What does Sime Darby’s blacklisting from the US mean for palm oil’s sustainability credentials?

The Malaysian company is supposedly one of the palm oil industry’s sustainability champions. What does its ban from the US over forced labour charges mean for the firm and the industry?

Sime Darby's human rights charter PDF doc.
Sime Darby's human rights charter. The company was blocked from selling palm oil to the United States after the US Customs and Border Protection Agency found forced labour in its operations. Image: Sime Darby

In 2017, Sime Darby Plantation became the first palm oil company to draw up a human rights charter, introducing guidelines to uphold human rights within its operations.

Two years later, the company ranked top of a human rights disclosure study of businesses in Southeast Asia, and joined forces with four other competitors to confront human rights issues in the palm oil industry.

“The palm oil industry continues to be under scrutiny over allegations of unsustainable practices and human rights abuses. Sime Darby Plantation is serious in addressing the risks of these issues occurring within our operations,” said Dr Simon Lord, its chief sustainability officer at the time.

Until recently, human rights issues in palm oil have been largely overshadowed by the environmental impact of the crop on forests in Indonesia and Malaysia, the two biggest producer countries.

Fast forward to the present, and the company that also claims to be the world’s biggest seller of certified sustainable palm oil — which is defined as exploitation-free, as well as grown without cutting down rainforests or burning carbon-rich peatlands — has been blocked from selling its produce in the US because of alleged human rights violations.

After allegations made by anti-trafficking group Liberty Shared, the United States’ Customs and Border Protection agency said it had found evidence of all 11 of the International Labour Organization’s forced labour indicators in Sime Darby’s plantations.

There have been unresolved social conflicts in Sime Darby plantations for many years. These failures indicate a failure within RSPO as well as Sime Darby is a key member.

Grant Rosoman, senior advisor, forest solutions, Greenpeace International

Mohd Haris Mohd Arshadhas, managing director of Sime Darby Oils, the company’s downstream business arm, told Malaysian media outlets that the allegations were “absolutely false”, but said that all companies the size of his employer — the firm has about 90,000 employees globally, 30,000 staff in Malaysia working across 300,000 hectares of land — will have “a few bad apples”.

Rashyid Redza Anwarudin, the company’s head of group sustainability, told Eco-Business that the abuses are “not systematic” and do not reflect the company culture. However, he noted that improvements need to be made in how Sime Darby recruits migrant workers and the process for reporting abuses.

The allegations levelled at Sime Darby included a range of human rights infringements on workers, including physical and sexual violence, child labour, intimidation and threats, restriction of movement, debt bondage, and withholding wages.

The company said that the allegations are hard to address, as US Customs and Border Protection was not clear on where and when the infringements took place. Greenpeace and Mighty Earth, civic society groups that have both been critical of Sime Darby in the past, have given specific times and locations when they have reported violations, it noted.

“I don’t know any court where the defendant isn’t shown the evidence. [The agency’s] allegations are opaque and somewhat odd,” said one company source.

Credibility facepalm

The ban on Sime Darby imports into the US is a “huge blow” to the credibility of the palm oil sector, commented Grant Rosoman, senior advisor of forest solutions at Greenpeace International. But he said that the US agency’s findings were “not surprising” as most high-profile palm oil companies with commitments to weed deforestation and exploitation out of their operations were failing to do so.

He said Sime Darby had been weakening its sustainability commitments for some time, for instance, by leaving the High Carbon Stock Approach (HCSA) six months ago, which he said was to “avoid implementing no-deforestation through their supply chain and avoid transparency.” Sime Darby has said that it lacks the budget for sustainability programmes like the HCSA, a methodology companies use to avoid cutting down high-value forests.

Rosoman said that while he had no new information on the current allegations of labour rights breaches, there has been unresolved social conflicts in Sime Darby plantations for “many years”.

Among the most high profile incidences of human rights violations in Sime Darby’s operations have occurred in Liberia, where the company ran plantations from 2009 until 2020. Sime Darby was accused of torturing and manhandling residents in and around its concessions, allegations the company denied.

Rosoman said Sime Darby’s apparent lapses in its commitment to stamp out exploitation also reflect a failure by the Roundtable on Sustainable Palm Oil (RSPO), the industry’s lead eco certifier. Sime Darby is a key RSPO member and all of its plantations are RSPO certified, which is an assurance that crops are grown exploitation-free.

RSPO has said it needs more information to investigate the matter, and confirmed that a review of audit findings last year did not raise any red flags against Sime Darby.

Sime Darby’s US ban comes four months after another Malaysian palm oil company, FGV Holdings, the world’s largest crude palm oil producer, was blocked from selling its products in the US after an investigation found forced labour in its operations.

Such allegations have further worsened palm oil’s image and prompted consumer-facing brands to remove palm oil from their products. In September last year, Australian confectioner Darrell Lea followed the likes of British cosmetics brand Lush and retailer Iceland to declare that it was palm oil-free.

Anwarudin told Eco-Business that the industry had its work cut out to demonstrate that palm oil can be grown responsibly. “We need to maintain the trust of customers and stakeholders. We don’t claim to be completely clean. But we work with stakeholders to resolve issues quickly whenever they arise.”

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