Palm-oil Credit Markus MautheGreenpeace

Over 10,000 hectares of peat forest in Borneo’s Sintang district had been cleared over the past five years by two palm oil plantations, says new report. Photo: Markus Mauthe/Greenpeace

PepsiCo and Nestlé have come under pressure after large-scale rainforest clearance for palm oil production in Borneo was linked to their joint venture partner Indofood.

An explosive new report published by the Rainforest Action Network (RAN) this week claimed over 10,000 hectares of peat forest in Borneo’s Sintang district had been cleared over the past five years by two palm oil plantations, in defiance of new regulations imposed by the government, which had essentially issued a “stop work order” while it mapped out conservation areas.

Over 97% of the cleared area was subsequently marked as conservation peatland prioritised for protection on maps completed by the Indonesian Peat Restoration Agency (BRG).

The report claimed both plantations responsible for the deforestation were “controlled by or associated with” Anthoni Salim, the head of Indonesian conglomerate The Salim Group, which also owns Indofood.

Although RAN did not suggest PepsiCo or Nestlé had sourced any palm oil from the two plantations, it argued they were “complicit” in the deforestation for continuing to do business with the Salim group despite “years of exposés”. It wanted the fmcg giants to “take the action needed to convince Salim as the owner and head of the conglomerate to change his practices,” said Gemma Tillack, forest policy director with RAN.

PepsiCo recently suspended palm oil sourcing from IndoAgri, another subsidiary of the group, amid concerns over workers rights and forestry stewardship. However, it had “neglected to address the fact it still has a business relationship with a high risk company”, Tillack said.

The two mills closest to the cleared areas in Borneo were among those on PepsiCo’s recently published lists of suppliers, putting it at risk of “sourcing from these companies as they become productive”, she added.

However, PepsiCo stressed it remained committed to its goal of sourcing 100% sustainable palm oil with no development on peatland and was working”vigorously”

“Our sustainable palm oil policy applies to our joint venture operations and across our entire supply chain,” said a spokesman. “Any non-compliances found are dealt with swiftly, and suggestions to the contrary are false. This report covers palm fruit that has not entered the supply chain, but all new information helps us to enforce our policies.”

Nestlé said it had taken over the sourcing of palm oil for products manufactured under its joint venture with Indofood to ensure it met its ambition for all oil in its supply chain to be fully traceable back to responsibly managed plantations that complied with High Conservation Value (HCV), High Carbon Stock (HCS) and Free, Prior and Informed Consent (FPIC) standards.

“The transition started in January 2017 and we are pleased to share that this work has been completed,” said a Nestlé spokeswoman.”For the palm oil that Indofood procures itself, independently of Nestlé, we continue to share best practices with the company in order to contribute to wider industry knowledge sharing and transformation.”

The Salim Group did not respond to requests for comment.