Nestlé, P&G Probe Palm Oil Sourcing After Report on Indonesia Deforestation

Nestlé and Procter & Gamble (P&G) are investigating their palm oil sourcing practices following a report that linked their suppliers to deforestation in Indonesia. The report, released by a green group, highlights environmental concerns surrounding palm oil production. In response, both companies are scrutinizing their supply chains to ensure sustainability and address any potential involvement in deforestation, aligning with their commitment to environmental responsibility.

Nestlé and Procter & Gamble (P&G) have initiated investigations after an environmental group revealed that palm oil sourced from illegally cleared land in Indonesia may have entered their supply chains. The U.S.-based Rainforest Action Network (RAN) reported that rainforests within the legally protected Rawa Singkil Wildlife Reserve had been cleared for palm oil plantations over the past eight years, with satellite images showing significant deforestation in the region.

RAN shared images showing large areas of cleared land within the reserve, with young palm trees planted along its borders. Some of the images, captured during a field investigation in February 2024, showed palm seedlings planted in burned areas surrounded by fallen trees inside the reserve. The reserve, located in Aceh province on Sumatra island, has lost 2,609 hectares (6,447 acres) of forest since 2016, with 645 hectares now occupied by palm oil plantations, according to RAN.

The Indonesian forestry ministry has not responded to requests for comment. RAN's investigation, conducted between September and October, found that illegal palm oil fruit from these plantations was being sold to mills such as PT Global Sawit Semesta (GSS) and PT Aceh Trumon Anugerah Kita (ATAK). These mills supplied large companies like Nestlé, P&G, Mondelez, and PepsiCo.

Palm oil is typically sourced from Indonesian mills through intermediaries. A Nestlé spokesperson stated that the company engaged with its direct supplier regarding GSS and was investigating the findings. By the end of 2023, 96% of Nestlé’s palm oil supply was reportedly "deforestation-free." Procter & Gamble responded by confirming that it had suspended sourcing from both GSS and ATAK and had conducted its investigation. Companies like RGE, Musim Mas, and Permata Hijau, which also sourced from GSS, are investigating the findings as well.

The Rawa Singkil Wildlife Reserve, home to endangered species like orangutans, tigers, elephants, and rhinos, has faced severe deforestation in recent years. RAN reported that at least 10 square miles of deforestation occurred within the reserve due to palm oil, rubber, and corn plantations. While Indonesia claims to have reduced its deforestation rate to under 140,000 hectares annually between 2020 and 2023, RAN's investigation revealed that deforestation in the Rawa Singkil reserve had increased fourfold in 2021-2023 compared to earlier years, despite laws prohibiting such practices.

RAN criticized the failure of palm oil mills, traders, and global brands to stop deforestation in what it calls the “Orangutan Capital of the World.” Green groups have long accused palm oil producers of illegally clearing rainforests, including protected areas, to expand plantations. Palm oil, used in products like cooking oils, biofuels, chocolates, and cosmetics, is a significant global commodity, with Indonesia and Malaysia producing the majority of the world’s supply.

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Source: Reuters‍