Pepsi cuts off Indonesian palm oil supplier over labor, sustainability concerns

JAKARTA — PepsiCo has suspended its business with Indofood Agri Resources (IndoAgri), one of the largest palm oil companies in Indonesia, citing sustainability and labor rights concerns. PepsiCo, the U.S.-based company behind brands like Pepsi, Frito-Lay and Tropicana, primarily sources its palm oil from Indonesia, the world’s biggest producer of the commodity, where huge swaths of tropical forests and carbon-rich peatlands are being cleared to make way for palm plantations. It has a joint venture with the parent company of IndoAgri, Indofood, to produce some products, such as Lays-branded snacks, in the Southeast Asian nation. While IndoAgri is not a direct supplier to PepsiCo, it supplies palm oil to international traders which then sell to PepsiCo. “PepsiCo is very concerned about the allegations that our policies and commitments on palm oil, forestry stewardship and human rights are not being met,” PepsiCo said in a statement. It revealed that it had therefore decided to suspend procuring palm oil from IndoAgri for its joint venture with Indofood since January 2017. IndoAgri has been subjected to various environmental and social concerns, particularly over alleged labor rights abuse in some of its plantations. In 2016, the Rainforest Action Network (RAN), an international NGO; OPPUK, an Indonesian labor rights advocacy organization; and the International Labor Rights Forum (ILRF) published a report on alleged labor rights abuses on IndoAgri’s plantations in Indonesia’s North Sumatra province. The report documents how workers in the plantations are routinely exposed to hazardous pesticides, paid less than the minimum wage, illegally…

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