The Leuser Ecosystem in Indonesia is threatened by deforestation © AFP/Getty Images
The Leuser Ecosystem in Indonesia is threatened by deforestation © AFP/Getty Images

PepsiCo becomes palm oil 'frontrunner'

27 February 2020

PepsiCo has announced a new palm oil sourcing policy and committed to a broad set of actions around sustainability.

The policy aims to ensure the palm oil in its supply chain does not involve deforestation, peatland destruction or human and labour rights abuses.

The Rainforest Action Network (RAN) said the company’s shift had been the result of a six-year public campaign, but PepsiCo’s policy had positioned it as a frontrunner among peers.

“We commend PepsiCo for adopting a comprehensive policy and leading actions that, if implemented, will drive change in its palm oil supply chain as well as the broader palm oil industry,” said Robin Averbeck, RAN agribusiness campaign director.

PepsiCo’s policy will apply to its entire supply chain, from direct suppliers to production sources, and will cover all palm and palm kernel oil that it uses globally.

One of the key changes in the policy is that it will now apply to suppliers at group level and therefore across all operations.

This means it will now cover the third-party supply chains of suppliers, rather than just palm oil sold directly to PepsiCo.

Among the business partners covered will be Indofood, Indonesia’s largest food processing company, which owns a joint venture with PepsiCo to make snack products in Indonesia, as well as Indofood’s parent company, the Salim Group.

RAN said that Indofood and the Salim Group have significant palm oil holdings and operations across Indonesia and labour exploitation, legal violations, and peat land clearance had been documented there.

PepsiCo has also pledged to improve human rights provisions and to play a more proactive role in the palm oil industry, taking actions to address ongoing deforestation in Indonesia’s critical Leuser Ecosystem, a six-and-a-half million acre wildlife haven.

As well as RAN, PepsiCo’s policy was developed with Indonesian labour rights organisation OPPUK, and the International Labor Rights Forum, who have run a high-profile “Conflict Palm Oil” campaign.

“The reality of the global climate crisis is becoming clear and island nations like Indonesia have been experiencing the first and worst impacts,” said Herwin Nasution, executive director of OPPUK.

“Conflict Palm Oil has been... harming palm oil workers on plantations across Indonesia. For these palm oil workers, we applaud this commitment from PepsiCo and we will watch to see it turn into real action on the ground.”

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