Report: Pepsi, Indofood Linked To Abusive Labor Practices In Indonesian Palm Oil Industry

A damning report released by the Rainforest Action Network (RAN) highlights PepsiCo, and Indofood’s links to abusive labor conditions, including child labor, as well as hazardous working environments. The scathing revelations, documented in The Human Cost of Conflict Palm Oil, unveil not only human rights violations but a startling lack of attention given to the condition of laborers.

PepsiCo, a US-based multinational food and beverage corporation, purchases at least 427,500 tons of palm oil each year, and has been a target on RAN’s list of companies who have failed to implement palm oil policies “set to new global benchmark for responsible palm oil production.” According to The Human Cost of Conflict Palm Oil, PepsiCo makes use of a policy loophole, which allows for its joint venture partner, Indofood, not to meet the same requirements necessitated for the production of its PepsiCo-labeled products.

This means any palm oil that’s sourced and produced by Indofood to make PepsiCo products “is not required to meet the same environment and social safeguards as PepsiCo products made directly by PepsiCo,” thereby “all but ensuring that deforestation and human and labor rights will continue to taint the snack food giant’s supply chain.”

The Human Cost of Conflict Palm Oil reveals that Indofood paid workers at one plantation below the district’s minimum wage. Women and children were often hired “with no direct employment relationship to [Indofood],” making it more likely that they’d face having no job security. They would earn half of what permanent workers were receiving, and would suffer more healthy and safety risks.

Children were commonly found to be working on Indofood plantations, primarily driven by low wages and high work quotas for the adult workers who often hire them. This left children exposed to pesticides, long hours, and having to carry heavy loads. One harvester interviewed for the report acknowledged hiring a 16 year-old boy “because he could pay him less than an adult,” thereby “retaining more of the income for his family.”

RAN notes in their report that, since Indofood is a joint venture partner of PepsiCo, PepsiCo must require Indofood to investigate and address labor violations, and “implement a responsible palm oil policy.”

PepsiCo is no stranger to accusations of human rights violations. In 2013, members of the Indian National Trade Union Congress (INTUC), who were contracted by PepsiCo, were terminated after exercising their right to join a union. According to The International Union of Food and Allied Workers’ Associations (IUF) 162 out of 170 workers were fired. In 2014, after intense international pressure, management told employees that they would be allowed to return to their jobs, so long as they give up their right to ever form or join a union.

The PepsiCo Frito-Lay Action Workers Action Committee, working under the PepsiSmash Campaign, is demanding that remaining workers be reinstated “with full back pay and guarantees that they may exercise their right to form or join a union without fear of reprisal.”

“PepsiCo knows what’s happening in these warehouses: the abuses have been brought to the attention of both Indian and corporate management,” the PepsiSmash Campaign website states. “PepsiCo refuses to act to ensure that workers’ rights are respected.”

Thus far, PepsiCo has rejected their demands.

In 2014, while PepsiCo workers were protesting, actively pursuing reinstatement and fighting for union rights, the food and beverage giant launched a strategic partnership with the Clinton Foundation, described as a “unique social enterprise model” aimed at sourcing cashews from small farmers in Maharashtra, India. That same year, PepsiCo donated more than $100,000 to the Clinton Foundation.

According to a report by the Associated Press, PepsiCo’s CEO has met with Hillary Clinton on at least three occasions, and the company had already given the Clinton Foundation nearly $8 million dollars in grants in 2008:

In February 2010, [PepsiCo CEO Indra Nooyi] met Clinton as part of the State Department’s efforts to secure corporate money for an American pavilion in China’s Shanghai Expo in May of that year… PepsiCo’s foundation pledged in 2008 to provide $7.6 million in grants to two water firms as a commitment to the Clinton Global Initiative. The Clinton charity also listed a PepsiCo Foundation donation of more than $100,000 in 2014, the same year the soda company’s foundation announced a partnership under the charity to spur economic and social development in emerging nations.

RAN is asking consumers to sign an urgent appeal to PepsiCo to hopefully pressure the company into changing their palm oil practices. “Every day that PepsiCo refuses to take action is another day where palm oil workers are exploited, children are working on plantations rather than in school, and ecosystems are destroyed.”