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Supply Chain Innovation

Fair Labor Association Statement on FGV Affiliation

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Friday, October 2, 2020

The Fair Labor Association (FLA) board of directors approved the application of FGV Holdings Berhad (FGV) to become a Participating Company in the FLA in October 2019. The FLA affiliation illustrated interest by FGV, a major industry supplier of palm oil and palm kernel oil, to address systemic labor issues in its palm oil supply chain.

The FLA is committed to working with companies that demonstrate top-level commitment to improve working conditions by implementing a labor compliance program that upholds stringent labor standards that are independently verified and transparent. The announcement by U.S. Customs and Border Patrol on September 30, 2020 of a Withhold Release Order (WRO) for all palm oil and palm oil derivative products produced by FGV signals the importance of the work that FGV recently began with the FLA to address labor standards in its supply chain.

As part of its affiliation, FGV and the FLA developed an action plan to address workers’ rights—with a focus on forced labor—in its owned palm oil operations and extended supply chain, including smallholder farmers in Malaysia and Indonesia. The action plan, based on an initial assessment by the FLA and consultations with local and international civil society organizations, was published in March 2020.

Within the first year of FLA affiliation, FGV is required to align its standards with the FLA Workplace Code of Conduct, which outlines internationally accepted good labor practices that address not only child labor and forced labor, but also the full range of labor rights issues such as employment relationship, nondiscrimination, harassment and abuse, freedom of association and collective bargaining, health, safety and environment, hours of work, and compensation.

On September 30, 2020, the FLA released a scheduled update on FGV’s performance against the action plan covering January through September 2020. This report presents the FLA’s assessment of the activities undertaken by FGV to enhance its internal labor standards management systems and begin implementation of FLA standards in its owned operations. FGV’s efforts and FLA’s verification will intensify in the coming quarter. The FLA is scheduled to publish its next update on FGV progress in March 2021.

In the near future, working within the limitation of the COVID-19 pandemic, the FLA intends to undertake forced labor focused assessments in FGV’s owned operations. In recognition of the need to address not only labor conditions with FGV, but also its full supply chain, the FLA has made strong recommendations to FGV to include the upstream supply chain in FLA’s assessment scope.

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