Strengthening Labour Rights within IOI’s Palm Oil Supply Chain
26/06/2023, Responsible Sourcing

Taking concerted action to safeguard human rights is key to effective implementation of the United Nations Guiding Principles on Business and Human Rights, which is becoming a norm in assessing businesses’ responsibility on human rights. To respect human rights by means of avoiding infringement and addressing adverse impacts will require adequate measures for prevention, mitigation and, where appropriate, remediation.

IOI Corporation Berhad (IOI) has recently concluded a collaboration on the Labour Transformation Programme (LTP) involving Earthworm Foundation (EF) and Winrock Solutions through Nestlé’s Human Rights Fund. The LTP provides a pathway to bridge gaps between market expectations and the current industry labour practices. The engagement framework of LTP is designed to support mill and plantation managements to guide them to adopt improved labour practices.

In September 2022, the first kick-off meeting was conducted in which the Kim Loong Resources Berhad, has agreed to implement the LTP programme in two of its operating businesses in Sabah, namely Kim Loong Sabah Mill and Kim Loong – KPD Plantations Sdn Bhd. The former is a Tier-1 supplier and the latter is a Tier-2 supplier to IOI Edible Oils (IOIEO). Over the course of six months, there were two intensive visits conducted inclusive of worker’s interviews, document review and management meetings to debrief and discuss findings based on the eight topics of good labour practices covered by the LTP. These include: workers’ contract, wages and working hours, grievance mechanism, freedom of movement and passport retention, freedom of association, recruitment practice, accommodations and, health and safety. 

There were two visit reports produced in October 2022 and March 2023. Based on the findings of the first visit report, IOI observed good practices employed by the mill such as obtaining written consent for overtime, and provision of better housing amenities such as beds, mattresses, and wardrobes, although the Workers’ Minimum Standards of Housing and Amenities (Amendment) Act 2019 (Act 446) has yet to be enforced in Sabah at the time of writing.

Following the findings and recommendations put forward in the final report of the second visit, IOI is pleased to note that the mill has incorporated a number of additional provisions to its employment contract, mandating one rest day for every six consecutive days of working and being open to the idea of absorbing the cost of repatriation ticket. As for the plantation, improvement on wage deduction with worker’s consent and better grievance documentation were reported.

Suffice to say that the engaged entities are now equipped with a personalised action plan to enhance their existing labour practices, and resource materials were shared to raise their awareness on applying various national and international standards on good labour practices. The engagement has highlighted a set of proposed priorities for both mill and estate managements to act upon post-LTP engagement.

Moving forward, IOI will continue to monitor the transformative steps that will be taken by the engaged entities and we will provide technical support to help close the remaining gaps. The goal is to achieve continuous improvement and maintain the good practices that have been adopted during the course of engagement. Subsequently, the engagement signifies our efforts to identify, prevent and where possible, provide remedy to address any possible challenges with regards to ensuring no social exploitation across our supply chain.

(File pic by IOI Corporation).

(File pic by IOI Corporation).