NGO and PepsiCo feud over deforestation, labour claims

The Rainforest Action Network has published a damning report accusing PepsiCo of ignoring its environmental commitments, but the food and beverage giant has hit back against these claims, calling them “unsubstantiated misrepresentations”.

leuser aceh
The Leuser Ecosystem in Aceh, Indonesia. Home to the densest population of wildlife animals, primarily the orangutans, the region is now threatened by land clearing for palm oil plantations. Image: Rainforest Action Network

American food and beverage giant PepsiCo is under fire from environmental campaigners Rainforest Action Network (RAN) for using palm oil tainted with deforestation and labour abuses, but has dismissed these claims as a “strategy of misinformation”. 

The report, released in late April and titled ‘Profits over People and the Planet, Not ‘Performance with Purpose’; Exposing PepsiCo’s Real Agenda’, uses newly acquired export data from Indonesian customs to show that PepsiCo could be sourcing palm oil from companies that are clearing the Leuser Ecosystem, an ecologically valuable and biodiversity-rich tract of land in Indonesia. 

RAN also accused PepsiCo of knowingly sourcing palm oil linked to child labour and worker abuses, a reference to a 2016 report by RAN and other NGOs which found that unethical employment practices were rife on plantations run by IndoAgri, a subsidiary of food and agribusiness giant Indofood. 

PepsiCo has a joint venture with Indofood, whereby the Indonesian firm is the sole manufacturer of PepsiCo snack products in the country.

Gemma Tillack, agribusiness campaign director, RAN, said in a statement that “PepsiCo has a moral obligation to confront the fact that the conflict palm oil currently in its supply chain, and possibly in hundreds of its products the world over, is in fact deadly for people and the planet.”

A PepsiCo spokesperson, meanwhile, pointed to various commitments and achievements to back up its sustainability credentials.

These include: A pledge to source 100 per cent certified sustainable palm oil—the actual physical commodity, not conventional palm oil that is made sustainable through purchasing credit certificates—by 2020, ensure traceability across its supply chain; and full marks on the World Wide Fund for Nature’s Palm Oil Buyers Scorecard 2016.

“The company will continue to invest in the measures necessary to deliver progress on that goal,” added the spokesperson. “Rather than recognising this progress however, RAN continues to engage in a strategy of misinformation,” they added, in reference to RAN’s claims about PepsiCo’s relationship with Indofood. 

Links to the Leuser 

Tillack told Eco-Business that RAN acquired the Indonesian customs data through a costly purchase from an anonymous agent outside Indonesia. 

The data shows that one or more companies with supply chain links to PepsiCo are shipping palm oil to the US from ports and refineries near the Leuser Ecosystem. These facilities in turn are known to purchase palm oil from companies that have cleared the ecologically valuable forest area. 

One such company is palm oil giant Wilmar. In February 2017, RAN released a report showing that a mill that Wilmar bought palm oil from was in turn purchasing crude palm oil from a firm known to be clearing forests inside the Leuser Ecosystem, PT Agra Bumi Niaga (PT ABN). 

While Wilmar said that the mill had put purchases from PT ABN on hold, Tillack said that Wilmar had not published any concrete evidence to show that all of its supplier mills have stopped sourcing from PT ABN. 

“This means that PepsiCo may still be sourcing conflict palm oil from PT ABN via Wilmar,” said Tillack. 

PepsiCo has a moral obligation to confront the fact that the conflict palm oil currently in its supply chain, and possibly in hundreds of its products the world over, is in fact deadly for people and the planet.

Gemma Tillack, agribusiness campaign director, Rainforest Action Network

Labour loophole

The RAN report also accused PepsiCo of ignoring a “loophole that excludes its joint venture partner Indofood from PepsiCo’s palm oil policy”. 

Even though investors like the Norwegian Government Pension Fund have divested from Indofood Agri Resources over environmental and social concerns, RAN said that “PepsiCo has continued its partnership with Indofood without consequence, despite substantial documentation of Indofood’s involvement in deforestation and human rights abuses”. 

In a strongly worded response, however, PepsiCo clarified that its joint venture partner is Indofood, a food manufacturer, and that “IndoAgri Resources is a completely separate palm oil division under the parent company”. 

“Despite this, PepsiCo has been a proxy in RAN’s campaign against IndoAgri,” said PepsiCo, adding that the company has tried to use its relationship with Indofood to get all parties to resolve the complaint. 

The company proposed a meeting between IndoAgri and RAN under the auspices of the Roundtable on Sustainable Palm Oil (RSPO), but RAN has “repeatedly refused” to take up this invitation for the last four months.

“PepsiCo believes that if RAN is truly committed to addressing these alleged issues, then it is high time it accepts IndoAgri’s invitation to meet with executives and RSPO representatives instead of continuing to put out reports full of unsubstantiated claims and misrepresentations,” said the company. 

However, Tillack refuted this, saying that RAN is willing to meet with the Chief Executive Officer of IndoAgri, Mark Wakeford. It had communicated this to the RSPO Complaints Panel in January this year, as well as in an earlier letter to the panel last July.

“The CEO is the ultimate decision-maker for IndoAgri, and given the scale and seriousness of the problems, it is clear that commitments must come from the highest level of company leadership to be meaningful,” explained Tillack. 

But while IndoAgri has agreed to a meeting with some representatives, it has not agreed to the participation of Wakeford, Tillack said. This is why RAN has not met with IndoAgri yet. 

PepsiCo has been a proxy in RAN’s campaign against IndoAgri.

PepsiCo spokesperson

Tillack also called Pepsi’s claims that Indofood and Indoagri are separate entities “totally ridiculous”, as IndoAgri is an Indofood subsidiary. 

“PepsiCo does use palm oil directly from IndoAgri as well, but even if it didn’t, PepsiCo’s ongoing (and important) relationship with Indofood is a major problem,” she said.

Tillack added: “RAN continues to encourage PepsiCo, and its partner Indofood, to publicly respond to our reports, and in doing so present any evidence that it believes refutes the facts and information presented in our reports.”

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