Oil (palm)

• The palm oil sector includes both large commercial plantations and smaller producers. Palm oil from different producers is mixed at mills and refineries. The large conglomerates who own these processors may also control some upstream suppliers, but processors typically source products from many third-party suppliers to meet market demands for palm oil. Given the complexity of supply chains, Roundtable on Sustainable Palm Oil (RSPO), which is the leading palm oil certification initiative, provides for mass balance and certificate trading approaches to product tracking that do not require segregation of product from certified suppliers. While these approaches are common, they have received NGO, media, and advocate criticism for reduced transparency.¹Torrico, Gonzalo and Edwin Montesinos. “RSPO: Over a Hundred Complaints Fail To Curb Palm Oil’s Impact on Rainforests.” Pulitzer Center, 14 June 2022, pulitzercenter.org/stories/rspo-over-hundred-complaints-fail-curb-palm-oils-impact-rainforests.
• Mid-tier Gatekeeper approaches at mills (which are common chokepoints for palm oil) require mills to implement due diligence systems for responsible sourcing and can fill some upstream traceability gaps.
• The palm oil sector relies heavily on both domestic and transnational migrant labor; migrant workers are often recruited by third-party labor brokers. These workers are vulnerable to forced labor indicators, such as deceptive employment and debt bondage. Understanding the practices of these brokers is a critical aspect of combating forced labor risk. Existing certification systems have not always been successful in identifying and addressing risk for vulnerable workers, including migrant workers; therefore, companies seeking to more directly address labor rights risks should use traceability methods that enable them to conduct on-the-ground assessments with workers and local community members.

• The U.S. Department of Labor has identified forced labor in palm oil production in Indonesia and Malaysia.²List of Goods Produced by Child or Forced Labor. Bureau of International Labor Affairs, 28 September 2022, www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2021/2022-TVPRA-List-of-Goods-v3.pdf.
• The U.S. Department of Labor has reported child labor in palm oil production Indonesia, Malaysia, and Sierra Leone.³List of Goods Produced by Child or Forced Labor. Bureau of International Labor Affairs, 28 September 2022, www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2021/2022-TVPRA-List-of-Goods-v3.pdf.
• NGO research has noted the risk of forced labor in Colombia, Ecuador, Nigeria, and Myanmar⁴Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/.  : Verité. “Toolkit for Palm Oil Producers on Labor Rights.” April 2021, www.verite.org/wp-content/uploads/2021/04/Verite-Palm-oil-toolkit-English.pdf as well as the risk of child labor in Ecuador, Myanmar, and Sierra Leone.⁵Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/. : Verité. “Toolkit for Palm Oil Producers on Labor Rights.” April 2021, www.verite.org/wp-content/uploads/2021/04/Verite-Palm-oil-toolkit-English.pdf 
• Labor rights organizations have identified migrant workers in the palm oil sector in Burundi, Liberia, and Uganda.⁶Verité. “Trafficking Risk in Sub-Sharan African Supply Chains.” www.verite.org/africa/explore-by-commodity/palm-oil/.  The palm oil industry relies particularly heavily on migrant workers in Malaysia. These migrant workers are primarily from Indonesia, Bangladesh, the Philippines, or Nepal and are often recruited through third-party labor brokers.⁷Gottwald, Eric. “Certifying Exploitation: Why ‘Sustainable’ Palm Oil Production is Failing Workers.” International Labor Rights Forum,  laborrights.org/sites/default/files/publications/NLFGottwaldPalmOil.pdf. In Malaysia, some employers limit the mobility of laborers by restricting or taking away their visas, passports, and work permits.⁸Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/.
• Women represent a significant percentage of the palm oil sector workforce in Indonesia, often as casual workers with insecure employment. Some women work without pay to help their husbands meet high quotas or other wage structures that utilize piece rate payments. Female workers are subject to harassment and abuse, as well as unsafe working conditions.⁹Mason, M. & McDowell, R. “Rape, abuse in palm oil linked to top beauty brands.” The Associated Press, 2020, apnews.com/article/palm-oil-abuse-investigation-cosmetics-2a209d60c42bf0e8fcc6f8ea6daa11c7. Piece-rate or quota-based compensation can also contribute to child labor risk.¹⁰“Palm Oil and Children in Indonesia.” UNICEF, 2016. www.unicef.org/indonesia/media/4391/file.

• Smallholder farmers are key producers of palm oil. In Indonesia, smallholder producers not linked to any particular company or mill manage roughly one-quarter of the country’s palm oil plantations.¹¹Suhada, Thontowi, Bukti Bagja and Shofia Saleh. “Smallholder Farmers Are Key to Making the Palm Oil Industry Sustainable.” World Resources Institute, 2018, www.wri.org/insights/smallholder-farmers-are-key-making-palm-oil-industry-sustainable#:~:text=Most%20point%20to%20large%20corporations,of%20Indonesia’s%20palm%20oil%20plantations. Given that Indonesia and Malaysia account for approximately 90 percent of global palm oil production, smallholder plantations play an important role in palm oil supply chains.¹²”Palm Oil Production.” European Palm Oil Alliance. www.palmoilalliance.eu/palm-oil-production/. Similarly, in Africa, smallholder farmers are responsible for 70 to 90 percent of palm oil production.¹³Verité. “Trafficking Risk in Sub-Saharan African Supply Chains: Palm Oil.” www.verite.org/africa/explore-by-commodity/palm-oil/.
• Palm oil from different producers is often mixed together during processing, making it difficult to trace back to a single origin.¹⁴Schuster Institute for Investigative Journalism at Brandeis University. “Outline of Production: Palm Fruit to Product.” www.schusterinstituteinvestigations.org/palm-oil-supply-chain.
• While a small number of corporations and corporate groups control Indonesia’s palm oil refineries and export market, there are numerous smaller companies that own mills and plantations. This dispersion indicates a lack of vertical integration that can contribute to opaque sourcing relationships.¹⁵Pirard, R. et al. “Corporate ownership and dominance of Indonesia’s palm oil supply chains.” Trase Insights, 2020, http://resources.trase.earth/documents/infobriefs/infobrief09EN.pdf.

• There is a documented risk of forced labor and child labor in many palm oil producing countries, including the two top producing countries, Indonesia and Malaysia.
• Forced labor exists at many points in the supply chain, including the cultivation and harvesting of palm fruit as well as milling and refining stages.¹⁶Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/.

The cultivation and harvesting stage in palm oil production begins with a three-year process of weeding, growing, and applying pesticides to oil palm trees. When the fruit that grows on oil palm trees is ripe, it is typically removed using scythes or long poles with sharp chisels and collected from the ground. In the milling stage, the fruit is softened by heating it before it is separated from the bunch through a process called threshing. Once separated, palm fruit kernels are delivered to processing plants to extract crude palm oil, which is then further processed and refined for the target good.¹⁷Verité, ”Commodity Atlas: Countries Where Palm Oil is Reportedly Produced with Forced Labor and/or Child Labor,” www.verite.org/project/palm-oil-3/.  Forced labor and child labor risks are highest in these stages, particularly in the cultivation and harvesting nodes. To learn more about the nodes that comprise Palm oil supply chains and where risk is present, read through the U.S. Department of Labor’s Palm Oil Storyboard, which is part of the Exposing Exploitation in Global Supply Chains Series. 

• 1
  Torrico, Gonzalo and Edwin Montesinos. “RSPO: Over a Hundred Complaints Fail To Curb Palm Oil’s Impact on Rainforests.” Pulitzer Center, 14 June 2022, pulitzercenter.org/stories/rspo-over-hundred-complaints-fail-curb-palm-oils-impact-rainforests.
• 2
  List of Goods Produced by Child or Forced Labor. Bureau of International Labor Affairs, 28 September 2022, www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2021/2022-TVPRA-List-of-Goods-v3.pdf.
• 3
  List of Goods Produced by Child or Forced Labor. Bureau of International Labor Affairs, 28 September 2022, www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2021/2022-TVPRA-List-of-Goods-v3.pdf.
• 4
  Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/.  : Verité. “Toolkit for Palm Oil Producers on Labor Rights.” April 2021, www.verite.org/wp-content/uploads/2021/04/Verite-Palm-oil-toolkit-English.pdf
• 5
  Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/. : Verité. “Toolkit for Palm Oil Producers on Labor Rights.” April 2021, www.verite.org/wp-content/uploads/2021/04/Verite-Palm-oil-toolkit-English.pdf 
• 6
  Verité. “Trafficking Risk in Sub-Sharan African Supply Chains.” www.verite.org/africa/explore-by-commodity/palm-oil/. 
• 7
  Gottwald, Eric. “Certifying Exploitation: Why ‘Sustainable’ Palm Oil Production is Failing Workers.” International Labor Rights Forum,  laborrights.org/sites/default/files/publications/NLFGottwaldPalmOil.pdf.
• 8
  Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/.
• 9
  Mason, M. & McDowell, R. “Rape, abuse in palm oil linked to top beauty brands.” The Associated Press, 2020, apnews.com/article/palm-oil-abuse-investigation-cosmetics-2a209d60c42bf0e8fcc6f8ea6daa11c7.
• 10
  “Palm Oil and Children in Indonesia.” UNICEF, 2016. www.unicef.org/indonesia/media/4391/file.
• 11
  Suhada, Thontowi, Bukti Bagja and Shofia Saleh. “Smallholder Farmers Are Key to Making the Palm Oil Industry Sustainable.” World Resources Institute, 2018, www.wri.org/insights/smallholder-farmers-are-key-making-palm-oil-industry-sustainable#:~:text=Most%20point%20to%20large%20corporations,of%20Indonesia’s%20palm%20oil%20plantations.
• 12
  ”Palm Oil Production.” European Palm Oil Alliance. www.palmoilalliance.eu/palm-oil-production/.
• 13
  Verité. “Trafficking Risk in Sub-Saharan African Supply Chains: Palm Oil.” www.verite.org/africa/explore-by-commodity/palm-oil/.
• 14
  Schuster Institute for Investigative Journalism at Brandeis University. “Outline of Production: Palm Fruit to Product.” www.schusterinstituteinvestigations.org/palm-oil-supply-chain.
• 15
  Pirard, R. et al. “Corporate ownership and dominance of Indonesia’s palm oil supply chains.” Trase Insights, 2020, http://resources.trase.earth/documents/infobriefs/infobrief09EN.pdf.
• 16
  Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018, www.fairlabor.org/projects/assessing-forced-labor-risks-in-the-palm-oil-sector/.
• 17
  Verité, ”Commodity Atlas: Countries Where Palm Oil is Reportedly Produced with Forced Labor and/or Child Labor,” www.verite.org/project/palm-oil-3/. 
• 18
  List of exporters for the selected product in 2021 Product: 1511 Palm oil and its fractions, whether or not refined (excluding chemically modified). ITC Trade Map, www.trademap.org/Country_SelProduct.aspx?nvpm=1%7c%7c%7c%7c%7c1511%7c%7c%7c4%7c1%7c1%7c2%7c1%7c1%7c2%7c1%7c1%7c1.
• 19
  “Crops and livestock products.” Food and Agriculture Organization of the United Nations, www.fao.org/faostat/en/#data/QCL.