Nestle says drops palm oil supplier after report

AMSTERDAM Wed Mar 17, 2010 2:04pm EDT

Different types of chocolate bars are seen in the company supermarket at the Nestle headquarters in Vevey February 19, 2010. REUTERS/Denis Balibouse

Different types of chocolate bars are seen in the company supermarket at the Nestle headquarters in Vevey February 19, 2010.

Credit: Reuters/Denis Balibouse

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AMSTERDAM (Reuters) - Nestle, the world's biggest food group, said it had stopped buying palm oil from Indonesia's Sinar Mas due to concerns about rainforest destruction, following a similar move by consumer goods firm Unilever.

Nestle's announcement came after Greenpeace released a report on Wednesday which looked into how the company was sourcing palm oil.

Switzerland's Nestle, which uses the edible oil in its food products such as KitKat bars, said it had replaced Sinar Mas with another supplier for further shipments after conducting its own investigations into its palm oil supply chain.

"We will continue to pressure our suppliers to eliminate any sources of palm oil which are related to rainforest destruction and to provide valid guarantees of traceability as quickly as possible," Nestle said in a statement.

It added that it had only bought from Sinar Mas for manufacturing in Indonesia, and no palm oil bought from Sinar Mas had been used by Nestle for manufacturing in any other country.

Environmentalist group Greenpeace highlighted the practices of Nestle's suppliers' and their impact on rainforests, peatlands and the habitat of endangered orangutans in their report on Wednesday.

Anglo-Dutch Unilever, the world's largest user of palm oil, said in December it had suspended purchases from Sinar Mas on similar concerns.

Greenpeace alleges that Sinar Mas, Indonesia's biggest palm oil producer and the second biggest in the world, has been responsible for widespread deforestation and peatland clearance, practices which release vast amounts of carbon dioxide.

Sinar Mas was not immediately available for comment on Wednesday. It has previously denied that its activities are damaging for the environment and in December it invited Unilever to inspect its operations.

Nestle has said it aims to only use palm oil that is certified as sustainable by 2015.

(Reporting by Catherine Hornby; editing by James Jukwey)

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