US bank pulls $140 million financing after RSPO dropped Indonesian palm oil giant for widespread labour violations
Citigroup has divested from Indofood after an RSPO investigation into the Indonesian food company's practices.
Indofood is facing a $140 million
black hole after Citigroup
cancelled all funding to the firm following allegations it used child
labour and breached numerous employment laws at its palm oil plantations.
The Roundtable on Sustainable
Palm Oil (RSPO) launched an investigation into the palm oil giant in 2018 and found
the largest food company in Indonesia to have violated 20 of its standards as
well as 10 breaches of Indonesian labour laws.
After conducting inspections at
its RSPO-certified unit, the regulatory body said that the “grave and methodical
nature of the breaches” required immediate suspension of its sustainability
certificate.
The move followed a
complaint by Rainforest Action Network (RAN) and other NGOs that
detailed numerous labour violations including
unpaid wages, gender discrimination, workers being exposed to hazardous
chemicals and a high probability of child labour.
Reacting to the June announcement
by Citigroup, RAN senior campaigner Hana Heineken said: “We are glad to see
Citigroup enforce its policy and cut ties with Indofood, as this company has
been flouting Indonesian laws, certification standards and international
business norms for far too long.”
“This should send a strong signal
to Indofood’s remaining financiers and business partners that Indofood is a
bad investment.”
Indofood, which is controlled by
The Salim Group, has lost a host of big-name buyers in the past two years with
Nestle, Musim Mas, Cargill, Fuji Oil and Hershey’s among those to sever ties.
Despite being dropped by RSPO and
international groups, working conditions at its palm oil operations have failed
to improve, according to an Indonesian NGO collaborating with RAN.
“Indofood has allowed systemic
labour exploitation to continue by ignoring RSPO’s warning. In fact, since the
company left the RSPO, instances of intimidation and attacks against the
independent union have escalated,” said Herwin Nasution, executive director at
OPPUK.
