The Palm Scribe

RSPO Suspends Sustainability Certificate Linked to Palm Oil Giant Indofood

Indofood, one of the biggest food producers in Indonesia violates labor law according to ILO.


The world’s largest palm oil certification scheme, the Roundtable on Sustainable Palm Oil (RSPO) has suspended the sustainability certification of a palm oil mill and three palm oil estates belonging to a company that is majority-owned by Indonesian palm oil giant Indofood, over violation of the core principles of the International Labor Organization, an RSPO letter to the company said.

“The grave and methodical nature of the breaches” led to the immediate suspension of the certificate of Begerpang Palm Oil Mill and its supply bases, of PT PP London Sumatra Tbk (Lonsum), an RSPO letter addressed to Lonsum President Director Benny Tjoeng and its Group Head of Sustainability, Muhammad Waras, said. Indofood Agri Resources Ltd, a subsidiary of PT Indofood Sukses Makmur Tbk that is listed at the Singapore Stock Exchange, holds a 64.4 percent stake in Lonsum.

The letter, dated November 2 and signed by RSPO Chairman of Complaints Panel Henry Barlow, cited the reasons for the suspension as being discrimination at work; threats or intimidation; freedom of association and the right to collective bargaining.

“The lifting of the suspension of the certification is conditional on PT Lonsum fulfilling the Complaints Panel’s directive above on implementation of the corrective action,” the letter, a copy of which was obtained online, added.

RSPO called for a full audit of all other RSPO-certified units of Indofood’s palm oil subsidiary within three months and will require oversight of those audits as well.

The letter also showed that an RSPO investigation found over twenty violations of the organization’s Principles and Criteria, as well as 10 violations of Indonesian labor law, on the Indofood facilities audited.

The investigation was prompted by a complaint against the company, brought by Rainforest Action Network (RAN), International Labor Rights Forum (ILRF) and Indonesian labor rights organization OPPUK, after serious labor rights abuses were documented on an Indofood-owned plantation, a joint press release of the three organizations said.

A string of independent reports over the past several years revealed that Indofood, one of the largest private palm oil companies in Indonesia, has violated RSPO standards, national and international norms, and laws, and engaged in exploitative labor practices –– including cases of unpaid workers, precarious employment and toxic working conditions, the joint press release said.

“Indofood is one of the worst companies and to continue to certify it as ‘sustainable’ drags down the reputation of the entire palm oil industry and the RSPO with it,” said Herwin Nasution, Executive Director of OPPUK. “As a first step toward justice for workers, Indofood must remedy the years-long labor abuses, now many times confirmed, and the RSPO must hold them to account.”

A number of major palm oil buyers including Nestle, Musim Mas, Cargill, Fuji Oil, Hershey’s, Kellogg’s, General Mills, Unilever, and Mars, had already cut ties with Indofood prior to this sanction.

“This must be the last straw for all companies and banks still doing business with Indofood. They must cut ties with this company immediately. Otherwise, they knowingly continue to do business with a company engaging in the illegal and unethical behavior,” said Robin Averbeck, RAN Agribusiness Campaign Director said in the release.

Averbeck cited companies holding joint venture partnerships with Indofood, including PepsiCo, Wilmar, and Yum! Brands and added that Indofood’s investors and lenders –– particularly the Japanese banks Sumitomo Mitsui Financial Group, Mizuho Financial Group and the Mitsubishi UFJ Financial Group (MUFG) –– must also cancel all financing immediately.

Eric Gottwald, who is ILRF Deputy Director, said that the RSPO move should be a test case that the RSPO, buyers, and financiers use to strengthen their policies and practices against labor exploitation. Gottwald was quoted in the release as saying that during the two years it took the RSPO to deliver a decision. “Workers have continued to suffer violations of their basic rights. Workers who risk so much to report violations deserve a much faster and more effective complaints process.”

RAN, ILRF, and OPPUK laid out clear requirements that Indofood must meet to address ongoing labor violations.

They included immediately promoting all workers who perform core plantation work to permanent employment status; paying a living wage and retroactively compensating workers for withheld wages, benefits, promotions, and unremunerated work; fully respecting workers’ right to Freedom of Association and ensuring non-reprisal towards all workers.

The company should also guarantee women’s rights by addressing the ongoing, egregious discrimination against female workers on Indofood’s plantations; and ensuring production targets are set fairly and transparently in consultation with workers, worker organizations and independent unions.

The three organizations also continue to call on Indofood to adopt and implement a comprehensive time-bound ‘No Deforestation, No Peatland, and No Exploitation’ policy that applies to Indofood, the entire Salim Group, and all third-party suppliers.

Both RSPO and Indofood have yet to respond to queries sent to them electronically.

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