NGOs allege Malaysian palm oil labour abuses violate US law, while EU legislation falls short

Legal complaint targets Proctor & Gamble’s purchases from Felda Global Ventures and acknowledges global buyers from same plantations, but similar cases not possible in Europe

A complaint filed by NGOs with the US Customs and Border Protection (CBP) to halt imports from one of Malaysia’s largest palm oil firms accused of various forced labour allegations would not be possible in Europe due to the absence of relevant law.

The International Labor Rights Forum (ILRF), Rainforest Action Network (RAN) and SomeOfUs filed the complaint on 15 August and allege that palm oil imported from Felda Global Ventures (FGV) in Malaysia by Procter & Gamble (P&G) breaches the US Tariff Act. P&G operates a joint venture with FGV to refine palm oil for its products.

Under the Act, US Customs is required to deny entry to goods that arrive at US ports if there is reasonable cause to believe they contain materials made with forced labour.

The NGOs cited field reports that detail instances of forced labour and human trafficking at FGV-owned palm oil plantations.

Allegations against FGV date back to 2015. A Wall Street Journal investigation documented how payments to migrant workers at FGV-owned plantations were withheld, passports confiscated and ‘violent forms of human trafficking’ were reported.

Later research by environmental groups in the region painted a similarly depressing picture and in 2019 further cases of debt bondage and workers being trafficked from Indonesia and the Philippines to work on FGV plantations also surfaced.

The Roundtable on Sustainable Palm Oil (RPSO), the leading palm oil certifier, suspended the certification of one of FGV’s mills and supply bases in 2018, due to ongoing violations. The RSPO recently reinstated FGV’s certification based on action plans produced by FGV but no public information is available on its progress.

Judy Gearhart, executive director of ILRF, said: “We are calling on US Customs to enforce current law and prevent American consumers from unknowingly funding forced labour with each illicit FGV palm oil product sold”.

FGV palm oil from Malaysia – the world’s second largest producer – enters the US via major traders like Sime Darby, Louis Dreyfus and Cargill and companies directly. The NGO complaint states that P&G imported 14 million pounds of palm oil from its FGV venture in the past year, while trader Bunge imported palm oil from 23 Felda/FGV operations to Illinois in the first quarter of 2019.

Given the global nature of the brands named in the complaint, it is believed a significant amount of FGV palm oil is also imported into Europe. FGV palm oil is used by a host of other major global consumer goods brands including Nestle, Mars, Mondelez and PepsiCo.

EU imports of Malaysian palm oil topped €25.6m in 2018 – almost €6m more than in 2014.

In Nestle’s updated August 2019 palm oil supplier list, the makers of KitKat state they buy from three FGV-owned mills (alongside hundreds of Felda-owned mills) through both Bunge Europe and Bunge North America.

“We have engaged with FGV to understand where they are making progress and where more work needs to be done,” a Nestle spokesperson told Earthsight. “We will continue to help ensure they take appropriate actions to eliminate labor rights abuses in their operations.”

Many other firms named also have European operations but unlike in the US there is currently no Europe-wide legislation that stops the importation of goods linked to forced labour, although the introduction of a ban is being considered.

“FGV is a global company, as are many of the brands and palm oil traders in question,” Robin Averberck, agribusiness campaign director at RAN, told Earthsight. “Alongside US major brands, RAN is equally concerned about European companies continuing to purchase from FGV in violation of their own policies and the [Malaysian] law.”

Averberck believes that although companies like Nestle adhere to initiatives such as the UK’s Modern Day Slavery Act and that the EU has a regulation covering forced labour within its borders, more needs to be done to monitor their global supply chains.

“While most companies like Nestle are meeting reporting requirements outlined under the UK Modern Day Slavery Act, their actions are clearly not going far enough, as Nestle and others continue to source from a palm oil company that has been repeatedly documented to be engaged in forced labor practices for four years,” he added.

Ferrero, makers of Nutella and Kinder chocolate, sourced from two FGV-run mills in the first six months of 2017 but have now stopped sourcing from the company.

A spokesperson at the Italian firm did not confirm if the decision was linked to the labour abuse allegations, but explained: “If it comes to our attention that suppliers engage in practices that contravene the Ferrero Palm Oil Charter and are likely to hinder our commitment to responsibly sourcing palm oil, we will stop sourcing from these suppliers.”

The comments reflect Europe’s promotion of voluntary self-regulation instead of hard legislation to monitor global commodity supply chains. 

It is an approach the recently published EU Communication on protecting global forests is hoped will change by introducing tangible laws to prevent commodities linked to deforestation and human rights abuses from entering European markets.

“Ferrero supports the European Commission’s proposed approach to strengthen international cooperation, set up a multi-stakeholder dialogue and consider measures to address deforestation and to encourage the use of certified sustainable palm oil,” the Ferrero spokesperson added.