FGV is one of the largest palm oil companies in the world and supplies brands including Nestle, Hershey’s and Mars.
Malaysian palm oil giant FGV
Holdings Berhad, formerly FELDA Global Ventures, has been sanctioned by the
Roundtable on Sustainable Palm Oil (RSPO) for forced labour, possible
trafficking in migrant workers, and numerous other violations of Malaysian
FGV, partly owned by the
Malaysian government and one of the largest palm oil companies in the world, is
a supplier to global brands Nestle, Hershey’s, Mars, PepsiCo, Procter &
Gamble and Unilever, among others. Palm oil is used in a wide range of consumer
products, from chocolate to toothpaste.
The RSPO, the world’s largest palm oil certification scheme, visited several FGV sites in April 2018 after a 2015 Wall Street Journal article revealed stories of abuse of workers in plantations connected to the company.
the company to be in breach of 25 of its sustainability certification criteria.
According to the RSPO’s
investigations, FGV and its subcontractors committed a series of violations
against foreign workers, including high fees paid to recruitment agents, no
channels to negotiate the terms of their contracts, apparently arbitrary
deductions from their wages for food, water and electricity, inability to
terminate contracts, illegal restrictions of movement, recruitment practices
that strongly indicate the use of trafficked workers, dire accommodation
conditions, and inadequate food and supplies.
As a result of its investigation,
the RSPO decided to suspend the
membership of FGV’s Kilang Sawit Serting mill and four plantations that supply
The certification body has given
FGV up to six months to complete an audit of its labour practices and submit an
action plan and quarterly reports on progress made to address the violations
identified before it can rule on lifting the suspension.
In a statement, FGV said that it has frozen all new recruitment of workers until the company is satisfied that contractors are adhering to its policies and guidelines.
said it will revise the benefits enjoyed by plantation workers and will absorb
the costs of their basic necessities, including food supplies. “The company is
taking immediate measures to address all the issues raised as expeditiously as
possible”, the statement said.
FGV’s Chairman and Interim CEO
Datuk Wira Azhar Abdul Hamid said that
“the welfare of all our employees is of paramount importance to FGV and to me
personally […] We must and will treat all our employees fairly and equally,
regardless of nationality.”
The findings against FGV were
revealed just a few weeks after Indonesian palm oil giant Indofood was
also sanctioned by
the RSPO for labour rights violations, including 10 violations of Indonesian
labour law and over twenty violations of the RSPO’s Principles and Criteria.
Civil society organisations have called for more robust action against companies in breach of sustainability criteria.
Robin Averbeck, Agribusiness Campaign Director for the Rainforest
Alliance Network (RAN), said that
the RSPO had “again failed to adequately hold accountable” one of its member
companies found culpable of “widespread illegal labor violations.”
She added: “The RSPO has issued a slap on the wrist to both FELDA and Indofood, while allowing these companies to continue selling certified ‘sustainable’ palm oil rife with illegality and labor violations.
"Such hypocrisy cannot last long in the global marketplace and
risks the complete collapse of the RSPO’s credibility.”
Speaking to RAN, Glorene Das,
Executive Director with Tenaganita, a Malaysian organisation that defends the
rights of migrants and refugees, said that
“the Malaysian government, global palm oil buyers, financiers, and the
international community must hold palm oil companies to account, especially
government-linked companies like FELDA. We cannot allow these crimes to
In a statement made to Supply Chain Dive, a PepsiCo spokesperson said that “we have activated our grievance process and are in contact with our direct suppliers in relation to the RSPO decision.”
A spokesperson for Hershey’s told Supply
Chain Dive that the company “‘immediately’ began an investigation after learning
of the RSPO sanction,” while Nestle stated that
“we have been engaging with [FGV] on their action plan and setting concrete
expectations for addressing these challenges immediately.”