Fonterra is holding to its view that most of the palm kernel imported by its subsidiary RD1 as a supplementary feed for dairy cows is sustainably produced.
The dairy co-operative has been under pressure from Greenpeace to stop imports of palm kernel expeller (PKE) because it says the trade is contributing to the clearance of rainforest for palm oil plantations in countries such as Malaysia and Indonesia.
In the latest development, Greenpeace says the World Bank has suspended funding to all palm oil producers while it investigates environmental and social concerns about the industry.
Greenpeace climate campaigner Simon Boxer says that investigation includes the world's largest trader of palm oils and kernel, Wilmer, which has a joint venture with RD1.
He says most of the PKE coming into New Zealand is unsustainable by any criteria.
However, in a written response, RD1 chief executive John Lea says Fonterra checked Wilmar's environmental performance before deciding to buy PKE from it.
He says all Wilmar's new plantings have been in compliance with the Roundtable on Sustainable Oil Production's protocols and guidelines.
These are now coming into viable commercial production, providing stock for the company's three Malaysian mills that have been certified for sustainability and which are the main source of RD1's stocks of PKE.
Mr Lea says the president of the World Bank, Robert Zoellick, has also stated that due diligence checks on a number of Wilmar's plantations concluded that these operations were being managed in the spirit of the draft principles of the Roundtable.
However, Mr Boxer says the total production of PKE at Wilmer's three Malaysian mills amounts to only about 15,000 tonnes, which doesn't account for the 1.5 million tonnes imported into New Zealand in the past year.