US bans palm oil giant Sime Darby over forced labour

The US says it will ban all shipments of palm oil from Malaysian-owned Sime Darby Plantation and its local subsidiaries, joint ventures and affiliates after intensive months-long investigation by the US Customs and Border Protection’s Office of Trade, according to Ana Hinojosa, one of the agency’s executive directors.

The order against one of the world’s biggest producers comes after finding indicators of forced labour and other abuses on plantations that feed into the supply chains of some of America’s most famous food and cosmetic companies.

Sime Darby has palm oil plantations covering nearly 1.5 million acres, supplying to some of the biggest names in the business, from Cargill to Nestle, Unilever and L’Óreal, according to the companies’ most recently published supplier and palm oil mill lists.

In a telephone press briefing, Hinojosa said the investigation “reasonably indicates” abuses against workers that included physical and sexual violence, restriction of movement, intimidation and threats, debt bondage, withholding of wages and excessive overtime. Some of the problems appeared to be systemic, occurring on numerous plantations, which stretch across wide swaths of the country.

Sime Darby did not immediately comment.

Importers should know that there are reputational, financial and legal risks associated with importing goods made by forced labour into the United States, according to Hinojosa.

The order was announced just three months after the federal government slapped the same ban on another Malaysian palm oil giant, FGV Holdings – the first palm oil company ever targeted by Customs over concerns about forced labour. The US imported USD410 million of crude palm oil from Malaysia in fiscal year 2020, representing a third of the total value shipped in.

The bans, triggered by petitions filed by non-profit groups and a law firm, came in the wake of an in-depth investigation by The Associated Press into labour abuses on plantations in Malaysia and neighboring Indonesia, which together produce about 85% of the USD65 billion supply of the world’s most consumed vegetable oil.

Palm oil can be found in roughly half the products on supermarket shelves and in most cosmetic brands. It’s in paints, plywood, pesticides, animal feed, biofuels and even hand sanitiser.

The AP interviewed more than 130 current and former workers from two dozen palm oil companies, including Sime Darby, for its investigation. Reporters found everything from rape and child labor to trafficking and outright slavery on plantations in both countries.

In a comment, Hinojosa said the agency’s decision to issue the ban should send an “unambiguous” message to the trade community. Consumers have a right to know where the palm oil is coming from and the conditions under which that palm oil is produced and what products that particular palm oil is going into.

Under the order, palm oil products or derivatives traceable to Sime Darby will be detained at US ports. Shipments can be exported if the company is unable to prove that the goods were not produced with forced labor.