PepsiCo demands more action from IndoAgri over palm oil labour abuse allegations

06-Feb-2018 - Last updated on 06-Feb-2018 at 05:10 GMT

IndoAgri responded to PepsiCo's call for it to take further action by stating that it complies with Indonesian labour laws and regulations. ©GettyImages

PepsiCo is urging Indonesian palm oil supplier IndoAgri to take further action against allegations of labour abuses on its plantations.

Human rights groups have lodged a catalogue of criticism against Singapore-listed IndoAgri in recent years, including allegations — which the firm denies — of using labourers under the age of 18, low pay and health and safety breaches.

This first came to light in April 2016, when the Rainforest Action Network (RAN), OPPUK, and the International Labor Rights Forum (ILRF) raised a formal grievance with PepsiCo against IndoAgri. This was followed-up last November when the organisations claimed labour abuses were still ongoing.

PepsiCo’s relationship with IndoAgri is complicated. While IndoAgri is not a direct supplier to PepsiCo, it does supply palm oil to international traders which then sell to PepsiCo.

Furthermore, IndoAgri is a subsidiary of food manufacturer Indofood, which has a joint venture with PepsiCo in Indonesia. The joint venture suspended the direct procurement of palm oil from IndoAgri last January.

Timely action

PepsiCo recently released a detailed statement on the situation, declaring that it “remained open to engaging with all parties involved” in the grievance and have urged the Roundtable on Sustainable Palm Oil (RSPO) to prioritise the case and to “take timely actions and decisions”.

PepsiCo has also asked IndoAgri to further demonstrate its commitment to sustainability by providing more public information on the steps it has taken to address the grievances, to take further necessary action to fully resolve the issues, and to join other stakeholders “to discuss the systemic issues that exist in some palm oil plantations in Indonesia”.

It has also called for IndoAgri to build upon the improvements made to its policy on sustainable palm oil.

“These steps are necessary for the potential re-establishment of palm oil supply from IndoAgri to the joint venture,” said PepsiCo, opening the door to the resumption of their business relationship.

“We will also continue over the course of 2018 to review on a quarterly basis IndoAgri’s progress against the requested actions outlined above, and in that context we will continue the dialogue with our direct suppliers around IndoAgri-sourced palm oil in our supply chain, including the possibility of change of source.”

IndoAgri has responded by stating it is committed to engaging with third parties to resolve conflicts, but that “only conflicts that are based on presented factual evidence will be followed up” and “unsubstantiated allegations without supporting facts will not be considered”.

“We have not been a supplier to PepsiCo since early 2017,” said Mark Wakeford, IndoAgri CEO and executive director.

“The Company wishes to state that as a public-listed company, we comply with the labour laws and regulations of the Indonesian Government. We do not have any dispute or outstanding issue with any of our Labour Unions or the Indonesian Ministry of Labour. We have also recently received a good compliment and zero accident award from the Indonesian Ministry of Labour,” he said.