The food and beverage conglomerate severed relations with Astra Agro Lestari (AAL), which has been accused of land grabs and human rights violations.
PepsiCo is the latest consumer products company to exclude palm oil from the Indonesian giant Astra Agro Lestari from entering its supply chain.
AAL, which operates palm oil plantations in Indonesia, was accused of human rights violations and land grabs last year.
The International Federation for Human Rights, in an open letter, urged several major consumer goods companies, including PepsiCo, to remove AAL from their supply chains due to its “persistent role in forcibly grabbing communities’ land, contributing to environmental destruction, negatively impacting communities’ livelihoods, and criminalizing land and environmental human rights defenders.”
Hershey’s, Kellogg’s, Unilever, Nestlé, and Procter & Gamble are among the other corporations included in the letter.
A previous 2022 study by the environmental group Friends of the Earth claimed that AAL subsidiaries unlawfully acquired 16,000 acres of local farmers’ property. Following the publication of the study, AAL stated that it will select a third party to investigate the accusations.
PepsiCo stated in a statement that it was evaluating the charges against AAL through its established grievance process.
“Although PepsiCo does not source directly from AAL, we are talking with suppliers who do and have requested that they halt the mills identified as possibly relevant to the grievance and underlying claims,” the firm stated.
PepsiCo predominantly utilizes palm oil in its packaged food business and is one of the world’s major purchasers of the product, albeit its purchases account for less than 1% of global supply, according to the firm.
The company’s palm oil aims include covering 100% of its supply with “No Deforestation, No Peat, No Exploitation” principles or launching a time-bound program to demonstrate progress towards that sustainability target.
Nestlé, Procter & Gamble, and baby formula producer FrieslandCampina have all stopped sourcing from AAL, according to Reuters, which previously reported on PepsiCo’s suspension of AAL palm oil from its supply chain.
AAL has previously said that it is devoted to human, community, and labour rights and that it works with farming communities throughout its supply chain.
Seeking a sustainable supply
Palm oil is commonly found in food, cosmetics, and other consumer goods, as well as biofuels. According to HTF Market Research, AAL is one of the top five manufacturers in the global market, which is expected to increase from $48.6 billion in 2022 to $70.2 billion by 2029.
Environmental organizations have long pressed firms to change their palm oil sourcing practices since oil extraction has been connected to deforestation and human rights violations.
Retailers and consumer products firms are also aware of the commodity’s environmental challenges.
Walmart aims to utilize exclusively palm oil with no deforestation linkages in its private label products by 2025 as part of its environmental ambitions.