Last Friday, Unilever said it will stop all future purchase of palm oil from the Indonesian company PT SMART, part of the Sinar Mas group, until they clean up their act and provide verifiable proof that none of their palm plantations are contributing to the destruction of forests and peat lands.
Early in 2009 Unilever conducted an independent audit of its major suppliers, and the company said it revealed several areas of concern that are now being addressed on an individual basis.
However, the decision about PT Smart was driven by Greenpeace's new report that feature a case study on Sinar Mas alleging that the company is engaging in illegal deforestation and peatland clearance in Indonesia.
"The Greenpeace claims are of a nature that we can't ignore. We have notified PT SMART that we have no choice but to suspend our future purchasing of palm oil unless they are able to come forward with concrete proof that they are not involved in unacceptable environmental practices. Then we would certainly re-consider our position." - Marc Engel, Chief Procurement Officer, Unilever.According to a Wall Street Journal article, Sinar Mas released a statement saying that the Greenpeace report is based on "inaccurate, misleading, exaggerated and generalized data and claims." Sinar Mas added that the Unilever order cancellation won't make a material difference to overall sales.
An Indonesian news report note that Unilever will buy CPO from PT SMART until first quarter of 2010 as they look for other CPO suppliers. PT SMART said the volume of CPO supplied to Unilever only represented 3% of the company's total production.
Palm oil products account for 5% of total agriculture raw material volume Unilever consumed in 2008. The company plans all palm oil and derivatives used in its products to be sustainably sourced and traceable by 2015.