PepsiCo and Indofood linked to Indonesian worker exploitation claims

Posted on 16 Jun 2016 by Tim Brown

A report released last week has claimed instances of worker exploitation, including child workers, at two palm oil plantations owned and operated by Indonesian food giant Indofood, a producer of PepsiCo branded snack foods.

The report by Rainforest Action Network (RAN), OPPUK, an Indonesian worker rights advocacy organization, and International Labor Rights Forum (ILRF) titled, ‘The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia‘, was based on a two-month investigation that interviewed 41 workers from two plantations on the Indonesian island of Sumatra.

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.

“Simply put, this report reveals that Indofood is violating the fundamental rights of workers on its palm oil plantations, as PepsiCo watches on. Both companies must act without delay to address the egregious worker exploitation exposed on Indofood’s plantations,” said Robin Averbeck, senior campaigner with Rainforest Action Network (RAN).

“These workers live in a world dominated by palm oil. The plantations stretch for miles in every direction, and Indofood’s subsidiary PT London Sumatra has nearly complete power over the livelihoods of its workers. Women are rarely afforded full, permanent employment and are given some of the most toxic jobs applying highly hazardous pesticides. Harvesters, one of relatively few permanent positions, struggle under a high quota system which forces them to bring their wives and children to work with them for help to earn the measly base pay––well below a living wage. Children leave school and childhood behind and work in the rows of palm oil trees to help their families make ends meet. It’s a disturbing system of abuse, where workers’ rights are rarely respected,” said Averbeck.

Indofood not subject to PepsiCo policy

Indofood, one of the largest palm oil growers in the world, the biggest food company in Indonesia, and the sole maker of PepsiCo products in Indonesia, is lagging behind its peers. Indofood is now the largest private palm oil company in Indonesia that has not strengthened its policies or improved its practices to align with the new benchmark for responsible palm oil: a commitment to no deforestation, no expansion on peatlands, and no violation of worker or human rights throughout the company’s own operations as well as those of third party suppliers.

PepsiCo released an updated palm oil policy in September 2015 that does not require its joint venture partner Indofood to comply with the principles of its policy. As a result of PepsiCo’s inadequate palm oil policy and implementation efforts, thousands of consumers around the world are ramping up pressure on PepsiCo and standing in solidarity with palm oil workers, demanding that the company take immediate and meaningful action.

“PepsiCo must take bold action to address the abuses in its supply chain. 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. In light of the egregious conditions on Indofood plantations detailed in the recent report, PepsiCo must do better,” said Eric Gottwald, Legal and Policy Director at International Labor Rights Forum.

PepsiCo said its chief executive had written to Indofood in the light of the findings detailed in the report.

“The letter acknowledged the gravity of the allegations and confidence that Indofood is taking them as seriously as PepsiCo does,” the company said in a statement to the Thomson Reuters Foundation.

“We take any alleged violation of labour and human rights policies seriously,” PepsiCo.

Indofood said that it complied with all Indonesian laws and regulations according to the report.

Palm oil is commonly used in soap, cosmetics and food spreads. It has been a major driver of growth for Southeast Asia’s largest economy but has been regularly linked to the destruction of rain forests and wildlife habitats, as well as displacement of Indigenous communities.