RSPO action affects FGV

KUALA LUMPUR: FGV Holdings Bhd’s shares fell 2.6% after the Roundtable on Sustainable Palm Oil (RSPO) suspended the sustainability certification for some of the company’s plantations in Malaysia.

The plantation stock yesterday closed at RM1.49, down four sen, on volume of 17.7 million shares.

This has been the steepest decline in FGV’s shares since Jan 8. The drop in share price was also partly due to the weaker crude palm oil (CPO) prices.

According to Bloomberg data, the CPO price fell below the RM3,000 mark to RM2,956 at close yesterday.

On the suspension of the certification, RSPO said it has also re-imposed the suspension of FGV’s mill, Kilang Sawit Serting effective Jan 13.The non-profit sustainable palm oil body added that the complaints panel had reviewed six audit reports on the FGV units and the results were deemed to be unsatisfactory.

In a statement issued yesterday, FGV said the complaints panel had conducted audits in six FGV complexes namely Kompleks Jerangau Baru, Kompleks Selanchar 2B, Kompleks Serting, Kompleks Triang, Kompleks Lanchang Kemudi and Kompleks Nilam Permata.

“With the exception of Kompleks Serting, the other five complexes are currently uncertified. They were selected by the RSPO because of the complexity of issues in these areas, ” it added.

However, the planter noted it is appealing the decision of the suspension of sustainability certification to the complaints panel and RSPO as it claims that its action plans are in the process of being implemented.

Meanwhile, in a letter to FGV dated Jan 13, RSPO’s panel found out that FGV’s foreign workers were not adequately briefed on their future working conditions in FGV.

It also noted that the planter continues the practice of signing contracts with the foreign workers in Malaysia, instead of in their respective countries of origin.

To the findings, FGV responded that its current process of recruiting foreign workers involved working closely with local authorities in the countries of origin and with approved recruitment agencies that adhere to FGV’s internal policies.

Moreover, the panel also said that the planter has failed to ensure that newly hired foreign workers do not pay their agents unnecessary recruitment fees before joining FGV despite new policies instituted by it after Jan 2019.

On this, FGV noted that its contract with all recruitment agencies stipulate that no fee is charged to the workers throughout the recruitment process.

In addition, RSPO pointed out that FGV has still not completely phased out the use of contractors in Sabah even after implementing policies in Oct 2019. It also claimed that FGV employed around 7,000 undocumented workers in Sabah.

On the undocumented workers issue, FGV said that the registration of undocumented contract workers in Sabah has been completed by Dec 31,2019.

“FGV no longer hires workers through contractors in Sabah or anywhere else. There are also no undocumented foreign workers on FGV’s operations in Sabah or anywhere else, ” it said.

On the other hand, RSPO noted that the planter failed to provide evidence to support the claim that it was monitoring contract workers to ensure that the pay and working conditions meet the requirements of local labour laws.

With this finding, FGV said it does not hire any workers on its estates through contractors.

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