1 April 2010 | Helen Gilbert

Finnish oil marketing and refining company Neste Oil is demanding an investigation into palm oil supplier IOI Group over allegations the Malaysian firm illegally cleared forests and encroached protected peat lands in Borneo.

It follows a report by Milieudefensie, the Dutch arm of Friends of the Earth, which claims IOI is responsible for illegal deforestation, invading protected peat lands and land-grabbing at the expense of local rice farmers in the Indonesian province of West Kalimantan. IOI criticised the robustness of the research and said no land conflicts have occurred.

In a statement, Neste said it “always takes seriously claims against its own operations or those in its supply chain”, adding that it had asked IOI to give a review on the claims, which it expected to receive shortly.

“Neste Oil does not accept any illegal actions or practices that are in contradiction with the rules of the Roundtable on Sustainable Palm Oil (RSPO),” the statement said.

It said it controls its supply chain through its own audits and audits commissioned from third parties. “These procedures are our standard practice and they are included in all of Neste Oil’s supplier contracts. Whenever any non-compliance to agreed procedures is found, Neste Oil requests a plan for corrective actions,” the statement added.

Adrian Bebb, food and agriculture campaign coordinator for Friends of the Earth, said: “Illegal deforestation, land-grabbing and the breach of environmental laws are the reality behind Europe’s palm oil use.

“Europe’s biofuel target and palm-oil obsession are driving this destruction, and companies like IOI Group, which promote themselves as green and responsible, are putting profit before both people and the planet, sacrificing forests for Europe’s food and fuel.”

However, parent company the IOI Corporation said a thorough investigation had been made into the allegations. These established that Milieudefensie’s field research had been “highly selective and limited, and that several incidents on which allegations were based were incorrectly reported,” it said.

In a statement, IOI added: “The investigation also concluded that no land conflicts have occurred, nor have any laws or RSPO regulations been violated. IOI Corporation is also not involved in any open burning activities and, as part of its zero-burning policy, is monitoring and preventing third-party burning activities on its concessions. A clear action list and timeline has been set by IOI to address the remaining points raised by Milieudefensie.”