PepsiCo cuts ties with palm oil supplier over land-grab accusations

23 March 2023

Food and drinks giant PepsiCo says it has suspended sourcing palm oil from Indonesia's second largest supplier, AAL, which has been accused of environmental and human rights violations.

According to an investigation by Friends of the Earth, palm oil producer Astra Agro Lestari (AAL) forcibly took communities’ land without consent across Indonesia, criminalised growers, and illegally occupied Indonesia’s protected forest zone.

In response to the allegations, PepsiCo, which owns brands including Pepsi and Walkers, said it had suspended sourcing from five mills thought to be linked to AAL.

The move follows the likes of Hershey’s, Nestle, and Procter & Gamble – which all cut ties with the supplier in November last year.

AAL is the second largest palm oil supplier in Indonesia, which is the biggest palm oil producing country in the world. Friends of the Earth claimed that consumer goods giants Mondelez, Kellogg’s and Unilever have continued to use AAL’s palm oil in their supply chains.

Friends of the Earth US senior forests and lands campaigner, Gaurav Madan, said: “It’s unacceptable for the world’s leading brands to pay lip service to sustainability while continuing to source conflict palm oil from AAL and other destructive suppliers.

“They must immediately catalyse a just transition away from industrial agribusiness, which is abetting deforestation, land grabbing, and an epidemic of violence against indigenous peoples and frontline communities. If companies and investors want to be on the right side of history, they should suspend all business with AAL.”

PepsiCo told Supply Management it is engaging with its suppliers that source from AAL, and has asked them to suspend buying from mills identified as having potential links to the allegations.

The Indonesian Forum for Environment campaigner, Uli Arta Siagian, said AAL should now provide compensation for loss of livelihoods, clear the names of those who have been “unjustly criminalised", and issue an apology for the alleged abuses.

Arta Siagian said: “Consumer goods companies continue to make billions of dollars of profits sourcing palm oil from companies that terrorise farmers and communities. They must use their global platforms and brand recognition to demand AAL remedies the harm it’s done.”

Responding to Friends of the Earth’s accusations, a spokesperson for AAL said: “We acknowledge we need to do more. We will work intensively with multi-stakeholders – especially the relevant government agencies and community representatives – to resolve any remaining issues. 

“We are also open to further discussion and collaborations with third parties to arrive at mutually agreeable solutions to these and any other matters.”

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