It was the second embarrassing blow to Sinar Mas in three months after Anglo-Dutch company Unilever in December severed ties with it in response to Greenpeace claims it is destroying rainforests.
Greenpeace activists held protests Wednesday at Nestle's headquarters and factories in Britain, Germany and the Netherlands, linking the company's signature Kit Kat confectionary to the destruction of orangutan habitats.
"Considering its size and influence, it should be setting an example for the industry and ensuring its palm oil is destruction free," Greenpeace said in a statement.
"Instead, Nestle continues to buy from companies, like Sinar Mas, that are destroying Indonesia's rainforests and peatlands."
Rampant deforestation in Indonesia makes it one of the biggest emitters of greenhouse gases in the world and threatens habitats of endangered species like orangutans, tigers and rhinos.
Nestle responded immediately to the protests, saying it had dropped Sinar Mas as a supplier and repeating its commitment to using only Certified Sustainable Palm Oil by 2015, "when sufficient quantities should be available".
"Nestle has replaced the Indonesian company Sinar Mas as a supplier of palm oil with another supplier for further shipments," it said.
"We confirm that Nestle has only bought from Sinar Mas for manufacturing in Indonesia, and no palm oil bought from Sinar Mas has been used by Nestle for manufacturing in any other country."
Sinar Mas Agro Resources and Technology (SMART) president director Daud Dharsono denied that its palm oil plantations were damaging the environment.
"We are committed to applying responsible land clearing and best practices in our plantations. We've been implementing best practices since the early 1980s," he told AFP.
"We're ready to have a dialogue with Greenpeace to clarify their report. However, we haven't received any official notification from Nestle that it has dropped us as their supplier of palm oil," he added.
Source: AFP
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