”.​ These include “rehabilitating affected areas, improving our firefighting capabilities and engaging consultants to advise on all relevant Indonesian laws and regulations which are the subject matters of the complaint”.

However, NGOs believe this is all too little too late. “We raised the alarm over the serious environmental and human rights impacts of IOI's operations in Malaysia six years ago and only now has the RSPO finally taken action,”​ explained Friends of the Earth senior food campaigner Clare Oxborrow.

The time has come to replace the voluntary-led approach taken by the RSPO, she added. “[It] is not enough to guarantee the sustainability their customers demand. We need strict law enforcement in producer countries [and] legally binding sustainability criteria for the import of palm oil for food into Europe.”

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