RSPO chief on why it pushed oil palm giant Sime Darby to submit ‘action plan’ on alleged labour violations

Malaysian plantation companies need to be ‘much more public’ with their practices, said Joseph D’Cruz in an interview with Eco-Business. This will help clean up long-standing forced labour issues that the industry has been plagued with.

Joseph D'Cruz RSPO
Joseph D'Cruz, CEO of the Roundtable of Sustainable Palm Oil, said that Sime Darby Plantation had not made public the third-party evaluation report on its labour practices. Image: RSPO

A recent demand for oil palm giant Sime Darby Plantation (SDP) to publish an action plan to address gaps in current labour standards was part of a push to get plantation companies to be more transparent about information they already have but is still not in the open domain, said the chief executive officer of Roundtable of Sustainable Palm Oil (RSPO) Joseph D’Cruz.

In his first interview with the media since a public exchange between RSPO and SDP made news headlines, the outspoken CEO, who is about nine months into his role, clarified that RSPO’s position was all along backed by a desire for the palm oil industry to become better at communicating its plans to the public. RSPO provides sustainability certification for SDP’s palm oil products. 

The exchange might have given a perception of a “fundamental disagreement” between RSPO and SDP, but the difference in positions is less than antagonistic, he said. 

Speaking to Eco-Business in an exclusive interview on the sidelines of the RSPO Annual Roundtable Conference on Sustainable Palm Oil (RT2022) held last week, D’Cruz said that what RSPO had asked for from SDP was initially not in the public domain, hence what it was doing was to give it a nudge to put the information out. 

“And SDP responded based on what they knew they were already doing,” said D’Cruz. “We are saying that is great – talk about it, publish it. Share the information so that we [in the palm oil industry] can learn.” 

Sime Darby faces forced labour allegations

Last month, just two weeks before its annual international conference, RSPO had issued a letter to SDP demanding an action plan to address violations of RSPO labour standards.

SDP, which is still under an export ban issued by the United States due to alleged use of forced labour in its operations, responded immediately and said that it was “surprised” to learn that RSPO had found these violations during its assessments. In a letter released three days later, the company said it had made improvements to labour practices in the past 18 months.

It insisted that RSPO’s conclusion did not reflect the current state of its operations, noting that the assessment team had identified violations of standards, including the payment of unreported recruitment fees to agents, sub-agents or other parties, and the retention of passports. “The assessment team’s findings do not reflect the substantial revisions, improvements and modifications that have been implemented by SDP during the past year,” said the letter. 

The plantation company has since submitted the action plan that RSPO had requested for. The submission was made in late November, ahead of a six-month deadline given by the certification body. 

Among the remedial actions it mentioned were plans to establish a new grievance channel, to centralise the management of grievances at its headquarters, and to train managers to undertake “effective social dialogues” with workers.

Malaysia is one of the biggest palm oil growers in the region, and the creation of RSPO – a group of palm oil growers, buyers, investors and non-governmental organisations – was so that deforestation and human rights abuses can be weeded out of the industry, by certifying sustainably-grown oil. SDP is currently the biggest seller of RSPO-certified oil. It has been a member of RSPO since 2004.

In the interview, D’Cruz pointed out that SDP had earlier not made public a third-party labour evaluation report by ethical trade consultancy Impactt Ltd, which it previously told the media would be completed by the first quarter of 2022.

Compliance still secondary to some suppliers

Speaking at a panel discussion during the RT2022 conference, SDP’s chief sustainability officer Rashyid Redza Anwarudin said that the company’s board and senior management have accepted the need for a “major cultural shift” within the organisation to address labour issues.

“The way this industry has been working, this has been there for the past 50, 60, 70 years,” he said, referring to issues of forced labour within the plantation sector.

They [the suppliers and smallholders] say to me: ‘Miss, I have to work hard just to eat. You are asking me to do this [implement better labour practices], which will impact my bottom line.”

Nurul Hasanah, head of group sustainability, FGV

Although short-term measures such as new key performances indicators have been put in place, it is essential that any changes made are sustained, Rashyid said. This means that addition to new governance structures and systems, awareness training and education for both managers and workers needs to be “constantly communicated and reinforced at various points in time.”

“It is not something that can be achieved overnight,” he said.

At  the same event, FGV, another Malaysian palm oil company that is also facing a US export ban due to alleged forced labour in its supply, said that it is still struggling to bring all its suppliers and smallholders in line with the International Labour Organisation (ILO)’s requirements.

Some of the company’s suppliers view compliance to global labour standards as secondary to economic survival, said FGV’s head of group sustainability Nurul Hasanah.

“They [the suppliers and smallholders] say to me: ‘Miss, I have to work hard just to eat. You are asking me to do this [implement better labour practices], which will impact my bottom line,’” said Nurul.

But FGV is duty-bound as a buyer of fresh fruit bunches, harvested from oil palm trees, to educate and work with its suppliers, she added.

“I still don’t have a solution for this because we are still at a very early stage of engaging our suppliers to understand how [they can fight] against forced labour indicators,” said Nurul. “They have progressed a lot, but there are certain areas that we need to help them out in understanding what the implications are of not following [labour laws and rules].”

She told Eco-Business that the company has appointed an independent consultant to investigate its labour processes as required by US authorities before the export ban is reviewed. FGV aims to submit its final report to the US Customs and Border Protection within the first quarter of 2023.

RSPO’s D’Cruz said that the transparency of labour practices of the organisation’s members should be encouraged.

“SDP effectively responded to the situation, in more or less exactly the way I would want anyone in the sector [to],” he said, referring to the company’s public acknowledgement of forced labour allegations and efforts to remedy the problem. RSPO wants these companies to be “much more public” about the steps they are taking to address sustainability and supply chain issues that have plagued the industry, he added. 

I want these companies to “own up” to any sustainability-related issues that they might face, he said. “And to the credit of SDP and FGV, that is what they have done.”

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