Golden Agri-Resources Ltd. (E5H.SG) said Thursday Nestle S.A. (NESN.VX) has resumed buying palm oil from its Indonesian unit after the supplier made progress to comply with the Swiss food company's sourcing guidelines.

Nestle, which stopped sourcing palm oil from PT Sinar Mas Agro Resources & Technology Tbk (SMAR.JK) in 2010 due to alleged draining of peat lands and violations of environmental laws, said the decision was based on assessments that Golden Agri was making "continuous progress" in meeting Nestle's "responsible sourcing guidelines."

However, "further business with (Golden Agri) will depend on the company delivering continuous progress towards meeting the (responsible sourcing guidelines) and (Roundtable on Sustainable Palm Oil) certification," a Nestle spokeswoman said in response to a Dow Jones query.

The Swiss firm has been engaging non-governmental organization The Forest Trust to assess compliance in plantations run by the world's second biggest producer of the edible fat.

"These assessments show that the company is making continuous progress, and demonstrating clear action to deliver against the Nestle (guidelines)," the spokeswoman said.

Nestle had also noted Golden Agri's efforts implementing a forest conservation policy and its attaining of RSPO membership, she added.

Global food giants, including Nestle, Unilever and Burger King, had stopped buying palm oil from Golden Agri in the last two years citing environmentally unfriendly practices.

Unilever executives didn't immediately respond to an emailed request for a comment on whether the company is planning to resume purchases from Golden Agri.

In a statement filed to the Singapore Exchange, Golden Agri said its PT SMART unit took action starting in late 2010 to comply with Nestle's guidelines, including implementing processes and supply chain controls to ensure "full traceability" of the delivered oil.

Golden Agri also said it has been working with TFT on implementing a forest conservation policy to ensure its has no deforestation footprint, and attain long-term sustainable growth.

-By Chun Han Wong and Gaurav Raghuvanshi, Dow Jones Newswires; +65 64154 160; chunhan.wong@dowjones.com