Swiss food giant Nestle said Friday it would stop purchasing palm oil from Astra Agro Lestari (AAL), an Indonesian firm whose farming practices have come under fire from activists.
Nestle, known for its KitKat chocolate bars and Nespresso coffee capsules, said it had instructed its direct suppliers to stop purchases from three AAL-linked entities.
The decision follows an investigation conducted earlier this year by EcoNusantara, an independent Indonesian organisation dedicated to the protection of forests and the climate, the company told AFP, confirming information reported by Bloomberg News.
The investigation discovered land seizures, environmental damage and human rights violations by the three AAL subsidiaries.
"As part of our approach to sustainable palm oil sourcing, we have been closely monitoring the situation in the region, and the three Astra Agro Lestari entities in question have been on our grievance list for several months," Nestle said in a statement.
The process of switching suppliers will likely take at least several weeks, but Nestle said it aims to have the process completed by the end of the year.
In an open letter last week, representatives of indigenous populations and civil society organisations called on global food processors to stop purchasing palm oil from the AAL firms.
The appeal was addressed in particular to Procter & Gamble, Hershey’s, Kellogg's, Unilever, Mondelez, Colgate-Palmolive, PepsiCo et Nestle.
"Nestle's suspension of AAL from its supply chain is an important first step toward ensuring accountability for ongoing human rights violations," said activist group Friends of the Earth.
"Nestle and other multibillion-dollar consumer giants - who for years have pledged to protect forests and respect human rights - cannot simply walk away from these abuses," it said.
Friends of the Earth said these firms now have an opportunity to ensure grievances are redressed and conflicts resolved.
It also noted that numerous European firms continue to buy palm oil from AAL.
AAL denied the accusations made against it.
"Astra Agro is very serious about implementing our sustainability policy. It is not true that Astra Agro or its subsidiaries carry out land grabbing," Mr. Santosa, president director of AAL, told Reuters.
He added that Nestle was not a direct buyer of products produced by AAL, but most probably bought from its customers.
"Astra Agro conducts daily physical spot sales, a common practice in the commodity business, so the direct impact of this issue is immaterial" he said.
The European Commission has proposed several laws aimed at preventing and, in the case of forced labour, banning the import and use of products linked to environmental and human rights abuses.
