The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

PepsiCo is moving from policy to practice

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Oil palm plantation workers arrive at an oil palm plantation area. The boom in biofuels since 2000 has increased the importance of palm oil in the international market. Following Malaysia, Indonesia is the second largest producer of palm oil. (Photo: Kemal Jufri / Oxfam Novib)

New commitments on implementation of its sustainability commitments are allowing a next stage of engagement with Oxfam.

Today, PepsiCo committed to participate in Oxfam’s FAIR Company-Community Partnerships project in Indonesia. As one of the world’s largest buyers of palm oil, PepsiCo’s engagement in the project will help ensure its success for communities. But this also means that Oxfam will be engaging with PepsiCo more closely – and differently – than we have in the past.

FAIR Company-Community Partnerships offer a model for sustainable palm oil that promotes the rights and development aspirations of women and smallholder farmers. It also provides a pathway for companies to implement their human rights, land rights, and zero deforestation commitments, all of which are priorities for Oxfam. (FAIR stands for 1) Freedom of choice; 2) Accountability; 3) Improvement and sharing of benefits; and 4) Respect for rights and the environment).

Still, given Oxfam’s history and reputation for campaigning toward food and beverage giants like PepsiCo, this may seem like a surprising and unlikely step. This history though, starting with the campaign we launched toward PepsiCo five years ago, is exactly what has led us to PepsiCo’s participation in the FAIR Company-Community Partnerships project.

How’d we get here?

In 2013, with the support of 200,000 people worldwide, Oxfam encouraged PepsiCo to commit to ‘zero tolerance’ for land grabs. PepsiCo made this commitment in early 2014. Ever since, Oxfam has monitored how the company has been putting its policy into practice.

PepsiCo’s progress appeared slow at first, and at times, was disappointing. But the company seems to have turned a corner in its efforts. In the past couple of months, PepsiCo made some new and notable time-bound plans for implementation of its land rights and other sustainability commitments. They include:

  • On land rights in Brazil: A commitment to publish findings and next steps from a next phase assessment process of land tenure risks and impacts by June 2018, conducted by an organization with land expertise.
  • On land and other human rights issues in Mexico and Thailand: Plans for going further to assess and address initial findings from studies, and a commitment to seek out affected stakeholder voices in its improvement efforts in Thailand
  • On human rights and land risks in Indonesia: An overview of known human rights and environmental risks in its palm oil sourcing
  • On known human rights violations involving a palm oil supplier in Indonesia: Previously undisclosed detail about how PepsiCo is addressing alarming human rights violations, including a commitment to continue to use multiple sources of leverage to help address the issues. Oxfam strongly encourages PepsiCo to engage directly and meaningfully with relevant stakeholders to build out its plans and timeline for next steps.
  • On its human rights approach: PepsiCo also recently updated its human rights policy, which is now in line with the UN Guiding Principles on Business and Human Rights.

Our assessment of PepsiCo’s commitments

Particularly encouraging are PepsiCo’s new time- bound commitments for next steps in Brazil, Mexico, and Thailand. Human rights violations can be challenging for companies like PepsiCo to address, as they require engagement with multiple companies in their supply chains, governments, communities, and other stakeholders. Time-bound commitments are important because they express that the company knows what it needs to do next to address the issue, is fairly certain it can make progress soon, and is willing to be held accountable to it.

Oxfam plans to do just that.

More than the new commitments, the quality of PepsiCo’s efforts to assess land and other human rights and sustainability risks and impacts in Mexico, especially as compared to previous attempts in Brazil, also stands out. In 2015 and 2016, I wrote about how PepsiCo’s land rights assessment process in Brazil didn’t contribute to its understanding of where women and communities were at risk in its supply chain. In Mexico, by contrast, PepsiCo’s assessment process provided more detail and analysis on land tenure risks and impacts, and helps the company begin to identify the next steps it needs to take to address them.

There are still key challenges the company needs to address, and more the company should be prioritizing. The 2016 Behind the Brands scorecard highlights areas for the company to improve in ensuring that women and small-scale farmers in their supply chains get a fair deal. The grievance raised by the Rainforest Action Network (RAN), Indonesian Labour Rights Association (OPPUK), and International Labor Rights Forum (ILRF) indicates that the company must keep pushing forward in using all possible sources of leverage to address the human rights violations of IndoAgri, a subsidiary of its JV partner Indofood, in line with international human rights standards. Oxfam strongly encourages the company to fulfill its commitment to engage directly and meaningfully with these organizations in further building out its plans for next steps.

But Oxfam sees strong signals that PepsiCo is on a positive trajectory, and thus we believe the time is right to take our engagement to the next level.  We hope PepsiCo’s participation in the FAIR Company-Community Partnership project in Indonesia will lead to faster and deeper progress by the company, in a sector where Oxfam and PepsiCo have had previous dialogues, and where there is urgent need to take policy into practice.

The FAIR Partnership project in Indonesia

Oxfam and partners designed FAIR Company-Community partnerships in response to the devastating forest loss and exploitation of local communities accompanying the rapid expansion of oil palm. The FAIR Company-Community Partnerships offer an alternative business model that addresses sustainability issues holistically, ensuring respect for human rights, protection of the environment, and inclusive economic development through a multi-stakeholder, landscape-based approach.

FAIR Partnerships require the active participation of multiple global and national companies in the palm oil value chain, local government agencies, civil society groups, and farmer organizations. Others will join, but PepsiCo is the first buyer to publicly commit.

The project uses an aggregated funding model. Oxfam is pooling contributions from foundations, institutions, and from each of the companies involved. PepsiCo committed its participation for the first 18 months of implementation of the project, contributing nearly 15 percent of the required funds. More importantly, Oxfam expects PepsiCo to bring in the relevant business perspective as well as share the lessons in its own supply chains and with its peers throughout the course of the project. In due time, it’s our hope that PepsiCo will help take the new business model to scale.

Still playing our watchdog role

Even as Oxfam begins to engage with PepsiCo on this project in Indonesia, Oxfam will be watching for PepsiCo’s delivery on its commitments elsewhere in its value chain. The FAIR Partnerships project remains just one of Oxfam’s many areas for engagement with the company. We’ll continue to follow up with PepsiCo on meeting the deadlines of its new milestones in Thailand and elsewhere, watching for its continued good-faith engagement in resolution of a land conflict in Brazil, addressing labor rights violations in Indonesia, and engaging the company on our running list of additional steps it needs to take to improve.

Onward.

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