*

RAN report shows deforestation in Indonesia's Rawa Singkil

Wildlife Reserve

*

Nestle and P&G investigate and suspend sourcing from

implicated

suppliers

*

Indonesia claims reduced deforestation rate, but RAN

reports

surge in protected areas

(Update with details from Apical in paragraph 15)

By Bernadette Christina

JAKARTA, Nov 11 (Reuters) - Consumer brands including

Nestle and Procter & Gamble ( PG ) said they conducted investigations

after an environmental group said palm oil sourced from an

illegally cleared wildlife reserve in Indonesia may have found

its way into their supply chains.

Rainforests within the legally protected wildlife reserve

had been cleared to make way for palm oil plantations during the

last eight years, the U.S.-based Rainforest Action Network (RAN)

said, citing satellite images that it says reveal deforestation

in the area.

The group shared images which it said showed stretches of

cleared brown land cut into the lush green expanse of

Indonesia's Rawa Singkil Wildlife Reserve, with rows of young

palm trees now planted along its borders.

Some images, which RAN said were taken during a field

investigation in February 2024, showed that oil palm seedlings

were planted on burnt ground surrounded by fallen trees inside

the reserve, according to the report published on Monday.

The wildlife reserve, located in Aceh province in the

northwest of Indonesia's Sumatra island, has lost 2,609 hectares

(6,447 acres) of forest since 2016, with palm trees now growing

on 645 hectares of the cleared area, RAN said.

Reuters could not independently confirm those findings.

Indonesia's forestry ministry did not respond to a request

for comment.

ILLEGAL PLANTATIONS

RAN said its investigation, conducted in September and

October, had found fresh fruit bunches from the illegal

plantations were sold to mills PT Global Sawit Semesta (GSS) and

PT Aceh Trumon Anugerah Kita (ATAK), both of which supplied

major brands including Procter & Gamble ( PG ), Nestlé, Mondelez ( MDLZ ) and

PepsiCo ( PEP ), according to the RAN report.

GSS and ATAK, which are located in remote areas, could not

be reached by Reuters for comment.

Companies typically source palm oil from Indonesian mills

through intermediaries.

A Nestle spokesperson said it promptly engaged with its

direct supplier regarding GSS to investigate RAN's findings,

adding that, by the end of 2023, 96% of its palm oil supply was

"deforestation-free".

"Should there be a need to find remedies, we will take

necessary action," the spokesperson said.

Procter & Gamble ( PG ) told Reuters that it had conducted an

investigation following RAN's findings and immediately suspended

sourcing from both GSS and ATAK.

Singapore-based Royal Golden Eagle Group (RGE), Musim Mas

and Indonesian firm Permata Hijau also sourced palm oil from

GSS, RAN said.

Apical, an RGE unit, said the firm has engaged with GSS to

look into a supplier who allegedly sourced illegal fresh fruit

bunches from the reserve. GSS has suspended the said supplier

since late October until investigations are concluded, Apical

said.

Musim Mas said they were investigating RAN's findings.

Permata Hijau, Mondelez ( MDLZ ) and Pepsi did not respond to multiple

emailed requests for comment.

'ORANGUTAN CAPITAL'

Indonesia, home to the world's third largest tropical

rainforest, says it reduced its deforestation rate to under

140,000 hectares annually between 2020 and 2023, down from more

than 400,000 hectares in 2016-2020.

However, RAN said its investigation showed that

deforestation within the wildlife reserve - the country's only

forest where endangered orangutans, tigers, elephants and rhinos

coexist - surged fourfold in 2021-2023 compared with the

previous period, despite laws banning deforestation.

"The high-resolution imagery and analysis definitively show

that the palm oil mills, traders, and global brands sourcing

from this area have failed to end deforestation for palm oil in

the 'Orangutan Capital of the World'," RAN said in its report.

Green groups have frequently accused palm oil producers of

illegally clearing rainforests, including protected areas and

wildlife reserves, to expand their plantations.

Global palm oil production has expanded over the past

decade, accounting for 60% of world vegetable oil exports.

Mainly produced in Indonesia and Malaysia, palm oil is used as a

cooking oil and in products including biofuels, chocolates and

cosmetics.