(Repeats to additional Reuters subscribers)
LONDON Dec 11 Consumer goods company Unilever (ULVR.L) (UNc.AS), the world's largest user of palm oil, has suspended purchases of edible oil from Indonesian group Sinar Mas on concerns over rain forest destruction.
Unilever, which uses palm oil in such products as Dove soap, Ben & Jerry ice cream, and margarines like Stork, cancelled its annual 20 million pound ($32.6 million) contract with Sinar Mas after a critical report by environmental group Greenpeace.
Anglo-Dutch Unilever said on Friday it was suspending purchases from PT SMART (SMAR.JK), which is part of Sinar Mas, until the Indonesian group could give proof that none of its plantations was contributing to the destruction of rain forests.
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. In the past, it has denied accusations its activities were damaging the environment.
"The Greenpeace claims are of a nature that we can't ignore. Unilever is committed to sustainable sourcing. Therefore, we have notified PT SMART that we have no choice but to suspend our future purchasing of palm oil," said Unilever's Chief Procurement Officer Marc Engel said in a statement.
Unilever said an independent audit of palm oil suppliers in early 2009 had highlighted areas of concern which were being addressed on an individual basis, but the Greenpeace report had prompted the group into immediate action.
"Unilever's decision could represent a defining moment for the palm oil industry. What we're seeing here is the world's larger buyer of palm oil using its financial muscle to sanction suppliers who are destroying rain forests and clearing peatlands, said Greenpeace director John Sauven in a statement.
Unilever consumes around 1.3 million tonnes of palm oil each year and has pledged to buy only from certified sustainable plantations from 2015, while around 90 percent of worldwide supply comes from Indonesia and neighbouring Malaysia. ($1=.6138 Pound) (Reporting by David Jones; editing by Karen Foster)