PepsiCo palm oil progress report dismissed as ‘masterful window dressing’

By Will Chu

- Last updated on GMT

PepsiCo’s efforts to provide further transparency in the palm oil supply chain have been slammed as “masterful window dressing”, in a strongly worded statement by the Rainforest Action Network.

Responding to the food firm’s efforts to protect worker rights and stamp out inappropriate supplier conduct, the US-based campaign group accused PepsiCo of “corporate greenwash”,​ insisting much more could be done.

PepsiCo needs to start enforcing an end to rainforest destruction and the violation of workers and communities' rights in its supply chain and the plantations controlled by its partner Indofood," s​aid Rainforest Action Network’s (RAN) senior campaigner Robin Averbeck.

"Until it does so, PepsiCo and its financial backers will be exposed to campaigns that demand real outcomes on the ground."

Last year, RAN brought allegations to light over breaches of workers rights, including the use of child labour, on Indofood's palm oil plantations.

Indofood, the largest food maker in Indonesia, manufactures snacks in the market under PepsiCo's brands as part of a joint venture agreement between the two companies.

In 2015, as part of a PepsiCo initiative that was committed to sourcing sustainable palm oil, Indofood has now moved to 100% certified sustainable palm oil for PepsiCo snack foods.

Its Palm Oil Action Plan Progress Report also details progress made on transparency and traceability in its supply chain. According to PepsiCo, 89% of the palm oil it used over the last year was traceable to the mill level, up from 65% in 2015 with a view to sourcing 100% sustainable palm oil by 2020.

The US snack maker also unveiled a scorecard system for use with palm oil suppliers to assess and improve their deforestation, peat loss and land use practices. The system also seeks to address human rights abuses in the workforce, with a number of grievance processes in place as well as public progress reporting.

PepsiCo dismissed RAN's critique of the progress it is making on strengthening its palm oil supply chain. 

“RAN continues to misrepresent our work”, s​aid PepsiCo in an official statement. “The new updated progress report demonstrates the breadth and depth of our sustainable palm oil efforts. Our commitments are time bound and we are encouraged by the progress we’ve made against them."

RSPO disapproval

PepsiCo's work on the environmental and human rights impacts linked to palm oil production has been supported by the Roundtable for Sustainable Palm Oil (RSPO).

However, RAN is also critical of the RSPO. The pressure group described the association’s work as “the same certification system that has continued to certify its controversial partner Indofood, despite its ongoing exploitation of workers exposed by RAN, Indonesian labour rights organisation OPPUK, and International Labor Rights Forum in June 2016."

According to PepsiCo, 16% of the palm oil that it buys is RSPO physically certified sustainable – a figure that should rise to 30% by the end of 2017.

Last year, PepsiCo's plan received the highest possible score for their sustainable palm oil actions by the World Wildlife Fund (WWF).

Stefano Savi, RSPO’s global outreach and engagement director, believed it important for organisations to continue engaging with the industry in a transparent space, such as that created by the RSPO. In particular, he flagged RAN's use of the RSPO complains system. 

“We are glad to see that RAN has done so through the RSPO complaints system,”​ he said.

“RAN has been a beneficiary of this system, as in the case involving RSPO member Indofood, for which all progress is available online.

“We appreciate RAN’s frustration and we are sure RAN and their partners (many of whom are RSPO members), will also agree that an objective process must be followed through. An independent complaints panel is firmly part of this objective process.

“Through this system, RSPO has received a number of complaints, many of which are valid. Other, more opaque approaches to sustainability may seem to have had little to no complaints, possibly because there is no ‘ammunition’ to surface issues, or no system in place to manage grievances”. 

PepsiCo palm oil activities

PepsiCo is a significant buyer of palm oil, which is primarily used in its Frito-Lay and Cheetos snack manufacturing lines.

In 2016, the firm’s global purchase of palm oil was around 480,000 metric tonnes (MT) of which palm kernel oil comprised about 4,600 MT. According to PepsiCo, 16% of this RSPO certified sustainable – a figure that should rise to 30% by the end of 2017.

PepsiCo’s top three suppliers were Cargill, Oleofinos and Wilmar, and the top three countries from which PepsiCo sourced palm oil were Indonesia, Malaysia and Mexico.

PepsiCo claimed its total purchase in 2016 represented less than 0.8% of the global supply.

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