IOI saw its RSPO membership suspended last month for non-compliance of certain principles and criteria within the palm oil certification scheme. RSPO had conducted a year-long investigation into allegations the company had failed to protect forests and peat areas.
Nestlé's decision follows an analysis of the action plan IOI had submitted to the RSPO in a bid to have its suspension lifted.
IOI claims the proposals are “a continuation of the positive actions which we have been taking”, but Nestlé said the plan “does not go far enough”.
“We have now carried out an assessment of IOI’s action plan, which it claims is designed to deliver on the group’s commitment to no-deforestation in its operations,” Kruchten noted.
“Our conclusion is that it does not go far enough in tackling the issues raised by IOI’s RSPO suspension and that Nestlé will therefore not award any new business to IOI group with immediate effect. We will also phase out all existing contracts with an expected completion date of August 31st 2016,” she added.
IOI's 'painful' decision to sue RSPO
The news comes just days after IOI announced plans to sue the RSPO. In a statement published on the company’s website on May 9, CEO Dato’ Lee Yeow Chor said the “painful” decision to sue RSPO over its suspension was a “last-resort measure to draw serious attention to the weaknesses in the decision-making process in certain parts of RSPO”.
An RSPO spokesperson said the suit, filed in Zurich, Switzerland, “came out of the blue”. Green groups have also been left puzzled.
“IOI should put their energy into making good on the problems which have been identified by this case,” said WWF expert Adam Harrison.
Click here for FoodNavigator's briefing note on the story so far.