9/8/2020 The Chain: RSPO Sanctions Indofood Agri Subsidiary for Labour Violations | Chain Reaction Research | Sustainability Risk Analysis CHAIN REPORTS EVENTS METHODOLOGY ABOUT PARTNERS SUBSCRIBE Search REPORT TYPES No Categories COMMODITIES Soy Palm Oil Other (Beef, Timber, Coee) The Chain: RSPO GEOGRAPHY Sanctions Indofood Africa Latin America Agri Subsidiary for Southeast Asia Labour Violations ARCHIVES Palm Oil • Southeast Asia November 9, 2018 September 2020 August 2020 The Roundtable on Sustainable Palm Oil (RSPO) has sanctioned Jakarta-based July 2020 PT PP London Sumatra Indonesia Tbk (Lonsom), a subsidiary of Indofood Agri June 2020 Resources (IndoAgri), for labour rights violations by revoking its sustainability May 2020 certificate for selling palm oil and calling for audits at four of the company’s April 2020 sites. This action comes a little over two years aer the Rainforest Action March 2020 Network (RAN), the Indonesian Labour Rights Association (OPPUK), and the February 2020 https://chainreactionresearch.com/the-chain-rspo-sanctions-indofood-agri-subsidiary-for-labour-violations/ 1/4 9/8/2020 The Chain: RSPO Sanctions Indofood Agri Subsidiary for Labour Violations | Chain Reaction Research | Sustainability Risk Analysis International Labour Rights Forum (ILRF) filed a complaint in October 2016 with January 2020 the RSPO on the grounds that Indofood and PepsiCo, one of its customers, December 2019 SUBSCRIBE CviHolAatIeNd labRouErP laOwRsT oSn palEmV oEiNl pTlaSntatiMonEsT. HODOLOGY ABOUT PARTNNEoRvSember 2019 October 2019 While examining IndoAgri facilities, which included one palm oil mill and three September 2019 palm oil estates, the RSPO found more than 20 violations of its standards and August 2019 ten violations of Indonesian labor laws, including gender discrimination, low July 2019 pay and poor safety conditions. Despite these findings, units of Lonsom not June 2019 subject to the complaint are still certified to sell RSPO-certified palm oil, and May 2019 they will be audited within the next three months. April 2019 The Salim Group runs First Pacific, which owns a majority stake in PT Indofood March 2019 Sukses Makmur Tbk (Indofood), Indonesia’s largest food company. The February 2019 company is listed on the Indonesia Stock Exchange. Singapore-listed IndoAgri, January 2019 a vertically integrated palm oil producer, is a subsidiary of Indofood. December 2018 November 2018 Since the initial complaint, RAN, OPPUK and ILRF further exposed IndoAgri’s October 2018 violations in subsequent reports. In February 2017, Chain Reaction Research September 2018 (CRR) showed that 42 percent of IndoAgri’s landbank may be contested due to August 2018 environmental abuses, community conflicts, land tenure risks, or a lack of July 2018 transparent boundaries. In April 2018, CRR partner Aidenvironment updated its June 2018 report of ongoing deforestation at plantation companies linked to the Salim May 2018 Group despite the Indonesian government implementing new regulations, April 2018 finding that 9,534 hectares had been cleared in five years. February 2018 Indofood and its subsidiaries have experienced negative eects from these January 2018 controversies. PepsiCo suspended both direct and indirect purchases of palm December 2017 oil from IndoAgri this year, and Nestlé ended it joint venture with Indofood in November 2017 October 2018. Other buyers such as Hershey’s, Kellogg’s, General Mills, October 2017 Unilever, Mars and Cargill have also cut ties with the company. The Norwegian September 2017 Government Pension Global Fund, the largest sovereign wealth fund in the August 2017 world, divested from Indofood in 2016 because of worries about sustainability July 2017 surrounding palm oil production. June 2017 May 2017 Moving forward, the company faces increasing material, financial and April 2017 reputational risks from its labor practices being exposed. Customer market March 2017 power through NDPE policies and a more active Indonesian government will February 2017 likely increase pressure on Indofood and its subsidiaries. Financial risks will January 2017 https://chainreactionresearch.com/the-chain-rspo-sanctions-indofood-agri-subsidiary-for-labour-violations/ 2/4 9/8/2020 The Chain: RSPO Sanctions Indofood Agri Subsidiary for Labour Violations | Chain Reaction Research | Sustainability Risk Analysis likely persist despite the fact that Indofood, which is vertically integrated, uses December 2016 its palm oil for its own food production and it has a heavy presence in November 2016 SUBSCRIBE CInHdAonINesia. SRaElimPO GRroTuSp comEVpaEnNieTsS still hMavEeT jHoiOntD vOenLtOurGesY withA PBepOsUiCTo, PARTNOEcRtSober 2016 Wilmar and Yum!Brands. Despite halting purchases from IndoAgri, PepsiCo is September 2016 continuing its JV with Indofood, the only producer of PepsiCo products in August 2016 Indonesia. July 2016 June 2016 Banks lending to Indofood will also likely play a major role in influencing the May 2016 company’s actions moving forward. RAN has called on banks to cancel all April 2016 financing to Indofood immediately. Major financiers of Indofood and the wider March 2016 Salim Group include Japan’s three largest banks: Mizuho Financial Group, February 2016 Mitsubishi UFJ Financial Group (MUFG), and SMBC Group, as well as Indonesia’s December 2015 Bank Central Asia and Bank Mandiri. Some banks have already reduced their November 2015 exposure to Indofood. Citigroup, earlier this year, said it is no longer lending to October 2015 IndoAgri and also cancelled an existing loan, while BNP Paribas now only September 2015 maintains a relationship with Indofood’s parent company First August 2015 Pacific. Deutsche Bank has stopped lending to Indofood and the wider Salim July 2015 Group. With more banks using RSPO membership as a benchmark to measure June 2015 companies’ sustainability policies, their decisions will be critical in determining May 2015 whether Indofood sees increasing financial risks from its violations. April 2015 March 2015 February 2015 Indofood, Indonesia, RSPO January 2015 « Bolsonaro’s Presidency to The Chain: Austindo Nusantara December 2014 Increase Deforestation Risk in Brazil Jaya Subsidiary First to Violate New November 2014 RSPO Standards » October 2014 September 2014 August 2014 July 2014 May 2014 April 2014 March 2014 February 2014 December 2013 November 2013 https://chainreactionresearch.com/the-chain-rspo-sanctions-indofood-agri-subsidiary-for-labour-violations/ 3/4 9/8/2020 The Chain: RSPO Sanctions Indofood Agri Subsidiary for Labour Violations | Chain Reaction Research | Sustainability Risk Analysis SUBSCRIBE C© H20A20I CNhain ReaRctEioPn OResReaTrcSh | SustEaiVnaEbNilityT RSisk AnaMlysiEs |T PHrivOacyD POolicLyO | CGooYkie PolicAy BOUT PARTNERS https://chainreactionresearch.com/the-chain-rspo-sanctions-indofood-agri-subsidiary-for-labour-violations/ 4/4.