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Supply Chain Innovation

Fair Labor Association Announces Affiliation of FGV Holdings Berhad and Procter & Gamble Chemicals

Miércoles, Noviembre 20, 2019

Timeline Set for Release of Action Plan and Activity Reports for Addressing Worker Rights With a Focus on Forced Labor

The Fair Labor Association (FLA) announced today that its board of directors approved the applications of FGV Holdings Berhad (FGV) and Procter & Gamble Chemicals (PGC) to become participating companies in the FLA.  The FLA affiliation demonstrates the commitment by FGV, a major industry supplier of palm oil and palm kernel oil, to address systemic labor issues in its palm oil supply chain. PGC’s participation, and active support of FGV, shows a desire to drive long-term change in the palm oil supply chain for the industry as a whole.

The FLA board’s decision follows a review of each companies’ palm oil operations and supply chain management systems and working conditions in Malaysia and Indonesia. Additionally, it examined documented instances of FGV’s lapses in ethical recruitment and employment, mainly related to migrant workers on palm oil plantations and in mills. The board also took into consideration FGV’s willingness to improve working conditions and uphold stringent labor standards in their palm oil supply chain, as well as their commitment to an independent review, verification, and public transparency of their social compliance program.

Given the urgency of the issues for workers in the palm oil supply chain, the FLA is partnering with the companies on an action plan for FGV’s owned, direct, and indirect operations which will address workers’ rights broadly with a focus on forced labor in its owned palm oil operations and extended supply chain, including smallholder farmers in Malaysia and Indonesia. FLA experts will engage with a variety of stakeholders, including local and international civil society organizations, to seek advice and feedback on the action plan.

Publication of the action plan will occur before March 31, 2020 after consulting with each company.  Subsequently, the FLA will publish reports documenting the activities against the deliverables outlined in the action plan starting with the first report the third quarter of 2020, and a second by the first quarter of 2021. After that, the FLA anticipates it will revert to its standard annual verification and public reporting.

Within the first year of FLA affiliation, FGV and PGC are required to align their standards with the FLA Workplace Code of Conduct. The FLA’s Code is based on International Labour Organization (ILO) standards and internationally accepted good labor practices that address child labor, forced labor, employment relationship, nondiscrimination, harassment and abuse, freedom of association and collective bargaining, health, safety and environment, hours of work, and compensation.

Furthermore, as FLA affiliates, the companies are required to develop a comprehensive social compliance and remediation program based on the FLA Workplace Code of Conduct for the Agriculture Sector and the Principles of Fair Labor and Responsible Sourcing or Production for Agricultural Supply Chains.

The FLA’s research on labor issues in the palm oil sector and its experience in the global agriculture sector provide a foundation for its affiliation with FGV and PGC. In 2018, the FLA issued a report on forced labor in the palm oil sector in Malaysia and Indonesia. The report, commissioned by the Consumer Goods Forum (CGF), documented indicators of forced labor and provided recommendations to address coercive practices including threats; violence and lack of clarity of employment terms and conditions; dependency on the employer; lack of protection by state/police; debt bondage; high recruitment fees; and involuntary overtime in Malaysia and Indonesia.

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For the past 20 years, the Fair Labor Association has worked to protect and promote the rights of workers across the global supply chain through collaboration among business, civil society, and colleges and universities. FLA is governed by a 19-member Board of Directors that includes an independent chair and eighteen members equally representing leading universities, labor and human rights organizations, and companies. FLA-affiliated companies and the factories that supply them commit to uphold high labor rights standards. The FLA conducts transparent and independent monitoring to identify the root causes of labor rights violations and work toward sustainable solutions.