Nestle can no longer claim to use certified sustainable palm oil in its chocolates and other products, after being suspended by the group responsible for certification.
But Greenpeace says the ban is too little, too late, and has only been imposed for monetary purposes.
The Roundtable on Sustainable Palm Oil (RSPO), which has come under repeated criticism for being too soft on member companies, suspended Nestle after "breaches of the RSPO statutes and code of conduct for members".
Many chocolate products including Nestle's KitKats contain palm oil.
The RSPO was set up by environment groups and industry partners in 2004, to help curb destructive practices by palm oil growers, including the bulldozing of huge swathes of rainforest.

Due in part to a controversial Greenpeace ad campaign in 2010 which portrayed an office worker biting into an orangutan finger instead of a KitKat, Nestle made a "commitment on no deforestation".
The commitment included helping to achieve zero-net deforestation by 2020.
A statement from Nestle in 2014 claimed the company was only using "segregated, certified-sustainable palm oil in its Australian chocolate factory".
But late last year a spokesperson for the Rainforest Action Network (RAN) accused a number of companies of "deceiving" their consumers over palm oil.
"Nestle, Mars and Hershey have cherry-picked their [palm oil] targets and then moved the goalposts when they don't achieve them," RAN's Laurel Sutherlin told the Guardian.
But in a statement to the ABC today, Nestle spokesperson Margaret Stuart said Nestle remained committed to "improving the social and environmental performance of the palm oil sector".
"Nestle is committed to achieving traceability to plantations and to improving supply chain practices through intervention on the ground, rather than relying on audits or certificates," Ms Stuart said via email.
"The suspension does not affect the sustainable sourcing of any of our ingredients containing palm oil: we are still buying the same ingredients from the same suppliers."

'RSPO cares more about profit than protecting forests'

The RSPO said Nestle's suspension was due to the company's failure to submit a progress report for 2016, and for submitting an incomplete report for 2017.
"Nestle was given the opportunity to complete its report for 2017 through active engagement, and has declined to submit a time-bound plan," the statement said.
"We would like to also notify that Nestle has an unpaid overdue membership fee of 2,000 Euros."
Although Greenpeace has previously condemned Nestle for its use of palm oil, Greenpeace South-East Asia forest campaigner Bagus Kusuma called into question the motives behind the RSPO suspension.
According to Mr Kusuma, the RSPO's own board members have breached its code of conduct without being suspended.
"Greenpeace has raised at least five cases of RSPO members destroying rainforest with the RSPO in the past year, including deforestation by members of the RSPO's board of governors and its complaints panel," Mr Kusuma said in a statement.
Responding to questions from the ABC earlier this month regarding research that called into question the effectiveness of RSPO certification, spokesperson Stefano Savi said there have been a number of instances where members have been suspended.
"Members are suspended or terminated, for example, when they recurrently fail to submit their annual communication on progress," he said.
Although a few members have been expelled from the organisation, Mr Savi said this was an undesirable outcome.
"RSPO does not consider termination of a membership as a positive solution as it means ceasing the opportunity to engage with a company to improve their practices," he said.
Despite the bad reputation palm oil has, many companies using the product are serious about improving the industry, according to Associate Professor John McCarthy from the ANU's resources environment and development program.
"There are a lot of companies that would like to have a cleaner and much more sustainable industry," he said.
"It's in the interest of these big companies to be in RSPO and it's about brand management. They want a clean brand. It's highly embarrassing for them."