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Neste Oyj: NGO Campaigns Against It Could Grow As Company Remains Linked To Deforestation

Jun. 22, 2020 7:21 AM ETNeste Oyj (NTOIF), NTOIY1 Comment


  • New data confirms that Neste's palm oil supply chain is still linked to suppliers that are connected to deforestation.
  • NGO campaigns against the company could bring reputation and financial risks.
  • Purchases from companies linked to deforestation contradict Neste's sustainability commitments.

In May 2020, the Finnish consumer good manufacturer Neste Oyj (OTCPK:NTOIF) (OTCPK:NTOIY) (known as Neste) updated its traceability dashboard, which provides data on both Neste’s palm fatty acid distillate (PFAD) suppliers and its Tier 2 suppliers (mills that supply crude palm oil to the PFAD suppliers – see Graphic 1). Despite the company committing to NDPE compliance and ensuring that all suppliers comply with its sustainability policy, Neste’s updated dashboard shows that several deforestation-linked companies are still entering its supply chain.

Given that Neste has been a target of NGOs in the past due to deforestation, campaigns against the company could grow, leaving it vulnerable to reputation and financial risks.

Neste, listed on Helsinki’s stock exchange, is involved in biofuel production and uses palm oil as raw material, especially PFAD. Neste has been a member of the RSPO since 2006 and handles over 1 million metric tonnes (MT) of palm oil and derivatives per year (445,000 MT of crude and refined palm oil, 716,500 MT of other palm-based derivatives). Neste’s palm oil is purchased and processed at its refinery in Singapore, which has a total capacity of 1.3 million MT/year. Capacity will increase to 4.5 million MT/year in 2022. In terms of traceability, Neste sources PFAD from 29 refineries and crude palm oil from 29 palm oil mills.

Graphic 1: Palm fatty acid distillate (PFAD) supply chain

Source: Neste

Neste’s recently published January-December 2019 supplier list shows it buys from PT Bina Karya Prima. Through PT Bina Karya Prima, Neste is receiving palm oil from both Indofood and Sawit Sumbermas Sarana. CRR has extensively covered both Indofood and Sawit Sumbermas Sarana due to persistent violations of NDPE policies. Violations include deforestation on their plantations, accusations of side businesses and shadow companies to obscure

This article was written by

Chain Reaction Research is a coalition of Aidenvironment, Climate Advisers, and Profundo funded by the public-sector to describe the material financial risks facing institutional investors from deforestation associated with agriculture commodities such as palm oil, soy, cattle, cacao, coffee, and pulp and paper. Chain Reaction Research's financial analysis is distributed globally free-of-charge to analysts and institutional investors to inform them of the material financial risks they face associated with deforestation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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