Press Releases

February 15, 2017

PepsiCo Still Linked to Conflict and Exploitation Despite New Palm Oil Policy from Partner Indofood

International NGOs criticize “corporate window dressing,” call for revisions and real action to address worker exploitation, land rights conflicts and deforestation in Indofood's global operations.

FOR IMMEDIATE RELEASE

CONTACT: Emma Rae Lierley, Emma@ran.org, +1 425.281.1989

San Francisco - Today, Rainforest Action Network (RAN), International Labor Rights Forum (ILRF), and Indonesian labor rights advocacy organization OPPUK are criticizing a new “Sustainable Palm Oil Policy” issued by IndoAgri, a subsidiary of Indonesian food giant Indofood, which is a major partner of PepsiCo. IndoAgri, and its parent company Indofood, have come under fire in the last year, as evidence of child labor and worker exploitation were uncovered on its plantations in North Sumatra, Indonesia.

The release of a sound palm oil policy is seen as the first step IndoAgri can take to remedy the conflict, but the NGOs are citing major flaws in the palm oil company’s newly released policy that mark it as a failed attempt to adequately address the documented abuses in IndoAgri’s operations. Loopholes in the current policy will lead to deforestation, massive climate emissions and human rights violations––leaving the reputation of its business partner PepsiCo in question on the same day as PepsiCo announces strong quarterly profits to its investors.

“This type of corporate window dressing will not fool IndoAgri’s customers, financiers or the NGOs that are committed to holding the company accountable for its impact on workers, communities and our environment,”  said Robin Averbeck, senior campaigner with Rainforest Action Network (RAN).

In late 2016, PepsiCo, Nestle, and Wilmar were called out as Indofood joint venture partners in the report, “The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia,” which exposed the documented cases of child labor and worker exploitation on its operations in North Sumatra, Indonesia.

“Workers on IndoAgri plantations continue to suffer a multitude of labor abuses, including toiling under an unfair wage system where workers must reach high targets to earn low wages. This system creates a class of invisible workers who have no benefits and earn poverty wages. IndoAgri needs to take transparent and immediate actions to address the documented exploitation of its workers on its palm oil plantations in Indonesia,” said Herwin Nasution, Executive Director of Indonesian labor organization OPPUK.

“A critical flaw in the new policy is IndoAgri’s failure to adopt a credible grievance mechanism which aligns with international standards set out in the UN Guiding Principles on Business and Human Rights,” stated Eric Gottwald, Senior Legal and Policy Director at International Labor Rights Forum (ILRF). “Instead, IndoAgri has made only a vague commitment that will allow it to pick and choose with grievances it will address.”

This policy is seen as the latest effort by IndoAgri to silence its critics after a formal complaint was lodged that called for the suspension of two of Indofood’s palm oil plantation subsidiaries––PT. PP London Sumatra Indonesia Tbk. (Lonsum) and PT. Salim Ivomas Pratama Tbk. (Salim Ivomas)––from the Roundtable on Sustainable Palm Oil (RSPO) for egregious labor rights abuses that violate the certification systems standards and Indonesian law. Neither IndoAgri, nor IndoFood, have yet to acknowledge or address the documented violations.

“This policy signals a dressed up ‘business-as-usual’ approach for IndoAgri and its partner PepsiCo, who will continue to profit at the expense of Indonesia’s rainforests and the rights of its people,” said RAN’s Averbeck. “PepsiCo may be signalling high earnings to its investors today but its connection to human rights abuse and deforestation for Conflict Palm Oil continues to tarnish its reputation and poses a major risk to investors. It is critical that financiers and investors hold both PepsiCo and Indofood accountable, requiring transparent action to address Indofood’s adverse impacts on people and the planet and fix the flaws in its new policy.”

Financiers of Indofood include: US-based Citibank, European banks HSBC, Rabobank, Standard Chartered, BNP Paribas and Deutsche Bank; and Japanese banks Sumitomo Mitsui Financial Group, Mizuho Bank and the Bank of Tokyo-Mitsubishi UFJ.

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