PepsiCo Faces Material Supply Chain Risks From Conflict Palm Oil

Figure: Activists on Monday delivered their demand by draping massiveCut Conflict Palm Oilbanner from New York Citys iconic, sixstorytallPepsiColasign.

As written by Chain Reaction Research, PepsiCothe largest globally distributed snack food companycame under pressure today because of its sourcing and business relationships with high risk actors in the palm oil sector in SE Asia and Central America. PepsiCos risky relationships include:

  • Possible sourcing relationships to Reforestadora de Palma dePetén SA (REPSA), a palm oil company purportedly involved in the killing of Guatemalan Indigenous rights activist Rigoberto Lima Choc on September 18, 2015, kidnapping of three others, Hermelindo Asij Mo, Lorenzo Pérez Mendoza and Manuel Perez Ordoñez and ongoing intimidation of human rights defenders.
  • Relationships with Indofood Agri Resources. A report in early 2017 by Chain Reaction Research suggested that 42 percent of Indofood Agri Resources549,287 hectares land bank is contested. In fact: Six plantations allegedly have community conflicts and labor controversies. Four plantations are located on peat and/or forest areas, potentially prohibited from development given Indonesian government regulations. 16 plantations do not publish concession maps.
  • Major palm oil traders Cargill, Wilmar and AAK involved in sourcing from palm oil plantations are threatening the future survival of the Leuser Ecosystemthe last place on Earth where orangutans, tigers, rhinos, elephants and sunbears still coexist in the wild.

PepsiCos global suppliers are selling PepsiCo material risks that PepsiCos investors may now own.

Clients Ask TIAA to Manage its Agriculture Investment Risks

TIAAs investment services clients14,000 of themand a broad coalition of international organizations requested last week that TIAA address material financial risks in how the firms manages its global agriculture investments.

TIAA is one of the largest global investors in farmland, with over 607,000 hectares under management in the U.S. and around the world. These farmland assets are worth about USD 8 billion. In aggregate, they represent about 1 percent of TIAAs overall assets under management.

To mitigate this material financial risks, back in 2011, TIAA signed the Farmland Principles for responsible investing focusing on robust investment and sustainable management of farmland assets. Now this TIAACREF clientled coalition is requesting that TIAA demonstrate compliance with these principles in how they manage their assets under management.

This is because recent reports, described in The New York Times in 2015, claim that TIAA has

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