Palm oil buyers and producers take collective action to improve labor conditions

16 Nov 2017 --- Palm Oil buyers and producers are joining forces to improve labor conditions and improve the working conditions and livelihoods of workers across the wider palm oil supply chain in Indonesia.

The group comprising of Colgate-Palmolive, Kellogg’s, Nestlé, Unilever and Wilmar International Limited, in collaboration with Business for Social Responsibility (BSR), is taking collective action, starting this month.

BSR will conduct a series of supplier workshops in the major palm oil producing regions in Sumatra, a large island in western Indonesia, and Kalimantan, the Indonesian portion of the island of Borneo.

The debate surrounding the sustainability of the palm oil industry is driving forward change within the industry. The companies involved in the palm oil supply chain are becoming much more aware of the sustainability issues and some key controversies including deforestation, habitat degradation, climate change, indigenous rights abuses including labor exploitation and other labor issues.

As the use of palm oil in food products has exploded in recent years, this has led to wider cultivation in some of the world’s most vulnerable tropical habitats, like Indonesia and Malaysia where countless hectares of forest get cleared to make space for oil-palm monoculture. 

On top of the loss of precious land, the natural habitat of endangered species of the orangutan (the Sumatran orangutan is listed as “critically endangered”) is being destroyed. 

Labor issues are also at the forefront as there have been several reports of abuses and exploitation within the industry. As part of reaching a sustainable palm oil industry, this needs to change and the workshops will help achieve this. 

Heighten awareness of the major issues 
Tailored for the medium and small suppliers, the workshops are designed to heighten awareness on wages, employment contract status and grievance mechanisms. Representatives from the government and union organizations are also involved so that key actors in the supply chain have a voice in this initiative.

“Besides raising awareness, we hope these workshops will create a shared understanding of the key issues around working conditions and livelihoods and more importantly, identify opportunities for real action to happen. We have always said that collective action is needed to change systemic and entrenched issues and we are excited to have several of our key partner brands onboard.”

As Asia’s leading agribusiness group, Wilmar International business activities include oil palm cultivation, edible oils refining, oilseeds crushing, consumer pack edible oils processing and merchandising, specialty fats, oleochemicals, and biodiesel manufacturing, as well as grains processing and merchandising. 

It has over 450 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries.

Perpetua George, General Manager of Group Sustainability at Wilmar, says the workshops will help make a real difference in the industry. 

“The objective of these workshops is to engage the entire value chain from producers (Wilmar and our suppliers) to buyers so that the wider oil palm community takes ownership of driving change and real impact on the ground,” she says. 

Jeremy Prepscius, Vice President, Asia Pacific at BSR, welcomes this series of workshops as an important initial step in helping to improve supplier awareness, and eventually implementation, of responsible labor practices across Indonesia. 

“We look forward to identifying further areas for collaboration with Wilmar, partner brands and other stakeholders to continue to drive change forward in the industry in a transparent manner,” he says. 

This collaboration is an extension of an earlier initiative implemented in November 2016 where Neste Corporation, a leading producer of renewable diesel, and BSR worked with Wilmar to review labor practices in three Wilmar-owned plantations located in two core palm oil producing regions in Indonesia. 

The outcome was positive engagement and a deeper understanding of salient labor issues. With growing support from additional partner brands, Wilmar is set on a unified approach towards improving labor practices.