AAL Banned From Supplying Palm Oil To PepsiCo And Frieslandcampina

U.S. soda and food company PepsiCO Inc. and Dutch dairy producer FrieslandCampina have asked their suppliers to stop purchasing palm oil from plantation owner Astra Agro Lestari (AAL). The environmental groups have accused the latter of land and human rights abuses.

The corporate supply markets are under scrutiny because investors and regulators are increasingly considering the social and environmental impacts. Consumers have started worrying about climate change and the loss of biodiversity. The Environmental groups have found in the last year that Asta Agro Lestari (AAL), a Jakarta-based oil company, needs to obtain permission from the local communities before claiming land. Furthermore, they were accused of improperly disposing of wastes and clearing areas responsible for floods in Indonesia.

The observations have caused chaos among major consumer products and packaged food manufacturers that utilize palm oil and have decided to cut ties with the agricultural company.

AAL has responded to the allegations in the last year, stating that it would appoint a third party independently to review the claims and other issues that may arise about the environmental concerns. They have even stated that they would publish the findings of the review, following the reports made by the NGO.

PepsiCo and FriesLandCampina, which manufactures Friso infant formula have joined companies with Tide manufacturer Procter and Gamble Co. and Nescafe Owner Nestle SA in suspending the partnerships with AAL.

A PepsiCo spokesperson commented on the decision and stated that the company is engaging with other suppliers that have continued to source products from AAL and have asked to suspend the mills linked with the grievances and allegations of the environment-related parties. The spokesperson has further confirmed that PepsiCo directly does not source from the AAL.

FrieslandCampin has stated that it has started to examine the relationship with AAl after receiving allegations from environmental NGOs.

A spokesperson has replied that the questions imposed on them have motivated them to conduct a thorough investigation. Based on the findings, they have asked their suppliers not to source any products from AAL.
Palm oil has a wide range of applications. According to the World Wildlife Fund, it is used in the production of soaps, provides flavor and texture, and keeps chocolate from melting, among other things.

An AAL spokesperson has replied on the relationship with PepsiCo stating that it has no direct relationship with the two companies, and the companies have not contacted them for any further questions or issues.

The scrutiny in AAL shows that sustainability is no longer a choice but a ‘necessity’:

AAL has been under the spotlight because of the breach of human rights, damaging the environment, including deforestation and other illegal practices like acquiring land without permission, pushing it away from the brink of sustainable development.

Many food companies have started to scrutinize the second-largest palm oil plantation in Indonesia, AAL. They have been alleged by the Environmental Group named Friends of the Earth of illegal acquisition of land and damaging local waterways and forests.

A FrieslandCampina spokesperson addressed the situation after they were questioned about the halt in partnership with the AAL stating that responsible purchasing concerning human rights, biodiversity, and the environment has become essential to them. In October 2022, they were questioned by environmental organizations. It motivated them to conduct further investigations. Based on the results, they have asked their suppliers to not source any materials from the AAL.

“These suspensions demonstrate that AAL’s destructive practices are not going unnoticed,” says Arta Siagian, forest and plantation campaigner at Friends of the Earth Indonesian Forum for Environment (WALHI).
Friends of the Earth emphasizes that some food giants continue to engage in AAL.

“It is inappropriate for the industry’s best brands to speak about sustainability while continuing to procure conflict palm oil from AAL and other destructive suppliers,” says Gaurav Madan, senior forests and lands campaigner at Friends of the Earth US.

“Consumer goods companies proceeded to make billions of dollars in revenues while procuring from palm oil companies that torment farmers and communities. “They should use their global platforms and brand recognition to claim that AAL repairs the damage done,” Sigian adds.

There have been rising concerns about the sustainability of palm oil which have been piling up in the last few months because the EU has become stringent towards approving the deforestation regulation.
It has caused Malaysia and Indonesia, the two largest palm oil exporters, to join hands in palm oil exports. Both nations have been looking for trade partners in China, India, and Pakistan.

The fact that people are focusing on sustainability comes as proof that Europe has been inclining towards the manufacturing of sustainable palm oil.

Edited by Prakriti Arora