Global banks and investors on the hook for fueling illegal and exploitative acts, NGOs say
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San Francisco, CA – The leading palm oil sustainability certification scheme, the Roundtable on Sustainable Palm Oil (RSPO), has announced the termination of the fourth largest company in its membership –– palm oil company PT Salim Ivomas Pratama Tbk (SIMP) –– which is owned and operated by the palm oil plantation arm of Indonesia’s largest food company, Indofood.
The decision to terminate SIMP comes after the company, as well as its parent company Indofood, failed to comply with a corrective action plan, as required by the RSPO in November 2018, to address over twenty violations of the RSPO’s standard, as well as 10 violations of Indonesian labor law, found on Indofood-owned palm oil plantations. Instead, the company announced its plans to withdraw from the certification scheme.
“We are glad to see the RSPO enforce its standard, as this company has been acting out of spite for too long,” said Robin Averbeck, Agribusiness Campaign Director with Rainforest Action Network (RAN). “Indofood and its subsidiaries have flaunted certification standards, international norms and Indonesian law for too long. All banks, investors and brands that are still doing business with this company must do good by their own policies and cut ties now.”
The investigation of palm oil plantations operated by Indofood’s subsidiaries was sparked by a complaint against the company, brought by Rainforest Action Network (RAN), International Labor Rights Forum (ILRF) and Indonesian labor rights organization OPPUK, in October 2016.
Many palm oil buyers claim to have cut ties with Indofood and its subsidiaries prior to this sanction, including Nestle, Musim Mas, Cargill, Fuji Oil, Hershey’s, Kellogg’s, General Mills, Unilever, and Mars. However, many companies still do business with Indofood and remain connected to its labor abuses, including joint venture partners PepsiCo, Wilmar and Yum! Brands.
Indofood’s operations are enabled by billions in dollars of financing from global banks and investors, many of whom have explicit policies against financing illegal behavior. These include Japanese banks SMBC Group, Mizuho Financial Group and Mitsubishi UFJ Financial Group (MUFG), which are among Indofood’s largest lenders, as well as Citigroup, Rabobank and Standard Chartered, which require clients to be RSPO members. Indofood’s top investors include Dimensional Fund Advisors, BlackRock, Vanguard, and the Government Pension Investment Fund of Japan, despite their claims to be responsible investors.
One of the largest food companies in Indonesia, Indofood is a vertically integrated company. It runs its palm oil operations under a business arm called Indofood Agri Resources (IndoAgri). The plantations in question were operated by a company called PT London Sumatra, which is a subsidiary of SIMP, which is in turn a subsidiary of IndoAgri.