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palm oil users in the dark on origins

February 2004

Most companies using palm oil in their products do not appear to know whether it comes from sustainable sources, according to the UK investment company Isis Asset Management.

An investigation by the investment house found that of 27 palm oil purchasing companies in which it invests, just over three-quarters appeared unaware of its source, even though many had strict policies on quality, health and the environment. Some did not even know the country of origin.

The exceptions included The Body Shop, Cadbury Schweppes, Compass Group, Marks & Spencer and Unilever.

Some activist groups have raised questions about the production of palm oil, which is used in products as diverse as mayonnaise, ice cream, laundry detergent, sunblock and lipstick. They claim oil palm cultivation causes environmental damage and destroys rainforests, particularly in Indonesia.

Robert Barrington, governance and SRI director at Isis, said he was ‘surprised and concerned about the levels of ignorance’, especially as pressure groups are threatening to challenge companies on how they source the raw ingredient.

He warned: ‘This is a blind spot that has important implications for companies … which could be targets of activists or consumer pressure in the future.’

Isis says all companies using large quantities of palm oil should monitor how they source the ingredient and ensure producers have policies in place to safeguard future supplies.

Palm oil is the most widely traded edible oil in the world, with about 23 million tonnes sold every year.




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