for Sustainable Livelihoods (Aceh & North Sumatra, Indonesia)
PepsiCo is a founding member of the Coalition for Sustainable Livelihoods (CSL). CSL is a group of civil society and private sector organizations with a shared interest in sustainable development, active investments in Aceh and North Sumatra, and a desire to work collaboratively with government. The coalition members have agreed to work collectively to achieve common objectives for smallholder livelihoods, sustainable agricultural production, and conservation in North Sumatra and Aceh, with a focus on the Leuser Ecosystem.
In 2019, the Coalition developed five working groups to address the key thematic areas requiring attention: governance, metrics, growth, and one for each district initiative: Aceh Tamiang and Tapanuli Selatan. The working groups were successfully conducted from August to October 2019, leading to draft recommendations for action and investment on how CSL should move forward on each topic.
Production, Protection, Inclusion in Aceh Tamiang
As part of its role in the CSL, PepsiCo has been supporting the development of the Aceh Tamiang district initiative and implementation of the landscape plan that the coalition has formulated. In late 2019, the district government formally adopted the plan and signed an agreement to work together towards specific targets on deforestation, livelihoods, and productivity in partnership with local stakeholders (a production-protection-inclusion model). In support of this plan, PepsiCo is investing in partnership with PT Mopoli Raya, Forum Konservasi Leuser (FKL), and IDH in the restoration of 300 hectares of forest and supporting at least 500 smallholders to become more productive and sustainable. PepsiCo is currently implementing this partnership work on the ground, while also supporting the development of a government-led landscape management body and working with other stakeholders to develop an effective monitoring system and response protocol to deforestation alerts.
For more information, please see our Statement on Working Together to Preserve the Leuser Ecosystem.
Siak–Pelalawan Landscape Program (Riau, Indonesia)
In Riau, PepsiCo is one of seven companies that are working together on a landscape program for sustainable palm oil in the districts of Siak and Pelalawan. The goal of the program is to create sustainable landscapes across both districts which will produce deforestation and exploitation-free palm oil and maintain or enhance key conservation areas. This will build upon existing local efforts and multi-stakeholder platforms to advance a shared vision of sustainable and inclusive palm oil production models.
In 2019, the partners made significant progress, including the development of a draft five-year plan for coalition support to the landscape. In 2020, the Coalition will focus on implementing activities within the workplan, including providing support to local communities, engaging mills, improving traceability, and coordinating on deforestation monitoring.
An agreement was also signed between the coalition and the Siak District Government to support the government’s plan for sustainable governance of the district.
Oxfam FAIR partnership
In February 2018, PepsiCo committed to participate in Oxfam’s FAIR Company-Community Partnerships project in Indonesia. The project promotes a model for sustainable palm oil that benefits women, smallholder farmers, local communities, the environment, and participating companies. FAIR Company-Community Partnerships address sustainability, human rights, and economic development issues holistically through a multi-stakeholder, inclusive, and landscape-based approach.
FAIR Company-Community Partnerships offer an alternative vision and business model for palm oil production. FAIR is an acronym that stands for 1) Freedom of choice; 2) Accountability; 3) Improvement of benefits; and 4) Respect for rights.
At the core of the project is the promotion of rights and development aspirations among women, small-holder farmers, and host communities. PepsiCo is the first palm oil buyer to publicly commit its participation and will be joined by others as the project progresses. We are contributing funds for projects and providing relevant business perspectives to the initiative, as well as sharing the lessons in our own supply chains and with our sector peers.
Building on continued interest from PepsiCo and following the geographic priorities as directed by the Indonesian government, Oxfam has redirected its focus to local economic development needs in Sulawesi. Taking this into account, it achieved significant progress in 2019. In 2020, the project is expected to begin implementation in the new location.
Holistic Palm Program – “Un México palmero sustentable!”
Mexico is one of the largest suppliers of palm oil for PepsiCo. In 2016, we created a holistic and inclusive palm oil sustainability program for Mexico in collaboration with Oleopalma, Femexpalma, and Proforest, and expanded in 2018 and 2019 with RSPO and Nestlé, respectively. Through the holistic program, PepsiCo will engage with all levels of the supply chain to support the adoption of good sustainable practices.
At the national level, we are working with Femexpalma to consolidate its role in representing and supporting the sustainability of the palm oil sector, including through capacity building of Femexpalma’s members. At the supplier level, we are engaging with Oleofinos, PepsiCo’s main supplier, to improve transparency and traceability of Oleofinos palm.
PepsiCo is also working with RSPO and Oleopalma to support smallholder farmers in Mexico to achieve RSPO independent group certification. Additionally, we have partnered with Proforest to provide technical guidance and support locally. The program’s objectives are as follows:
- Improve productivity and livelihoods of smallholders through capacity building and knowledge sharing.
- Ensure an efficient, inclusive, and collaborative supply chain;
- Secure sustainable palm oil through increased implementation of best agricultural practices;
- Improve the quality of life for producers and protect their land rights, while also preserving forests and biodiversity; and
- Serve as a model for sustainable development for the palm industry in Mexico.
Of the approximately 7,000 oil palm producers in Mexico, 95% of palm oil groves are less than 30 hectares and represents approximately 85% of national fruit production. Inclusion of smallholders is fundamental to meet growing domestic demand. The productivity rates of smallholders in Chiapas and Tabasco are among the lowest globally and have the potential to double. To help address this challenge, and with an ambition to further expand the existing capacity-building component of the Smallholders Program, nine demo farms were launched in 2019. The farms enable the demonstration of the positive impact of sustainable agricultural practices, including nutrient management, productivity, quality, and livelihoods.