PepsiCo applies strengthened palm oil rules to entire supply chain

PepsiCo has moved to strengthen its palm oil sourcing policy, aiming to eliminate deforestation, peatland destruction, and human rights abuses from all parts of its supply chain, in a move hailed by green groups as an industry first.

The world's second-largest food and beverage company yesterday pledged to avoid purchasing palm oil from any direct or indirect supplier involved in deforestation over the past four years. PepsiCo is believed to be the first major company to apply its palm oil policy to its entire supply chain, comprising its direct suppliers and production sources, and including all palm and palm kernel oil that it uses globally. 

Palm oil is one of the world's most widely used ingredients, found in everything from shampoo to chocolate to margarine. While highly versatile, its production has been blamed for fuelling the rampant destruction of rainforests around the world, particularly in parts of south east Asia such as Indonesia and Malaysia. While western multinationals have sought to respond to consumer concerns about the environmental impacts of palm oil production by adopting increasingly strict sourcing policies, campaigners have continued to uncover abuses. Last year, undercover investigators from the Rainforest Action Network (RAN) found evidence suggesting palm oil sourced from an illegal plantation within a threatened Indonesian rainforest dubbed "the orangutan capital of the world" had entered the supply chains of brands including Mars, Nestle and PepsiCo.

But RAN's agribusiness campaign director Robin Averbeck welcomed PepsiCo's new palm oil sourcing policy, explaining the NGO had worked with the drinks giant to help draft the strategy. He praised PepsiCo as the first major brand to extend its palm oil policy to include its business partners and all other firms in its partners' groups.

"We commend PepsiCo for adopting a comprehensive policy and leading actions that, if implemented, will drive change in its palm oil supply chain as well as the broader palm oil industry," he said.

The policy encompasses some of the south-east Asia region's biggest palm oil processers such as Indofood, which together with its parent company the Salim Group owns significant palm oil holdings and operations across Indonesia and has faced criticism over claims of environental and labout rights abuses.

In addition to working with RAN, PepsiCo said it had also worked with Indonesian labour rights organisation OPPUK and International Labor Rights Forum (ILRF) to help draft its new policy.

"The reality of the global climate crisis is becoming clear and island nations like Indonesia have been experiencing the first and worst impacts," said Herwin Nasution, executive director with Indonesian labor rights organization OPPUK. "While Conflict Palm Oil has been contributing to the destruction of our forests and our climate, it has also been harming palm oil workers on plantations across Indonesia. For these palm oil workers, we applaud this commitment from PepsiCo and we will watch to see it turn into real action on the ground."

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• Topics
• Supply chain
• Rainforest Action Network
• PepsiCo
• Indofood
• Indonesia
• Palm Oil
• Deforestation
• supply chain