TFT and Fuji Oil bringing change to Malaysian palm oil

TFT and Fuji Oil bringing change to Malaysian palm oil

February 23, 2018

Since 2016, Japanese food manufacturer Fuji Oil Holdings and The Forest Trust (TFT) have been working together to influence and scale up change among their palm oil suppliers in Malaysia. This journey began with the release of Fuji’s Responsible Palm Oil Sourcing Policy, signifying their commitment against deforestation, peatland development and exploitation for all palm oil in their supply chain.

With such a big commitment at hand, the first step was to communicate Fuji Oil’s policy to its staff and suppliers, in person and in writing. Following this, TFT and Fuji Oil then mapped its supply chain, establishing transparency over the origin of its raw materials.

This facilitated the roll-out of transformation activities that have been focused around Fuji’s Palmaju refinery and its suppliers in southern Peninsular Malaysia. The first step involved an assessment of a supplying mill and its integrated oil palm estate in Kota Tinggi, Johor. This visit represented a gateway to bridge the gap between Fuji’s policy commitment and the reality on the ground. A two-way dialogue between the supplier and TFT helped build trust and an understanding of challenges faced.

The outcome of this visit was used to inform a comprehensive program to engage all mills in the Palmaju supply shed. This saw over 18 suppliers come together in Johor to review NDPE (No Deforestation, Peat and Exploitation) challenges that are known to exist in supplier operations.

Back at the mill in Kota Tinggi, TFT and Palmaju kick-started an intensive program with the mill to address a set of high priority social issues. Through the committed engagement of Palmaju, the mill management came to understand the changes afoot in the palm industry, giving its full support to align company practices with leading principles for human rights. A key objective of this program was to solve complex problems that not only this mill, but the entire industry is grappling with. Through these solutions, resources were developed to provide structure in the overhaul of company administration, paving the way for the transformation of other committed companies.

During three site visits spanning a six-month period, a joint TFT-Palmaju team engaged management from the mill and estate, as well as their workers. Discussions revolved around Fuji’s policy, international sustainability demands and the benefits of staying ahead of the curve by embracing change. The team rolled up their sleeves to develop solutions with the mill, putting ownership of the change journey in the mills hands from day one.

This was made possible by the mill’s positive reception, creating the space necessary for constructive dialogue. During the site visits, several good practices already in place were also observed. The mill was providing good quality housing, places of worship and recreation facilities for their workers. The relationship between workers and management was already strong – a reflection of the company’s values.

The continuous engagement process led to a shifting of mind-sets about business norms, and several on-the-ground changes were realised. The mill now has a formalised grievance procedure, a code of conduct for labour recruiters and individual contracts for workers. The contracts issued to foreign workers were reviewed by the Indonesian and Bangladeshi embassies to ensure consistency with each country’s laws. Company staff were also briefed about their new contracts and their right to handle grievances through a union.

Most significantly, the mill returned all foreign workers’ passports and installed safety lockers for workers to store their documents. All of their 200 plus foreign plantation workforce now hold their own passports. This is a great step in the right direction, given the widespread culture of passport retention in Malaysia.

The coming year will see efforts to strengthen the relationship between Palmaju and its suppliers, and scale up passport return and other transformation outcomes across the supply chain. To this end, a supplier evaluation has been sent to Fuji suppliers – furthering transparency across their supply chain and to aid ongoing transformation to align practices with NDPE principles.

Future workshops will be organised to gather suppliers and use their collective industry experience to come up with custom-made solutions and action plans to address the outstanding challenges that exist.