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June 21, 2016
Pepsi Challenged on Palm Oil Worker Exploitation
    by Robert Kropp

A report from three NGOs reveals that violations of workers' rights on the palm oil plantations of PepsiCo's joint venture partner in Indonesia includes child labor.

Most sustainable investors are well aware of the severe environmental impacts of deforestation in Indonesia. Leveling of rainforest in order to build plantations for the production of palm oil has resulted in Indonesia being the third largest emitter of greenhouse gases (GHGs) in the world.

Perhaps not as well known are the often exploitative conditions endured by workers on Indonesia’s palm oil plantations; but a new report, co-authored by the nongovernmental organizations Rainforest Action Network (RAN), the International Labor Rights Forum (ILRF), and OPPUK, provides enough context to raise serious concerns. OPPUK is a labor rights advocacy organization based in Indonesia.

Entitled The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia, the report analyzes worker conditions at two plantations owned by Indofood, a company which is the sole Indonesian supplier of palm oil to PepsiCo.

“Child labor, exposure to highly hazardous pesticides, payment below the minimum wage, long-term reliance on temporary workers to fill core jobs, and the use of company-backed unions to deter independent labor union activity, among other findings, were all documented on the plantations which are linked to PepsiCo through its joint venture partnership with Indofood,” a press release states.

The report points out that after much public pressure, PepsiCo published an updated palm oil policy; the new policy specifically requires that the company’s suppliers “Adhere to the Universal Declaration of Human Rights, be in basic compliance with applicable laws, prohibit forced, compulsory or child labor, follow ethical recruitment practices, respect freedom of association, [and] recognize the rights of all workers including temporary, migrant, and contract workers.” However, PepsiCo does not require that its joint venture partner Indofood adhere to the environmental and social tenets of the policy.

“This report reveals that Indofood is violating the fundamental rights of workers on its palm oil plantations, as PepsiCo watches on,” Robin Averback of RAN said. “Both companies must act without delay to address the egregious worker exploitation exposed on Indofood’s plantations.”

“It’s a disturbing system of abuse, where workers’ rights are rarely respected,” Averbeck continued.

The first order of business for PepsiCo, the report concludes, is to “fix the loophole in its current policy by requiring that Indofood comply with the all principles of its policy.”

“More broadly,” the report continues, “PepsiCo must adopt an ambitious deadline for achieving third-party verified compliance with its policy for all palm oil used in all its products and brands, including those produced by Indofood and other joint venture partners.”

“PepsiCo must take bold action to address the abuses in its supply chain,” Eric Gottwald of ILRF said. “Any serious responsible palm oil commitment must include Indonesia, the world’s largest palm oil producer and the country most greatly impacted by rainforest destruction and human rights abuses caused by palm oil plantation expansion.”

“The Indonesian government should enact specific labor laws to protect palm oil plantation workers, who face unique and heightened risks from their geographic isolation,” Herwin Nasution of OPPUK added. “Specifically, urgent attention needs to be paid to those workers most at risk and least protected––women workers and child laborers.”


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