Showdown among palm oil giants

Leading corporate buyers of palm oil have stopped doing business with the Malaysian company IOI Group, the world’s fourth biggest palm oil trader with 11 per cent of the global market. The reason for the change? IOI was suspended from the industry’s sustainable sourcing body, the Roundtable on Sustainable Palm Oil (RSPO), despite being one of its founding members.

The suspension happened in March 2016 after an investigation found that IOI subsidiaries operating in West Kalimantan had broken RSPO rules to prevent rainforest destruction and social conflict.

Unilever, Nestlé, Mars, Kellogg Company and other powerful consumers of palm oil have announced plans to scale back or cease buying from IOI. Ethical sourcing policies adopted by these companies in recent years gave them little choice but to cut ties with IOI.

In May, IOI raised the stakes by launching legal action against the RSPO in Switzerland. The company said the decision to challenge its suspension had been “difficult and painful” but that it had been unfairly affected by the extent and scope of the RSPO move. 

Weighing in, confectionary giant Mondelez, which uses palm oil in its Cadbury and Milka chocolate products, has called on IOI to quickly abandon its legal challenge and “build relations with (other) stakeholders.”