Suppliers of Pepsico, Nestlé, Unilever linked to deforestation
Major brands including McDonald’s, Pepsico, Procter & Gamble, Unilever and Nestlé have been accused of using suppliers that are complicit in the deforestation of Sumatra’s final rainforest, in a report by Rainforest Action Network (RAN). The study claimed that palm oil plantations that indirectly supply the brands have been established on deforested land formerly inhabited by elephants, orangutans, rhinos and tigers. RAN’s research used GPS coordinates, satellite data and photographs to reveal illegal clearances across the Leuser ecosystem despite last year’s moratorium on such clearances. The palm oil is obtained by the brands from traders via a supply chain that stretches from logging company Agra Bumi Niaga.

Pepsico, Unilever and Nestlé have been accused of complicity in the destruction of Sumatra’s last tract of rainforest shared by elephants, orangutans, rhinos, and tigers together in one ecosystem.

Plantations built on deforested land have allegedly been used to supply palm oil to scores of household brands that also include McDonald’s, Mars, Kellogg’s and Procter & Gamble, according to a new report.

“If more immediate action is not taken to enforce ‘no deforestation’ policies, these brands will be remembered as the corporate giants responsible for the destruction of the last place on earth where Sumatran elephants, orangutans, rhinos and tigers roamed side by side,” says the study by Rainforest Action Network (RAN).

Using satellite data, photographic evidence and GPS coordinates, the research builds on evidence gathered earlier this year to show ongoing illegal forest clearances across swathes of the 2.6m hectare Leuser ecosystem, despite a moratorium announced last June.

The palm oil reaches major brands via a twisting supply chain that stretches from the PT Agra Bumi Niaga (ABN) logging company, which delivers to a processing mill owned by PT Ensem Sawita (ES), which then sells the palm oil on to some of the world’s largest traders. PT is an abbreviation that denotes a limited liability company in Indonesia.

PT ABN declined requests for comment but after extensive Guardian inquiries, PT ES admitted using ABN’s palm oil – due to confusion after the logging firm changed its name – and said that it “regretted this failure”.

The company promised to “strengthen our traceability practices by exchanging information to relevant stakeholders who have palm oil plantation data.”

However, Gemma Tillack, RAN’s agribusiness campaigns director, said that ABN’s name change had been reported, and the continued inability of palm traders and food brands to source the palm they used back to the plantations showed a wider failing of due diligence systems.

“Relying on NGOs to uncover the truth is simply not good enough,” she said. “If RAN, with our relatively limited budget, can figure it out, then multibillion dollar, multinational corporations certainly can. The fact that they haven’t demonstrates that it is not a lack of ability holding them back, but a lack of will.”

Leuser’s vanishing ecosystem is already have a devastating effect on critically endangered elephants which use it as a migratory corridor. At least 35 elephants were killed in Leuser between 2012-2015, and human-animal conflicts are fast increasing as palm plantations fragment animal habitats.



Many species such as tigers, clouded leopards and sun bears are becoming more vulnerable to poachers, as their environment disappears. Leuser is still Sumatra’s largest rainforest and its Unesco world heritage status was reaffirmed this month, despite Indonesian government protests.

But its deforestation rate is among the world’s highest. In the 2015 haze disaster, Sumatran wildfires, often linked to plantation activity, destroyed 8,000 sq miles of rainforest, contributing to the early deaths of an estimated 100,000 people and emitting more CO2 than the whole of the UK that year.

Indonesia’s president Joko Widodo responded with a moratorium on new palm oil permits last April. Two months later, Aceh’s governor, Zaini Abdullah ordered palm oil companies to halt all forest clearing, even where valid permits existed.

But RAN’s research shows that ABN continued clearing another 336 hectares of Sumatran rainforest after Abdullah’s instruction, with 12 hectares of new deforestation since February.

In just one district of the Leuser, nine other suppliers to milling companies continued logging activities since last June across concessions with a combined area of more than 26,000 hectares, according to RAN’s research.

Tillack said: “We believe that there was a rush to clear land because the [logging] companies knew that there would be government intervention to stop forest clearances.

“Global brands like Pepsico can no longer hide behind paper promises and simply blame their international partners for forest crimes. The Leuser ecosystem will die a death of a thousand cuts if brands don’t start taking urgent action to address the root cause of this crisis.”

A spokesman for Pepsico, singled out by RAN as “the ultimate snack food 20 laggard”, said “We take this issue very seriously, and we are making significant investments to improve every aspect of our palm oil supply chain. After being informed of the allegations, we immediately initiated a thorough investigation. While we do not source directly from the mills in question, we identified direct suppliers who had the mills in their supply chains. We have been assured that these suppliers are taking corrective actions to address the allegations.”

Unilever admitted that it had indirectly bought palm oil from PT ABN through its suppliers, Wilmar and Musim Mas, and said that it had requested “a response and an action plan” from them soon.

Nestlé also said that it was investigating the allegations with Wilmar – which told the guardian that it was sending a team to the region to assess whether other sources in its supply chain were using palm oil sourcing back to PT ABN’s 2,000 hectare concession.

Mars and Kellogg’s stressed their sustainable palm oil policies, while Procter & Gamble said that it had told suppliers about its responsible sourcing policy. McDonald’s denied any links to PT ABN.

Of the palm oil traders which supplying the food brands, IOI said that that it had “registered recent deliveries from PT ES in our supply chain” but that the firm had “confirmed that they no longer source from PT ABN”.



Golden Agri-Resources said that its exposure to PT ES was “relatively small” but that it would visit the company in the next weeks to find out if it was indirectly selling on palm oil from PT ABN. Cargill and Musim Mas both said that they were investigating the reports.

However, the companies had been warned about ‘conflict palm oil’ entering the supply chain through PT ES’s third-party suppliers since 2014, and engagement with the firm had not changed its behaviour.

“Brands and traders tend to hide behind supply chain complexities,” she said, “but consumers need to know whether or not the palm oil they use is connected to the destruction of rainforests.”