Baseline Assessment: Assessing working conditions in L’Oréal’s coconut supply chain in the Philippines (Cotabato and Davao Del Sur)

L’Oréal, the world’s largest beauty and personal care company, has been working with the Fair Labor Association since 2021 on projects like Harvesting the Future programs in Türkiye and Egypt. In 2024, L’Oréal joined FLA, pursuing Fair Labor Accreditation for its coconut oil and derivatives supply chain (referred to simply as its coconut supply chain) in the Philippines.

In March 2025, we completed this baseline assessment of L’Oréal’s prospective supply chain for copra, the dried fruit of a coconut that can be processed into oil-based derivatives for cosmetics. The company had identified two cooperatives as potential sourcing locations based in the towns of Makilala, Cotabato province, and Magsaysay, Davao del Sur province.

For this baseline assessment, we held interviews with farmers, workers, intermediaries, and community and government stakeholders to understand the local farming context. Seventy-nine farmers and 11 workers participated in the labor risk assessment to verify labor practices against our Workplace Code of Conduct (COC), which establishes labor standards aimed at achieving decent working conditions based on International Labour Organization (ILO) standards and internationally accepted good labor practices.

We also conducted interviews with stakeholders and community members to gather additional information on labor and socio-economic issues that impact the communities where the three cooperatives are based.

Assessment background and methodology

Our baseline assessments provide situational awareness by examining the status of a company’s supply chain, country risks, community profile, local stakeholders, farmer and worker profiles, and labor risks. Baseline assessments also guide the development of a company’s monitoring and remediation program.

As part of the annual due diligence cycle for our members, we also conducted a supplier’s Human Rights Due Diligence (HRDD) evaluation and an Independent External Monitoring (IEM) assessment of L’Oréal’s coconut supply chain against the Fair Labor Code and Compliance Benchmarks for Agriculture with this baseline assessment in 2025. The purpose of these assessments is to supplement the baseline assessment with deeper insights into the cluster-level state of internal supply chain operations, fundamental labor management systems, and labor risks, among other topics.

Key findings from this report

The labor risk assessment covered the nine elements of our COC. Key findings include issues related to the informal nature of the sector:

• Compensation and benefit structures: Profit sharing arrangements between landowners and farmers and/or between the farmers and workers made it difficult to establish decent payments.
• Lack of awareness in basic labor rights and standards: Farmers and workers lack awareness of basic labor standards such as minimum wage, minimum working age, and more.
• Worker protections: Farmers had a general lack of awareness of, or measures in place to protect, workers’ freedom of association and collective bargaining and occupational safety and health (including preventative measures such as personal protective equipment).
• Weak management and operational practices as business: As cooperatives are still being formalized and strengthened, cooperative members are still developing their knowledge and capacity to manage international buyers’ labor expectations.

Finally, though the assessment did not identify any cases of child labor and forced labor, general risks in the sector may exist due to informal employment relationships and farmers’ lack of awareness on relevant national and international regulations for young workers and children.