The owner of brands including Dove, Persil and Flora said that it aims to have all of its palm oil certified by 2015.
The announcement follows protests across Europe last month, when Greenpeace activists dressed as orang-utans demonstrated against the sourcing of Unilever's palm oil, an ingredient in food and soaps.
The protest aimed to highlight the destruction of the Indonesian rainforest, one of the last remaining habitats of the orang-utan.
Greenpeace also targeted the offices of Unilever's marketing services agencies including the ad agency Ogilvy Advertising and public relations specialists Jackie Cooper and Lexus PR.
The lobby group urged staff at the agencies to put pressure on Unilever to change the behaviour of its palm oil suppliers.
The action coincided with the release of a new Greenpeace report entitled 'How Unilever palm oil suppliers are burning up Borneo'.
Greenpeace claims that Unilever buys around 1.3m tonnes of palm oil a year, making it the largest corporate consumer of the product in the world.
Unilever said that it started working on sustainable palm oil 10 years ago by developing its own guidelines with growers and suppliers, leading to an industry consensus on criteria for sustainable cultivation.
Patrick Cescau, chief executive of Unilever, said: "Now we need to take the next step. Suppliers need to move to meet the criteria, by getting certified both the palm oil from their own plantations and the palm oil they buy from elsewhere.
"We also intend to support the call for an immediate moratorium on any further deforestation in Indonesia for palm oil."
John Sauven, Greenpeace UK director, said "Unilever's commitment to sourcing sustainable palm oil will be meaningless unless its suppliers stop trashing Indonesia's rainforests -- this is why the moratorium is so important. Every day that Unilever keeps buying palm oil from these suppliers, orang-utans are pushed closer to extinction."
Pic: Cobb/Greenpeace