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Suppliers face threat of exclusion with new Nestlé palm oil partnership

By Sarah Hills , 20-May-2010

Nestlé has bolstered its sustainable palm oil commitments by partnering with The Forest Trust (TFT) in a move described as “game-changing” for the industry.

The partnership between the confectionery giant and the global non-profit organisation could see suppliers who do not meet its new sustainability guidelines cut off as Nestle works towards zero tolerance of palm oil from non-sustainable sources.

TFT executive director, Scott Poynton, said: “As part of the agreement, TFT will audit Nestlé's suppliers and will help identify and exclude those that are not doing the right thing.

“And if there are suppliers that want to change the way they operate, our team on the ground will help them to improve their practices in order to comply with Nestlé's purchasing requirements.”

“Game-changer”

Nestlé is said to be the first global consumer goods company to become a TFT member and Poynton described the partnership as a “game-changer”.

Although Nestlé only buys 0.7 per cent of world palm oil production, Nestlé's decision could inspire other companies to follow suit.

Poynton added: “The impact of Nestlé's announcement is huge because the company is so important globally.”

Palm oil is used extensively in food and toiletries, but its production has had a devastating effect on South Asian rainforests, clearing habitats for endangered species such as tigers and orang-utans, while also adding to carbon emissions.

The move towards the use of sustainable palm oil has gathered momentum in the last year, amid mounting pressure from environmental campaigners such as Greenpeace and WWF.

A string of major food manufactures, including Unilever and Kraft, have responded with sustainable palm oil pledges and Nestlé has committed to ensure that by 2015, all of the palm oil it uses comes from sustainable sources.

Suppliers have also found themselves under the spotlight as Unilever, Kraft and Nestlé stopped buying palm oil from Indonesia’s Sinar Mas due to its alleged deforestation practices.

Sourcing guidelines

However, with this latest announcement, Nestle is going one step further. Alongside TFT, Nestlé has laid out its Responsible Sourcing Guidelines, a set of critical requirements to guide the Nestlé procurement process and to ensure compliance with its Supplier Code.

The guidelines state that palm oil purchased by Nestlé will protect peatlands, forest areas of high conservation value and ‘high carbon’ value, be derived from plantations and farms operating in compliance with local laws and regulations as well as support indigenous and local communities.

The partnership will assess how suppliers’ measure up to these guidelines and support those who are committed to achieving sustainability.

Nestlé said its actions will “focus on the systematic identification and exclusion of companies owning or managing high risk plantations or farms linked to deforestation”.

Andy Tait, senior campaign advisor for Greenpeace, said Nestlé’s new policy sent a clear message to companies that if they don't stop deforestation and protect peatlands, their days of supplying to global brands would be over.

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