Nestle and P&G probe palm oil sourcing after Indonesia deforestation claims

Consumer brands including Nestle and Procter & Gamble said they conducted investigations after an environmental group said palm oil sourced from an illegally cleared wildlife reserve in Indonesia may have found its way into their supply chains. 

Rainforests within the legally protected wildlife reserve had been cleared to make way for palm oil plantations during the last eight years, the US-based Rainforest Action Network (RAN) said, citing satellite images that it says reveal deforestation in the area. 

The group shared images which it said showed stretches of cleared brown land cut into the lush green expanse of Indonesia's Rawa Singkil Wildlife Reserve, with rows of young palm trees now planted along its borders. 

Some images, which RAN said were taken during a field investigation in February 2024, showed that oil palm seedlings were planted on burnt ground surrounded by fallen trees inside the reserve, according to the report published on Monday. 

The wildlife reserve, located in Aceh province in the northwest of Indonesia's Sumatra island, has lost 2,609 hectares (6,447 acres) of forest since 2016, with palm trees now growing on 645 hectares of the cleared area, RAN said. 

Reuters could not independently confirm those findings. 

Indonesia's forestry ministry did not respond to a request for comment. 

ILLEGAL PLANTATIONS 

RAN said its investigation, conducted in September and October, had found fresh fruit bunches from the illegal plantations were sold to mills PT Global Sawit Semesta (GSS) and PT Aceh Trumon Anugerah Kita (ATAK), both of which supplied major brands including Procter & Gamble, Nestlé, Mondelez and PepsiCo, according to the RAN report. 

GSS and ATAK, which are located in remote areas, could not be reached by Reuters for comment. 

Companies typically source palm oil from Indonesian mills through intermediaries. 

A Nestle spokesperson said it promptly engaged with its direct supplier regarding GSS to investigate RAN's findings, adding that, by the end of 2023, 96 per cent of its palm oil supply was "deforestation-free". 

"Should there be a need to find remedies, we will take necessary action," the spokesperson said. 

Procter & Gamble told Reuters that it had conducted an investigation following RAN's findings and immediately suspended sourcing from both GSS and ATAK. 

Singapore-based Royal Golden Eagle Group (RGE), Musim Mas and Indonesian firm Permata Hijau also sourced palm oil from GSS, RAN said. 

Apical, an RGE unit, said the firm has engaged with GSS to look into a supplier who allegedly sourced illegal fresh fruit bunches from the reserve. GSS has suspended the said supplier since late October until investigations are concluded, Apical said. 

Musim Mas said they were investigating RAN's findings. 

Permata Hijau, Mondelez and Pepsi did not respond to multiple emailed requests for comment. 

'ORANGUTAN CAPITAL' 

Indonesia, home to the world's third largest tropical rainforest, says it reduced its deforestation rate to under 140,000 hectares annually between 2020 and 2023, down from more than 400,000 hectares in 2016-2020. 

However, RAN said its investigation showed that deforestation within the wildlife reserve "the country's only forest where endangered orangutans, tigers, elephants and rhinos coexist" surged fourfold in 2021-2023 compared with the previous period, despite laws banning deforestation. 

"The high-resolution imagery and analysis definitively show that the palm oil mills, traders, and global brands sourcing from this area have failed to end deforestation for palm oil in the 'Orangutan Capital of the World'," RAN said in its report. 

Green groups have frequently accused palm oil producers of illegally clearing rainforests, including protected areas and wildlife reserves, to expand their plantations. 

Global palm oil production has expanded over the past decade, accounting for 60 per cent of world vegetable oil exports.

Mainly produced in Indonesia and Malaysia, palm oil is used as a cooking oil and in products including biofuels, chocolates and cosmetics.