05 March 2018

Neste's human rights program making gradual impacts on labor issues within the palm oil industry

Neste Corporation

News

5 March 2018

Neste's human rights program making gradual impacts on labor issues within the palm oil industry

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At Neste, we recognize that we have an important role to play in preventing adverse human rights impacts and addressing the risks that are linked to our business activities. Over the past few years, we have focused heavily on improving and fine-tuning our approach and means to carry out human rights due diligence both in our own operations and in our value chains.

In August 2017, we updated our human rights commitment and published a set of principles that clarify our standards with regards to human rights. Together with Neste Code of Conduct and Supplier Code of Conduct, we believe we now have a strong human rights framework for our employees and partners to lean on.

In order to truly have impacts in human rights, we have started identifying potential human rights issues and put in motion a plan to manage the associated risks, particularly in our palm oil supply chain.

Engagement to ensure capacity building

"Collective awareness and understanding of issues that have impacts on people and communities are necessary for transformation to happen on the ground," explains Neste's human rights specialist Yan Peng Ng. "Meaningful engagement with our business partners and those we interact with along our supply chain is key to encouraging them to set their own development programs to uphold mutual obligations to respect human rights in their own activities. Therefore, we have mobilized ourselves to have direct dialogues and engage with as many suppliers as we possibly can."

To foster face-to-face dialogue, we started organizing Neste supplier workshops with our partner and social issues' expert BSR (Business for Social Responsibility). The events we have organized so far in Malaysia and Indonesia, conducted in 2015 and 2016 respectively, were built upon the findings of two separate social and labor impact assessments of the palm oil industry. In addition to sharing key observations from the assessments, the workshops also enabled us to carry out consultations with our suppliers' on their key concerns and opinions.

The first workshop in Malaysia in November 2015 focused on recruitment and rights of migrant workers who make up the majority of the workforce in Malaysian oil palm plantations. The second supplier workshop held in February 2017 in Indonesia consisted of role-play sessions on the working conditions and labor issues, such as adequate wage and casual workforce, which are relevant in the Indonesian context. The importance of workers' "voice" and access to effective grievance mechanisms were also highlighted. The scenarios were derived from the assessment conducted in partnership with two major palm oil suppliers at their plantations, with experts from BSR.

Have we managed to make an impact?

Altogether 46 participants representing 12 of Neste's suppliers have been reached with the supplier workshops. Many more have been reached by other types of engagement. Views and thoughts have been exchanged, feedback offered and received. But have we had an impact on human rights? As impacts of these types are difficult to measure and verify, we asked some of our stakeholders to share their thoughts:

"Not many companies engage in a partnership with their suppliers like Neste does. Normally companies do a top-down assessment or audit and then ask suppliers to fix the problems discovered. This approach usually results in quick fixes that are not long-lasting," explains Jaewon Kim, Associate Director from BSR. "If you really want to make an improvement, you have to make the supplier understand the basics of the problem. This is what Neste does. It engages with its suppliers to identify the root cause in the context of the supplier's perspective."

"When palm oil company IOI's recruitment practices and treatment of migrant workers were implicated in Finnwatch's reports in 2014 and later in 2016, Neste took findings on one of its palm oil suppliers very seriously. IOI and Neste were engaged in dialogues even before the RSPO suspension was imposed on IOI due to land use issues and failing to protect peat forests. At the same time, there was a good cooperation between Neste and Finnwatch. This supported IOI's efforts to change. IOI later engaged BSR to help them look into the issues at hand from a third party point of view. Together, these created a positive environment that helped IOI to improve, and it did. IOI revamped its labor policies, and continues to make positive progress in sustainability," Jaewon Kim concludes.

"In October 2017, IOI Group announced three major labor policies, committing to no longer charging recruitment fees to its workers, respect freedom of association and strive towards paying a living wage. These policies, if implemented properly, set a new standard in an industry that has been repeatedly exposed for labor rights violations and worker exploitation. We at Finnwatch are expecting Neste to apply similar standards to all of its palm oil suppliers. Now that the industry is taking major steps forward, also RSPO, the leading palm oil sustainability certification, should take these developments into account when updating its criteria," summarizes Sonja Vartiala, Executive Director, Finnwatch.

"Three years after Finnwatch's findings and two years after Neste-BSR social assessment in Malaysia, IOI launched an initiative in which the company aims to take responsibility for paying for the recruitment costs of its migrant workers. Neste was the first company to look at this issue and gradually, we are now witnessing a change in the industry. Neste and BSR have also worked with other Malaysian palm oil suppliers on managing their migrant workers and helped the companies understand why they should be concerned. Eventually, also these suppliers have started to look at migrant workers' issue differently," Jaewon Kim from BSR continues. "I believe Neste is on the right track: it listens instead of forces, it aims at making a profound change instead of just fixing a problem. It has a good foundation to go further."

Work continues

"We kick-started our human rights program in an area where we feel our positive impact could be the largest. Our program contributes to the overall sustainability transformation of the palm oil sector, which we started with our work to prevent deforestation but that has since been expanded towards social issues", explains Sustainability Director Johan Lunabba from Neste. "But we are still far from the finish line because tackling social issues is challenging. Companies cannot force one another to pay certain wages or to provide certain services to their employees if they are not required by law. We believe, however, that by promoting good practices and by inspiring our suppliers we can encourage them to do the same to in their supply chains. This is how we can contribute to larger-scale transformation."

Further information:

Johan Lunabba, Director, Sustainability, tel +358 50 458 0795, johan.lunabba(@)neste.com

Read also:

Neste ranked the 2nd most sustainable company in the world

New human rights principles strengthen Neste's commitment

Neste in brief



Neste (NESTE, Nasdaq Helsinki) builds sustainable options for transport, business and consumer needs. Our global range of products and services allows customers to lower their carbon footprint by combining high-quality and low-emission renewable products and oil products with tailor-made service solutions. We are the world's largest producer of renewable diesel refined from waste and residues, and we are also bringing renewable solutions to the aviation and plastics industries. We want to be a reliable partner with widely valued expertise, research and responsible practices. In 2016, Neste's net sales stood at EUR 11.7 billion. In 2018, Neste placed 2nd on the Global 100 list of the most sustainable companies in the world. Read more: neste.com