Neste's work on ensuring human rights in its palm oil supply chain strives to set good examples

Neste Corporation
News
2 November 2016

Neste's work on ensuring human rights in its palm oil supply chain strives to set good examples

Neste is working hard to tackle common challenges related to human rights and the fair treatment of workers in the palm oil industry. Collaboration with NGOs is crucial in advancing social sustainability.

For years, Neste has focused on tackling environmental issues related to its palm oil supply chain. Even though the significance of crude palm oil in Neste's portfolio of renewable raw material has dramatically diminished over the years - crude palm oil use currently representing less than 20% of the company's renewable raw material use while the rest, nearly 80%, consists of wastes and residues - the company has continued to work on improving supply chain transparency and engagement of smallholders to minimize the risk of deforestation. It has also relentlessly supported and pushed palm oil suppliers to develop methane-capturing systems at palm oil mills to minimize methane being released to the atmosphere. Methane is a greenhouse gas that has a much higher global warming potential than carbon dioxide.

As we all know, building and maintaining sustainable supply chains requires work that stretches beyond environmental issues.

"We conducted a social and labor assessment within our palm oil supply chain last year to identify areas that need further attention. Many of the issues we identified were linked to foreign migrant workers who are the major workforce in the palm oil plantations in Malaysia," explains Johan Lunabba, Director, Sustainability at Neste.

"Although we do not own any oil palm plantations, nor operate any palm oil refineries, we have strong business relationships with our suppliers and therefore have the leverage to make an impact. I believe we should use our influence to help improve the lives of those who are most vulnerable," Lunabba continues.

Most social issues are complex, and for this reason Neste has been cooperating with a global nonprofit organization Business for Social Responsibility (BSR), an expert in social issues. Most of the collaborative work between Neste and BSR has focused on Southeast Asia, a source of Neste's palm oil supplies, which has been identified as a high risk region in terms of human rights.

Multi-stakeholder programs to benefit individual workers and the industry at large

"Challenges related to ethical recruitment and fair working conditions for migrant workers are not specific to Neste's supply chain, and neither do they concern only the palm oil industry. These are systemic in countries that rely heavily on migrant workforce to drive their industries," explains Yan Peng, who is responsible for social improvement programs at Neste. She is currently developing an initiative to promote fair employment for workers in the palm oil industry.

Particularly high on Neste's priority list is the issue of migrant workers recruitment, which has been documented to consist of complex mechanisms that more often than not, result in cumulative fees charged to migrant workers to secure their employment. Such recruitment practices lead to debt-bondage and increase the vulnerability of migrant job-seekers.

Due to their complexity, handling issues related to international labor migration requires collaboration between concerned parties. "We hope to secure funding to kickstart the baseline research that is necessary for us to understand the root causes and enable us to develop solutions. At the same time, we will work on building partnerships among palm oil buyers, as well as producers, civil societies, non-governmental and inter-governmental organizations (NGOs and IGOs) in a joint-effort to tackle this complex issue on multiple fronts," Yan Peng lists. 

She points out additionally that a lot of good has already been done in advancing social sustainability in the palm oil industry. Neste, for example, aims at continuing to make a difference through increasing the number of smallholders the company already has in its supply chain.

"When working directly with smaller suppliers of palm oil, we get a transparent view of the challenges at the plantation level, and have the possibility to make direct impacts on human rights issues on the ground," Lunabba says.

Respecting human rights makes business sense

According to Lunabba, NGOs and international watchdog organizations are needed to keep human rights high up on the public and private agenda.

"Without close and transparent collaboration with NGOs, authorities, palm oil producers, and other companies in the palm oil value chain, it would have been challenging for Neste to drive remediation programmes in the industry. We aim to be a forerunner in social responsibility, driving the whole palm oil industry and all the global users of palm oil in the right direction and beyond mere regulatory compliance."

Lunabba stresses the fact that human rights and good business go hand in hand.

"In addition to being the right thing to do, making sure human rights are protected simply makes sense from a business perspective. If we were somehow, even indirectly, linked to violating basic human rights, it would also be a huge economic risk and burden."

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

Neste's approach to human rights

Neste is committed to respecting and promoting human rights throughout its value chain and in all its business relations. Neste's stand on many human rights issues is unambiguous. In its Code of Conduct, Neste pledges to provide a fair, safe and secure working environment for its employees and those directly impacted by its activities. In compliance with the Neste Human Rights Commitment, adopted for the entire Group in December 2015, Neste is committed to observing the human rights that are enshrined in the United Nations' Declaration of Human Rights and the fundamental principles set out in the International Labor Organization (ILO).

In light of these, respecting human rights is an absolute requirement for everyone in Neste's supply chain. To follow through at the practical level, Neste carries out a comprehensive review of operating practices and policies, including those related to human rights, on all companies before they are selected as our suppliers.

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Neste in brief

Neste is a pioneer in oil refining and renewable solutions. We provide our customers with premium-quality products for cleaner traffic and industrial products based on world-class research. We are the world's leading producer of renewable diesel, and our annual production capacity is more than 2 million tons. We also are the world's largest company providing renewable fuel from waste and residues. Our sustainable operations have received recognition in the Dow Jones Sustainability World Index and the Global 100 list of the world's most sustainable companies, among others. Our net sales for 2015 amounted to approximately EUR 11 billion, and our shares are listed on NASDAQ Helsinki. Cleaner traffic, energy and life are moved forward by about 5,000 professionals. More information: neste.com/en