Year 2014
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Labor rights at palm oil plantations – an NGO's point of view

"Finnwatch, a Finnish human rights organization focusing on corporate responsibility, investigated the realization of labor rights at the plantations of the IOI Group, Neste Oil's Malaysian palm oil supplier, in 2014. The Finnwatch report published in September revealed several severe shortcomings related to working conditions at IOI's plantations, such as salaries under the minimum wage, limitations to the right to strike and professional organization and problems related to recruitment. It should be noted that Neste Oil was the only one among the surveyed companies that traced all of the crude palm oil it uses to the plantations using mass balance and segregation tracing methods.

IOI Group has prepared the first action program to address some of the problems raised in our report. We are still waiting for Neste Oil to provide information about the concrete measures with which it will ensure the realization of labor rights throughout its supply chain. We consider it likely that the problems observed with IOI Group are also common at other Malaysian plantations.

Good cooperation, but room for improvement in openness

During the preparation of the Finnwatch report, Neste Oil acted openly and provided a substantial amount of information to Finnwatch. The company also encouraged the IOI Group to provide Finnwatch people with access to individual plantations. Nevertheless, there is reason to remark that Neste Oil still has a lot to do in relation to increasing the openness of its operations. In spite of years of criticism by NGOs, the company has still not published all of its palm oil suppliers or information concerning individual plantations supplying palm oil to Neste Oil. By keeping their supply chain secret, Nest Oil maintains a contrary position in regard to the Finnish Government resolution on ownership policy that encourages companies to pay attention to the transparency of supply chains.

Room for development in monitoring with regard to labor rights

Neste Oil has prepared extensive policies on corporate responsibility from ecological and social points of view. In spite of these policies, Neste Oil has exclusively relied on international palm oil certification systems in the monitoring of labor rights. According to the Finnwatch report, it is obvious that these certifications are not, in their current form, sufficient to guarantee the rights of employees. Neste Oil should improve its policies in relation to the monitoring of working conditions and should also pay more attention to human rights in the audit systems it uses. Neste Oil and the certification systems it uses should commit to the international principles of labor rights in the production of palm oil prepared by NGOs.

Even though the Finnwatch report published in fall 2014 focused on labor rights, it also briefly touched the subject of tax responsibility in palm oil production. Company tax responsibility is a growing international trend that Neste Oil should also increasingly acknowledge in the future. In addition, Neste Oil should prepare responsibility guidelines on the payment of taxes and start publishing an extensive country-by-country tax report."

Sonja Vartiala,
Executive Director,
Finnwatch