JAKARTA — More than a decade after the palm oil industry embraced a pledge to not deforest, clear tropical peatlands, or use exploitative practices, policies to that end now cover most of the global palm oil trade, as major traders, refiners and consumer brands have pledged to keep deforestation-linked palm oil out of their supply chains.
However, deforestation linked to palm oil continues, particularly in Indonesia, the world’s largest producer of the commodity.
Satellite analysis by forest-mapping initiative TheTreeMap shows 31,073 hectares (76,783 acres) of forest were cleared for palm oil in Indonesia in 2025, slightly higher than the 30,956 hectares (76,494 acres) recorded in 2024 — highlighting persistent gaps in how the industry enforces its zero-deforestation pledges.
In some cases, palm oil from newly cleared land still enters supply chains that companies describe as deforestation-free.
“No Deforestation, No Peat, No Exploitation” (NDPE) policies aim to eliminate three major sources of harm in palm oil production: clearing natural forests, developing plantations on carbon-rich peatlands, and exploiting workers or local communities. By 2020, these commitments covered roughly 83% of palm oil refinery capacity in Indonesia and Malaysia, the world’s main producing region.
In recent years, companies have also built systems to enforce these pledges. Many now publish grievance mechanisms where violations can be reported, while third-party monitoring groups use satellite imagery to track forest loss and flag suspicious activity.
Large-scale corporate deforestation in Indonesia has fallen compared to the mid-2010s, when some plantation companies were clearing vast areas of rainforest.
Yet TheTreeMap data show deforestation linked to palm oil has not disappeared. This happened even as plantation expansion slowed: the total area covered by plantations expanded by 101,120 hectares (249,873 acres) in 2025, an 18% drop from the previous year.
Campaigners say the persistence of deforestation reflects how the problem has shifted. Instead of large-scale clearing by major plantation groups, forest loss increasingly occurs through three structural gaps in the system: incomplete traceability, corporate ownership loopholes, and NDPE policies that apply only to palm oil and not to other deforestation-linked commodities.
“Whilst overall the level of deforestation for palm has reduced in the last 10 years, I think it’s reduced mainly at the large-scale cases,” said Phil Aikman, campaign manager at U.S.-based environmental advocacy group Mighty Earth.
An analysis by investor research firm Sustainalytics, which looked at 17 key companies sourcing palm oil, including four of the largest palm oil traders in the agriculture industry, found that 69% have traceability programs covering both direct and indirect suppliers.
These companies also publicly disclose the locations of their suppliers to at least to the mill level.
However, traceability remains one of the biggest obstacles to deforestation-free commodity supply chains, according to a recent report by consultancy AidEnvironment.
The report says complex supply chains, large numbers of smallholder farmers, and multiple intermediaries often prevent companies from tracing products back to individual farms.
Palm oil mills process fruit from many suppliers. A large share of the palm fruit they receive doesn’t come from company-owned estates but from independent farmers, cooperatives and third-party companies. These suppliers often sell through brokers or village collectors who combine fruit from multiple farms before delivering it to mills. While mills typically record the names of these intermediaries, they frequently lack detailed information about the farms where the fruit was grown.
That makes it difficult to verify whether the fruit came from land cleared in violation of NDPE commitments.
The fragmented nature of Indonesia’s smallholder sector adds to the challenge. Independent farmers account for roughly 40% of the country’s palm oil production, and many operate outside formal traceability systems.
Fruit harvested in different villages can be pooled together before reaching a mill. Once mixed, it becomes difficult to determine the origin of individual batches — meaning fruit grown on newly deforested land can enter the supply chain alongside fruit from NDPE-compliant farms.
“There are a lot of these mills in Indonesia that are receiving fresh fruit bunches from companies that are still involved in deforestation or even smallholders,” Aikman said. “The problem is that these mills are not really being checked by traders and brands who source from them, and thus this becomes a leakage point.”
The palm fruit must usually be processed within about 24 hours of harvest, but within that window it can still travel more than 100 kilometers (60 miles) to reach a mill. This allows fruit grown outside a company’s monitored supply base — including from recently cleared plantations — to enter mills supplying major traders and consumer brands.
