PepsiCo responds with 'disappointment' at Indofood's withdrawal from RSPO over disputed audit decision

By Pearly Neo contact

- Last updated on GMT

Indonesian food giant Indofood has withdrawn from the Roundtable of Sustainable Palm Oil (RSPO) certification scheme ‘with immediate effect’, citing ‘extreme disappointment’ in the process and outcome of the RSPO audits conducted on the firm. ©Indofood
Indonesian food giant Indofood has withdrawn from the Roundtable of Sustainable Palm Oil (RSPO) certification scheme ‘with immediate effect’, citing ‘extreme disappointment’ in the process and outcome of the RSPO audits conducted on the firm. ©Indofood

Related tags: Indofood, Rspo, Indonesia

PepsiCo has voiced its 'disappointment' in Indonesian food giant Indofood's decision to withdraw from the Roundtable of Sustainable Palm Oil (RSPO) certification scheme ‘with immediate effect’. Indofood had cited ‘extreme disappointment’ in the process and outcome of the RSPO audits conducted on the firm as a reason.

After conducting an ‘independent verification visit’​ in June 2018 to PT Perusahaan Perkebunan London Sumatra Indonesia Tbk (Lonsum), owned by Indofood plantation arm Indo Agri, the RSPO complaints panel issued a final decision letter to the company on November 2 2018.

In the letter, the panel detailed a list of Lonsum’s supposed breaches of the RSPO Principles and Criteria (P&C), as well as ordered it to take a series of corrective actions.

In total, the letter listed some 23 alleged offences, ranging from workers’ working conditions and health risks to gender discrimination and child labour.

Lonsum was directed to provide an updated Action Plan ‘with clear milestones and a timeline for implementation’​ including the corrective actions within 30 days of the decision letter issuance, but apparently failed to do so, resulting in another warning letter being issued to them on January 15 2019.

The company responded after this by deciding to withdraw entirely from the RSPO claiming ‘unexplained inconsistencies’ ​and an ‘unrealistic timeline’​.

‘We are extremely disappointed with the process and decision of the [RSPO] Complaints Panel,”​ said Lonsum Group Head of Sustainability Muhammad Waras via an official withdrawal letter.

“We are not in agreement with [some of the audit findings], and [based on the 23 audits conducted since 2016], there were no material findings to substantiate the allegations and we have implemented all Non-Conformities arising from the above audits.

“There remains a material and unexplained inconsistency in findings between the [June 2018] verification audit and the previous 23 audits.”

“[In our letter to the RSPO Secretariat on December 10 2018], we gave you notice that we were looking for outside consultants to engage and help us in this process [and requested advice on a suitable consultant.

Waras went on to say that after that, the company staff had gone on leave for the December year-end holidays which ‘naturally limited​’ the company’s progress on the matter.

“[We then received your January 15 letter, directing us to] submit our Action Plan within three working days, which is impossible for us to comply with. We feel it is unrealistic for you to impose this very short deadline on us.”

Waras concluded by saying that the company would focus its sustainability efforts on the Indonesian Sustainable Palm Oil (ISPO) moving forward instead, and announced its official withdrawal from the RSPO.

The ISPO has also previously been criticised by local organisations as being inadequate, and just a ‘mere instrument for Indonesian palm oil to be recognised in international markets’​.

Food brands cut ties

The initial NGO coalition to submit the complaint against Indofood comprised of the Rainforest Action Network (RAN), the International Labor Rights Forum (ILRF) and Indonesian labor rights organization OPPUK.

According to their press release on the matter, a number of well-known food brands have claimed to have cut ties with Indofood prior to this, including Nestle, Cargill, Hershey’s, Kellogg’s, Unilever, and Mars.

“However, many companies still do business with Indofood and remain connected to its labor abuses, including joint venture partners PepsiCo, Wilmar and Yum! Brands,”​ said the NGOs.

Robin Averbeck, Agribusiness Campaign Director at RAN, added that: “PepsiCo and Wilmar have stopped sourcing IndoAgri’s palm oil, it’s past time they terminate their joint venture partnerships with this company.”

“Otherwise, they knowingly continue to do business with a company engaging in illegal and unethical behavior without compunction.”

The NGOs also claimed the move from Indofood to be ‘an attempt to evade its responsibilities to respect the rights of its workers’.

In response to Lonsum's withdrawal from the RSPO, PepsiCo told FoodNavigator-Asia​ that it was also 'very disappointed'​ in the decision.

PepsiCo and our Indonesian joint venture decided some time ago to no longer receive palm oil from IndoAgri, owner of PT Lonsum,"​ a PepsiCo spokesman told us. 

"We are very disappointed to learn of IndoAgri’s attempt to withdraw PT Lonsum from the RSPO. This is unacceptable and inconsistent with our policy and commitments on sustainable palm oil."

"We support the RSPO’s Complaints Panel process and continue to urge IndoAgri to act immediately to resolve the identified issues and strengthen their palm oil policy and grievance mechanism [and] are reviewing what more we can do to support the RSPO in resolving this serious matter​.”

The company has not revealed further details on any possible connections or joint ventures it may still have with Indofood/Lonsum.

The Indofood-RSPO story background

In 2016, the three NGOs listed above submitted a formal complaint to RSPO against Indofood’s subsidiaries Lonsum and its parent company PT. Salim Ivomas Pratama Tbk. (Salim Ivomas), citing ‘labour violations on multiple Lonsum plantations in contravention of RSPO Principles and Criteria and its Code of Conduct’​.

This was accompanied by a report entitled ‘The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia’​, detailing RAN’s 2015 investigation into Lonsum plantations.

Lonsum later revised its sustainable palm oil policy, but this was dismissed by NGOs saying it had ‘critical shortfalls’.

In a series of letters between IndoAgri/Lonsum and the NGOs via RSPO, the former repeatedly requested for ‘evidence’​ to back up the allegations, but the NGOs refused to reveal their sources in order to protect the workers’ identities and livelihoods until a formal ‘no-repercussions’ arrangement was reached.

Indo-Agri sent this agreement to the RSPO in May 2018, which then led to the RSPO conducting the aforementioned audit and verification visit in June 2018.

The NGOs also requested for a meeting with senior IndoAgri/Indofood representatives including IndoAgri CEO Mark Wakeford, but no results from this meeting, if held, were published on the RSPO website.

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