The British cosmetics chain The Body Shop, that claims to source only sustainable palm oil, has among its main suppliers the Colombian firm Daabon Organics, which in July was part of a consortium that had the courts remove farmers from a ranch 320km north of the capital Bogotá to grow there African palm.

Now the 123 peasant farmers are appealing against the decision, saying that some locals had already applied (under Colombian law) for the right to become owner of the land since they had lived and worked there for more than 10 years before the consortium bought it, The Guardian reports.

“The Body Shop should reconsider its decision to buy palm oil from Daabon in the light of this conflict," said Catherine Bouley of Christian Aid, a British charity which is backing the farmers' legal action. She added: “The Colombian government would like to triple the area under palm cultivation, which will only exacerbate the problem of displacement.”

Solicitors acting for the peasant farmers claim that the consortium should have been aware that the land had been home to families who had been cultivating crops including plantain, maize and squash for more than 10 years. The peasants say they had previously been forced off the land in mid-2006 by paramilitary groups, but had moved back some six months later and made a legal submission to own it for good. Under Colombian law, ownership can be granted to farmers who have occupied abandoned land for more than three years.

The Body Shop, which is the world's second largest cosmetics franchise and has 2,400 stores in 61 countries, was founded by the late Dame Anita Roddick and is now part of L'Oréal group.

Its distinctive eco-friendly image – it was the first British cosmetics chain to introduce refillable bottles – has been preserved by L'Oréal and it continues to campaign for the rights of local producers.

In June 2007, while announcing its deal with Daabon, The Body Shop called on manufacturers and retailers to follow its lead to help slow the drastic environmental and social effects of unsustainable production. “We have changed our entire soap range to be manufactured using palm oil from one of the leading sustainable plantations – Daabon in Colombia”, the chain said in a press release. "We have visited the plantation to ensure the protection and welfare of communities, workers and the surrounding jungle is preserved.

Daabon, a certified organic producer, is a family-run company that was set up in 1914 but has grown substantially over the past five years. It now has 714 office in Colombia and 28 offices in other countries including the US, Germany, Japan, and Australia.

A spokeswoman for Daabon said the company had never been involved in any other land disputes and was seeking to resolve the case through the courts and "community outreach". She said it had no knowledge of any claim by the farmers before it acquired the land and had taken all steps to come to an agreement with them. A spokesman for The Body Shop said that the disputed land has not produced oil for its products.

The demand for palm oil has soared over the past 15 years and it is found in foods such as margarine, crisps and chocolate, as well as in soap, cosmetics and biofuel. But the growth has led to a backlash from environmental groups concerned that forests across the tropics are being cut down to make way for plantations, destroying habitat for endangered species and resulting in the displacement of indigenous populations. Greenpeace adds that the palm oil industry contributes to carbon emissions when producers establish new plantations on peat bogs, which store carbon.