Listed Indonesian palm oil company Sawit Sumbermas Sarana seeks to raise $300 million by selling global bonds in the third or fourth quarter to refinance its debts and fund the working capital, the company said in a statement on Thursday (08/06). (Photo courtesy of Rainforest Action Network)

NGOs Slam IndoAgri Over Labor Rights Abuses and Poor Sustainability Policies


FEBRUARY 17, 2017

Jakarta. Indofood is once again under fire after the discovery that its agribusiness subsidiary, IndoAgri, was allegedly exploiting workers, some of them minors, in its plantations in North Sumatra.

The company's alleged illegal labor practices became known after the California-based Rainforest Action Network (RAN), along with the International Labor Rights Forum (ILRF) and local labor rights advocacy organization, the Institute for Strengthening and Developing People Initiatives (Oppuk) published a report titled "The Human Cost of Conflict Palm Oil: Indofood, PepsiCo's Hidden Link to Worker Exploitation in Indonesia."

The report states that plantation workers' rights were "not being upheld in accordance with international labor norms" as set out in the United Nations Framework for Business and Human Rights.

"Workers on IndoAgri plantations continue to suffer a multitude of labor abuses, including toiling under an unfair wage system where workers must reach high targets to earn low wages," Oppuk executive director Herwin Nasution said in a statement on Thursday (16/02).

"This system creates a class of invisible workers who have no benefits and earn poverty wages."

With the alleged violations, the three activist groups are not buying into IndoAgri's responsible palm oil guideline as it fails to address the abuses they found. The organizations believe this will strain the "rainforest-friendly" reputation of Indofood's joint venture partner, PepsiCo.

Due to its partnership with the global snack giant, ILRF senior legal and policy director Eric Gottwald believes IndoAgri has a responsibility to adhere to international standards.

"IndoAgri has only made a vague commitment that will allow it to pick and choose grievances it will address," ILRF senior legal and policy director Eric Gottwald added.

In its 2015 sustainability report, IndoAgri stated that it employed 38,991 people in full-time positions and 1,489 on short-term contracts in various parts of Indonesia, with 92 percent of them working in the fields. Additionally, 50 percent of its workforce is listed as casual labor.

According to IndoAgri's 2017 sustainability policy, underage workers and forced labor are strictly prohibited, and employment contracts must be given to all workers, be it temporary, contract or casual workers.

IndoAgri also states that remuneration of its employees will comply with the minimum-wage regulations issued by local governments.

However, RAN, ILRF and Oppuk believe IndoAgri's policies are flawed due to a lack of transparency, and they claim that the company's sustainable palm oil policies contain loopholes that could allow it to easily shift the blame for deforestation, emissions and human rights violations.

"This type of corporate window dressing will not fool IndoAgri's customers, financiers or the NGOs that are committed to holding the company accountable for its impact on workers, communities and our environment," RAN senior campaigner Robin Averbeck said.

"This policy signals a dressed-up 'business-as-usual' approach for IndoAgri and its partner, PepsiCo, who will continue to profit at the expense of Indonesia's rainforests and the rights of its people."