Iceland has pledged to stop using palm oil as an ingredient in its own brand food by the end of 2018, warning that it drives the destruction of rainforests.

The company said it is taking the product out of 130 food lines, which will reduce demand by more than 500 tonnes per year, with palm oil already replaced with alternatives such as sunflower oil and butter in half of them.

Growing demand for palm oil for use in food, toiletries and biofuel has helped fuel widespread deforestation in south-east Asia, prompting industry efforts to promote “sustainable” palm oil which is not environmentally damaging.

But Iceland managing director Richard Walker said the company did not believe there was verifiably sustainable palm oil on the mass market and so was removing it all together.

Iceland pointed to studies which showed palm oil and wood pulp plantations were the biggest driver of deforestation in Indonesia and Malaysia, pushing many species towards extinction.

One study published in the journal Current Biology earlier this year found that half of Bornean orangutans were affected by logging, deforestation, or industrialised plantations, with 100,000 lost between 1999 and 2015.

The loss of rainforests also contributes significantly to the world’s rising greenhouse gas emissions, which cause climate change.

While palm oil is found in more than half of all supermarket products from biscuits and breakfast cereals to soap, 35% of consumers are unaware of what it is, a survey of 5,000 people commissioned by Iceland found.

But once informed about palm oil and its effects on the environment, 85% say they do not believe it should be used in food products.

Walker said: “Until Iceland can guarantee palm oil is not causing rainforest destruction, we are simply saying ‘no to palm oil’.

“We don’t believe there is such a thing as verifiably ‘sustainable’ palm oil available in the mass market, so we are giving consumers a choice for the first time.

“Having recently been to Indonesia and seen the environmental devastation caused by expanding palm oil production first hand, I feel passionately about the importance of raising awareness of this issue – and I know many British consumers share my concern and want to have a real choice about what they buy.

“This journey has shown me that, currently, no major supermarket or food manufacturer can substantiate any claim that the palm oil they use is truly sustainable, as the damage being caused to the global environment and communities in South East Asia is just too extensive.”

Greenpeace UK executive director John Sauven, said Iceland’s move was a direct response to the palm oil industry’s “failure to clean up its act”.

He said: “As global temperatures rise from burning forests, and populations of endangered species continue to dwindle, companies using agricultural commodities like palm oil will come under increasing pressure to clean up their supply chains.

“Many of the biggest consumer companies in the world have promised to end their role in deforestation by 2020.

“Time is running out not just for these household brands but for the wildlife, the climate and everyone who depends on healthy forests for their survival.”