Unilever announced it was suspending future purchases from palm oil supplier PT Smart.
The move followed allegations that the Indonesian company's plantations are contributing to the destruction of high conservation value forests and expanding onto peat lands.
Greenpeace's Executive Director John Sauven says Unilever's decision could represent a defining moment for the palm oil industry.
"What we're seeing here is the world's largest buyer of palm oil using its financial muscle to sanction suppliers who are destroying rainforests and clearing peat lands. This has set a new standard for others to follow," he says.
Unilever's Chief Procurement Officer Marc Engel says the company is committed to sustainable sourcing and is taking a stance against a supplier who is accused of breaking the law.
Unilever's Director of Sustainable Agriculture and President of the Roundtable on Sustainable Palm Oil (RSPO) Jan-Kees Vis adds that "companies sign up to the RSPO, we expect them to live up to the RSPO principles."
Key facts about palm oil
Palm oil is used in many products, from margarines, sauces and ice cream, to shampoo, lotions and soap. Every consumer goods company in the world, from big producers like Unilever to those that produce supermarket-own brands, uses palm oil. Around 43 million tonnes of palm oil are produced annually, of which Unilever purchases around 1.5 million tonnes (about 3%).
Unilever is a founder member of the RSPO, which it chairs. There is currently comparatively little palm oil which is certified sustainable. The RSPO is working to increase the amount available and has set sustainability criteria against which suppliers can now be certified. The RSPO is the only organisation in the world to do this.
In May 2008, Unilever made a commitment to buy 100% certified sustainable palm oil by 2015, regardless of any additional cost – which would not be passed on to consumers. In 18 months we have already reached 15% of that target and we plan to double this to 30% in 2010 and double that again by 2011 reaching 60%.
Unilever works directly – and through the RSPO – with local NGOs and agencies to drive industry change and set high sustainability standards. Few companies are doing as much as Unilever to find a solution. Unilever is committed to the highest sustainability and environmental practices. When presented with evidence of palm oil producer PT Smartâ€™s activities, we acted immediately.
Deforestation is a serious issue and has a bigger impact on carbon emissions than the whole transport sector. It is a problem that requires action and leadership from governments, companies and NGOs working in partnership. No one group can find the answer by itself. Unilever says it is committed to playing an active role.