Company: PepsiCo
Palm Oil Supply Chain / IndoFood

PepsiCo Admits Connection to Ongoing Labor Abuse In First Public Statement Following Investigative Report

Burgess COMMENTARY

Peter Burgess

PepsiCo Admits Connection to Ongoing Labor Abuse In First Public Statement Following Investigative Report

Rainforest Action Network calls on PepsiCo to now take real action to address Conflict Palm Oil practices of its joint venture partner Indofood

San Francisco, CA - Today, food and beverage giant PepsiCo released its first public statement in response to a report published in November 2017 which revealed the company’s connection to egregious and ongoing labor abuse in the operations of its business partner. The report documented years-long exploitation on palm oil plantations which are owned and operated by its joint venture partner and producer of PepsiCo-branded foods and beverages in Indonesia, Indofood.

In response to PepsiCo’s statement, Robin Averbeck, Agribusiness Campaign Director for Rainforest Action Network (RAN), issued the following:

“After years of denial, PepsiCo has admitted to the high risks associated with its palm oil supply chain and business partner. Its partnership with Indofood is marred by years of labor violations and other practices that have produced nothing but Conflict Palm Oil for PepsiCo-branded snack foods.

“In a public statement today, PepsiCo revealed it has partially suspended palm oil procurement from IndoAgri, the palm oil subsidiary of its joint venture partner Indofood. At the same time however, PepsiCo continues its business partnership with the parent company Indofood without consequence.

“PepsiCo must be willing to move beyond acknowledging the exploitation and set binding preconditions that Indofood must meet to remain a joint venture partner, starting with addressing labor abuses on its plantations in North Sumatra.

“While other palm oil companies have taken transparent, measurable actions to address labor violations over the past years, Indofood has continued to deny problems exist, increasingly isolating itself as a rogue player in the wider palm oil industry. Indofood must reform its practices and update its outdated palm oil policies to align with ‘No Deforestation, No Peat, No Exploitation’ practices across all group and third-party operations, or risk losing more of its clients and investors.

“PepsiCo must also improve its own palm oil policy to set a clear deadline for achieving the ultimate goal of an independently verified ‘No Deforestation, No Peat, No Exploitation’ palm oil supply chain.

“PepsiCo states that it is seeking resolution to these issues ‘in a way that prioritizes outcomes for the workers and communities that might be affected’ and that it will resolve grievances in alignment with the UN Guiding Principles on Business and Human Rights. PepsiCo can begin to realize these commitments by publicly listing its grievances, what actions have been taken to address them, and setting thresholds for exiting relationships with non-compliant suppliers and business partners like Indofood. Only then will tangible changes for workers, communities and forests in Indofood’s operations be realized.”

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For the full report:

The Human Cost of Conflict Palm Oil Revisited: How PepsiCo, Banks, and the Roundtable on Sustainable Palm Oil Perpetuate Indofood’s Worker Exploitation, Rainforest Action Network, International Labor Rights Forum, OPPUK. November 2017. ran.org/indofood_2107

For PepsiCo’s public response:

“PepsiCo sourcing of palm oil from Indonesia,” PepsiCo. January 2018. https://www.pepsico.com/docs/album/policies-doc/pepsico-palm-oil-indonesia-sourcing.pdf