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More than 20 labor law violations by Indofood alleged in Indonesia

Oil palm fruit in Aceh, Indonesia. Photo by Rhett A. Butler

  • NGOs are calling for a pair of Indofood subsidiaries to be suspended from the Roundtable on Sustainable Palm Oil.
  • The company has denied the allegations of human rights abuses on its plantations in the archipelagic Southeast Asian country, the world’s top palm oil producer.
  • Indofood is an arm of the Salim Group and one of the world’s largest palm oil companies.

Amid allegations of widespread abuses on its plantations, including the use of child labor, three NGOs this week lodged a formal complaint against Indonesian palm oil giant Indofood, calling for two of its subsidiaries to be suspended from the industry’s largest certification scheme.

The complaint, signed by Rainforest Action Network (RAN), Indonesian labor rights advocacy group OPPUK and the International Labor Rights Forum (ILRF), was filed with the Roundtable on Sustainable Palm Oil (RSPO) on Tuesday.

Citing numerous violations of the roundtable’s principles and Code of Conduct, the complaint calls for Indofood subsidiaries PT London Sumatra and PT Salim Ivomas Pratama to be suspended from the RSPO “until transparent actions are taken” to resolve the issues.

The complainants also raise doubts over the RSPO’s own credibility in detecting and responding to labor violations on member plantations — not the first time this has been called into question.

“It is time for the RSPO to act in the interest of palm oil workers. The evidence is clear: Indofood is systematically violating the fundamental rights of workers on its palm oil plantations,” OPPUK director Herwin Nasution said in a statement.

Indofood, which operates a joint venture with global snack food brand PepsiCo, is the largest private oil palm plantation company in Indonesia that has yet to adopt a commitment to use only responsibly produced palm oil.

The complaint comes four months after the NGOs released the results of an investigation into abuses on two Indofood plantations in North Sumatra.

Their report, The Human Cost of Conflict Palm Oil, included detailed allegations of child labor, exposure to hazardous chemicals, a reliance on temporary workers, below minimum-wage payments and the suppression of independent unions.

In response to the accusations, an assessment was conducted by the RSPO’s accreditation body, Accreditation Services International (ASI), on a third Indofood operation, the Gunung Mas palm oil mill and supply base in North Sumatra.

ASI’s report, released last month, found similarly widespread violations of Indonesian labor law and evidence of unsafe practices. Several of the violations had already been identified in a previous audit, but had never been addressed.

In total, Indofood has violated more than 20 Indonesian labor laws, according to the complaint filed this week, which also highlights violations of the RSPO Code of Conduct requirement that members “commit to open and transparent engagement with interested parties and actively seek resolution of conflict”.

Indofood’s head of public relations, Stefanus Indrayana, told Mongabay he was out of the office and unable to provide comment. Other Indofood representatives did not respond to questions about the RSPO complaint.

A worker on an oil palm plantation on Indonesia’s main western island of Sumatra. Photo by Rhett A. Butler

The company previously said the allegations were unsubstantiated. In a June interview with Indonesian newspaper The Jakarta Post, Indofood director Franciscus Welirang responded to claims that children as young as 12 were working on the plantations.

“Plantations in Indonesia are usually close to villages and thus there’s a plantation culture based on targets. It’s standard for families to ask for help [from their children],” he said.

“There’s a law in Indonesia and we are in compliance but there’s also a culture that cannot be perceived as the same as Western culture.”

Emma Lierley, forests communications manager at RAN, said the NGOs hoped Indofood’s suspension from the RSPO, the world’s largest association for ethical production of palm oil, would “force the company to take these findings seriously…and endeavor to clean up its business practices.”

She added that if Indofood fails to take action, “buyers, business partners and investors must enforce their own policies by suspending relationships” with the company, citing its ties with global brands including PepsiCo, Nestle and HSBC.

PepsiCo, which is a joint venture partner with Indofood but does not otherwise buy its palm oil, said it was discussing the issues with the company.

“Are we completely aligned? No, not at this minute. But the conversations are going on. Indofood has been very responsive,” a spokesperson told Mongabay earlier this year.

But, the spokesperson claimed, the nature of PepsiCo’s relationship with Indofood made it more difficult to force changes.

“You can be much more demanding with a supplier. A joint venture is much more delicate, especially because the joint venture preceded any discussion about sustainability and what was needed regarding that.”

Oil palm fruit in a motorbike basket in Indonesia’s Riau province. Photo by Rhett A. Butler

Beyond Indofood and the companies it has relationships with, the complaint says the RSPO’s own credibility is at stake.

“The RSPO’s ‘sustainable’ label means nothing without enforcement. If the RSPO is not willing to uphold its own standards, it threatens its credibility on the market and the brand reputations of all its members,” explained Lierley of RAN.

“Its standards still have major shortcomings…but this complaint provides an opportunity for the RSPO to demonstrate that it can, and will, take actions to enforce compliance with its standards,” she added.

Eric Gottwald, legal and policy director at the ILRF, said there is a “culture of non-compliance” on many RSPO-certified plantations regarding both Indonesian labor laws and the RSPO’s own policies.

“As a first step toward addressing the issues, Indofood should sit down with the RSPO and complainants to discuss the report, audit findings, and necessary reforms to its employment practices,” he said.