Palm oil giant FGV sanctioned for forced labour and rights violations

03.01.2019

FGV is one of the largest palm oil companies in the world and supplies brands including Nestle, Hershey’s and Mars. Photo: Creative Commons

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 labour laws.

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. 

RSPO found 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 it.

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. 

It also 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 persist.”

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.”

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