PepsiCo reinforces palm oil sourcing policy with stricter supply chain rules

27 Feb 2020 --- PepsiCo has released an in-depth global policy on sourcing sustainable palm oil to help address the challenges often associated with the popular edible oil crop and its widespread use in the food industry. Updating previous commitments, the new global policy covers the whole supply chain, including production sources and direct suppliers. The food, snack and beverage giant sends a clear message saying “we expect all of our palm oil suppliers to conduct business responsibly.”

The new policy includes the company’s commitments to no deforestation, no development on peat, and no exploitation of the rights of indigenous peoples, workers and local communities (NDPE commitments). It applies to all palm and palm kernel oil that PepsiCo uses in its products globally. 

NDPE will be applied across its entire operations and third-party supply chain and not limited solely to the palm oil sold to PepsiCo. The policy also applies to all of PepsiCo’s operations, subsidiaries, joint ventures, brands and products worldwide. It also serves as an expectation of PepsiCo’s business partners, at the group level, that directly produce palm oil.

“We strive to source only sustainable palm oil while helping to lift production standards across the broader palm oil sector. At PepsiCo, we believe acting ethically and responsibly is not only the right thing to do but also the right thing to do for our business. We expect all of our palm oil suppliers to conduct business responsibly, with integrity, honesty, transparency and adherence to the principles described in our Global Supplier Code of Conduct,” says the policy. 

The food giant also highlights how palm oil is an important edible oil crop that employs millions of people, supports farmer livelihoods, contributes to economic development, and requires less land to produce more oil than any other vegetable oil crop. 

The rapid expansion of oil palm plantations, however, has caused deforestation while the conversion of peatlands contribute to climate change and other environmental impacts. Additionally, palm oil production has led to significant concerns over human rights concerns and the exploitation of local people and communities. 

In addition to compliance with all applicable legal requirements of each country in PepsiCo operates and from which it sources palm oil, the policy also requires the following:
- No conversion of High Carbon Stock (HCS) forests as defined by The HCS Approach.
- No conversion of High Conservation Value (HCV) Areas as defined by the HCV Resource Network.
- No new development on peat, defined as soil containing greater than 65 percent organic matter, regardless of depth.
- Application of best management practices for existing plantations on peat, as described in the Roundtable on Sustainable Palm Oil’s (RSPO) Manual on Best Management Practices for Management and Rehabilitation of Natural Vegetation Associated with Oil Palm Cultivation on Peat.
- No burning as defined by RSPO.

Edited by Gaynor Selby