Kellogg says it will buy palm oil only from companies that don't destroy tropical rainforests to produce the additive used in many processed foods.
The cereal giant responded to a campaign by environmental groups that have long pressured the food industry to shun palm oil from plantations that displace rainforests in Southeast Asian nations, primarily Indonesia.
The forests are home to endangered species such as the orangutan and Sumatran tiger. Palm oil cultivation has wiped out more than 30,000 square miles of rainforests in Indonesia and Malaysia alone, say leaders of a campaign to reform the practice.
Battle Creek-based Kellogg announced last week it would require its suppliers to trace their palm oil to plantations that have been verified independently as complying with the law and meeting standards for protecting the environment and human rights. The policy also applies to processors and growers, said Diane Holdorf, Kellogg's chief sustainability officer.
"We must ensure they are all producing palm oil in a way that's environmentally responsible, socially beneficial, and economically viable," Holdorf said on Tuesday.
Palm oil is a minor ingredient in Kellogg products such as Pop-Tarts, cookies and waffles, although most of its cereals don't contain it, she said.
The announcement drew praise from environmental groups, which staged a rally at Kellogg's headquarters in November and met with company representatives. They described the new policy, which requires compliance or substantial progress by December 31, 2015, as the industry's toughest.
"Kellogg is sending a strong message to palm oil producers that traceable, deforestation-free and exploitation-free palm oil are core conditions for global market access," said Deborah Lapidus, campaign director for a group called Catapult.
Palm oil generates US$50 billion ($60 billion) annually and is used in roughly half of all packaged foods, according to Green Century Capital Management, which last year filed a shareholder proposal urging Kellogg to insist on deforestation-free oil. The investment company says US imports have jumped almost five times in the past decade.
Environmental groups also credited Kellogg with influencing joint venture partner Wilmar International, the world's biggest palm oil trading company, to overhaul its policies.
Wilmar announced in December its plantations and suppliers would protect forests with high conservation values, prohibit using fire to clear land and ban development on peatlands.
- Fairfax Media