Palm Oil

PepsiCo has stopped sourcing palm oil from its joint venture partner Indofood amid ongoing concerns over workers’ rights and forestry stewardship.

The food giant confirmed this week it had put a complete stop on all sourcing from Indofood’s palm oil supplier arm IndoAgri, which has been accused of labour rights abuse and deforestation.

PepsiCo announced in January 2018 it had stopped directly sourcing palm oil from IndoAgri for IndoFood Fritolay Makamur (IFL), its joint venture with IndoFood that produces snacks in Indonesia under the Lays brand.

It has now confirmed it has also suspended all indirect sourcing via third party suppliers from the company, which is still awaiting a decision on its certification with the Roundtable on Sustainable Palm Oil (RSPO) following a complaint by several environmental and workers rights groups in 2016.

“While we note developments in the RSPO complaints process, PepsiCo remains concerned that the complaint against IndoAgri continues to be unresolved, and we have not seen sufficient evidence of progress from IndoAgri in addressing the issues raised,” said a PepsiCo spokeswoman.

“Due to this, we’ve engaged with our direct suppliers over the last few months to ensure that they suspend any sourcing of palm oil from IndoAgri. We will review this decision on a regular basis, taking into consideration additional developments in the RSPO complaint process and actions taken by IndoAgri. Our Indonesian joint venture, IndoFood Fritolay Makamur, suspended procurement of palm oil from IndoAgri in January 2017.”

Strong move

The “strong move” from PepsiCo was welcomed by the Rainforest Action Network, which raised the RSPO complaint against IndoAgri alongside the International Labor Rights Forum and Indonesian labour rights organisation OPPUK after a publishing a report detailing allegations of labour rights abuse in June 2016.

However, campaigners want PepsiCo to go further and cut all ties with Indofood. More than 127,000 people signed a SumOfUs petition calling for outgoing CEO Indra Nooyi to terminate PepsiCo’s partnership with the Indonesian company before she stepped down.

IndoAgri has strongly denied the allegations of labour issues at its palm oil plantations. “No substantive facts, evidence or supporting documents have been provided to us to support these allegations,” it said in June. “IndoAgri has reiterated the request for substantive evidence to support these allegations on multiple occasions, but nothing beyond the initial report has been provided.”

The palm oil supplier insisted it had “complied fully “with the RSPO complaints procedure, which has included an independent investigation at its sites and stressed its “plantations remain certified under RSPO”.

The Grocer understands the RSPO is set to announce the findings of the investigation and its final decision on the complaint imminently.