Fonterra's move to clean up its use of palm kernel expeller (PKE) is a good first step, but the dairy giant must stop using it as soon as possible, says Greenpeace.
Fonterra announced on Friday it has adopted a new standard for sourcing of palm products as part of its commitment to sustainability.
The standard was developed in consultation with key supply partners, and it follows discussions with Greenpeace that began in December 2015.
"The new standard requires us to purchase only segregated supply palm oil by 2018, and to work with suppliers of palm products to ensure that plans are in place for full traceability to plantation by 2018," says Fonterra's director of social responsibility, Carolyn Mortland.
PKE is a by-product of the palm oil industry, which is the leading cause of rainforest destruction in Indonesia. Greenpeace has been campaigning for seven years to stop its use in New Zealand.
Greenpeace forests adviser Grant Rosoman said he looks forward to a full phase out of use by Fonterra.
New Zealand is currently the largest importer of PKE, using about a quarter of the world's supply each year as supplementary feed for livestock. On some farms, it's believed to make up nearly 50 percent of cows' diets, he said.
"Fonterra has bowed to public pressure and taken an important first step. This is a win for the rainforests and a win for better dairying in New Zealand, because PKE's been a big part of the intensive dairy model that has failed our rivers, land, climate and farmers.
"We now look forward to Fonterra moving towards a full phase out," said Mr Rosoman.
Earlier this month state-owned enterprise Landcorp said it will stop using PKE and transition to alternative feed supplements from June next year.
Landcorp manages 140 farms across New Zealand, making it the country's largest corporate farmer.