Creating a sustainable palm oil industry that distances itself from harmful human rights breaches, damaging environmental impacts like contributing to deforestation and other illegal practices such as land grabbing are once again in the spotlight as key players pull out of deals with Astra Agro Lestari (AAL).

Food companies are scrutinizing the origins of their palm oil supplies as the second largest palm oil plantation in Indonesia, AAL, has been accused by environmental group Friends of the Earth of illegal land grabbing and harming local waterways and forests. 

FrieslandCampina conducted its own investigation on AAL practices and its findings led the company to halt sourcing materials from them. 

“Responsible purchasing with respect for the environment, biodiversity and human rights is important to us. In October 2022 we received critical questions from an NGO. This motivated us to conduct further investigation. based on the findings, we asked our supplier to no longer source materials from this plantation,” a FrieslandCampina spokesperson tells FoodIngredienstFirst.

FrieslandCampina’s move to pull out comes on the heels of Nestlé’s recent decision to stop sourcing from the three subsidiaries of AAL accused of land abuses. The Swiss food giant made the decision following an independent assessment. 

Other companies that have cut ties with AAL include Hershey, Procter & Gamble and Colgate.

“We applaud FrieslandCampina’s decision to suspend AAL from all its direct palm oil suppliers, as well as its demand for other suppliers to stop sourcing from AAL,” says Wouter Kolk, campaign leader at Friends of the Earth Netherlands. 

The hit to one of Indonesia’s largest palm oil suppliers comes as the EU is finalizing a law that will cut deforestation globally by not allowing the import of products from at-risk areas. In January, the EU environment committee cleared the path for a momentous vote on the issue.

“Rogue” palm oil company 
Arta Siagian, forest and plantation campaigner at Friends of the Earth Indonesian Forum for Environment (WALHI) says that “these suspensions prove that AAL’s destructive practices aren’t going unnoticed.”

Friends of the Earth underscores that some food giants still engage with AAL. 

“It’s unacceptable for the world’s leading brands to pay lip service to sustainability while continuing to source conflict palm oil from AAL and other destructive suppliers,” says Gaurav Madan, senior forests and lands campaigner at Friends of the Earth US.

“Consumer goods companies continue to make billions of dollars of profits while sourcing from palm oil companies that terrorize farmers and communities. They must use their global platforms and brand recognition to demand AAL remedy the harm it’s done,” adds Sigian.

Palm oil headwinds
Concerns about palm oil sustainability have been heating up in the last months as the EU moves toward approving its deforestation regulation.

This has forced Indonesia and Malaysia, the two largest palm oil exporters, to join forces to secure palm oil exports. Last month, the two countries decided to send a joint trade mission to the EU to give the bloc their view on the new deforestation regulation.

Both countries have been actively seeking other trade partners in the US, China, India and Pakistan.

Globally, international palm oil prices have continued to dro and are at its lowest level since the beginning of 2021, according to the UN Food and Agriculture Organization (FAO). In its last food commodity prices updat for February, the UN body noted that the global demand for palm oil is “lingering sluggish” despite seasonally lower production from major growing regions. 

Sustainable palm oil
Europe is the leading global region regarding products launched with sustainable palm oil claims. According to Innova Market Insights, Western Europe accounted for 53.9% of all global launches with the claim between April 2020 and March 2021.

The search for sustainability has decreased the importance of the EU as an importer country in recent years. According to the European Commission, the EU share of Malaysian palm oil has fallen by 40% in the last seven years, declining 10% last year – with Indonesian imports also falling 14%. 

Some companies have decided to seek alternatives to palm oil through reformulation or turning to solutions like precision fermentation.

Cultivated fats are also emerging as an alternative to vegetable oil use. 

Meanwhile, NoPalm Ingredients in Wageningen, the Netherlands, is producing an upcycling alternative to palm oil.