Progress Report: PepsiCo Reaches 94% Palm Oil Traceability to Mill Level

In its newly released 2017 Palm Oil Progress Report, PepsiCo announced that the company sourced 32% certified sustainable palm oil in 2017, exceeding its interim target of 30%, and that it is well on its way to achieving 50% by the end of 2018. The snack giant has also increased palm oil traceability to the mill level to 94%. Despite PepsiCo’s progress, the Rainforest Action Network (RAN) has once again accused the snack giant of maintaining a palm oil policy that fails to “protect labor rights or stop rainforest destruction.”

PepsiCo Progress

As part of its commitment to sourcing sustainable and responsible palm oil, PepsiCo’s report highlights the following progress in 2017:

• Increased traceability to the mill to 94% at the end of 2017, up from 65% in 2015, with the aim of achieving traceability to plantation by 2020;
• Piloted its third-party traceability-to-mill system assessment process with Cargill;
• Disclosed a complete list of 2018 direct suppliers and 2017 mill list;
• Continued to identify and address risks associated with smallholders, worker rights, deforestation/peatlands and land rights;
• Published a formalized grievance mechanism for its agricultural supply chain;
• Implemented a supplier scorecard to build capability and promote partnership and continuous improvement among suppliers;
• Achieved 100% RSPO membership among direct suppliers (not including Venezuela).

How It’s Getting There

PepsiCo aims to source 100% Roundtable on Sustainable Palm Oil (RSPO) physically certified sustainable palm oil by 2020 while helping to lift production standards across the palm oil sector. The company focuses on four “pillars” to achieve this:

• Risk management: How we understand areas of concern and opportunity in our supply chain.
• Supplier engagement: How we engage with suppliers to communicate expectations and improve performance.
• Positive impact: How we work collaboratively to help transform the wider industry.
• Transparency and stakeholder engagement: How we report on our progress and engage with the broader stakeholder community.

The company says its strategy is informed by its understanding of the key sustainability challenges facing palm oil, including deforestation, biodiversity loss and human rights abuses. But the company says it is also mindful of the economic benefits provided by palm oil production, including rural economic development and improved livelihoods for farmers. “As we seek to expand these benefits while reducing any potential harm, it is important that we address standards in our own supply chain while addressing systemic issues through collaboration with suppliers, peer companies, civil society, governments and certification bodies, to help sustainable production become the norm and human rights be respected,” the company’s Palm Oil Sustainability Policy states.

Company Must ‘Fix its Major Palm Oil Problem,’ Says RAN

Despite the company’s progress, the Rainforest Action Network says the snack giant’s latest policy still contains “unacceptable loopholes that fail to protect labor rights or stop rainforest destruction.”

PepsiCo must “close the loophole that allows its partner Indofood to continue business as usual. It needs to set a binding deadline for achieving its new commitment to ‘No Deforestation, No Peatland and No Exploitation,’ and it needs to enact independent, third party verification of progress by its suppliers and business partners across all their operations,” says RAN’s Palm Oil Campaign Director Robin Averbeck. “We are not asking for the impossible, PepsiCo has the ability and responsibility to meet the demands of global consumers to protect workers rights, eliminate deforestation and peatland destruction.”

This is not the first time RAN has blasted PepsiCo. Following the company’s release of its Palm Oil Progress Report last August, RAN claimed the report was an attempt to “window dress its lack of progress.”

Addressing the Gap

While PepsiCo is now able to trace almost all of its palm oil back to the mill level, getting to the source earlier in the supply chain is a challenge because there is no common industry definition of traceability among farms and plantations. The company says it is collaborating with industry and other stakeholders to address that disconnect.

In a statement following RAN’s accusations last year, PepsiCo claimed that the activist group “continues to misrepresent our work. The new updated progress report demonstrates the breadth and depth of our sustainable palm oil efforts. Our commitments are time bound, and we are encouraged by the progress we’ve made against them.”