Dutch Banking Sector Agreement finalizes value chain analysis on palm oil. One of the commitments of the Dutch Banking Sector Agreement (DBA) is that parties and adhering banks will conduct value chain analyses of high risks sectors. After publishing a consultation version in 2018, parties and adhering banks are now publishing the final value chain analysis report on palm oil.
Banks are financing (parts of) the palm oil value chain and according to the United Nations Guiding Principles on Business and Human Rights (UNGPs), they should avoid infringing human rights and address adverse human right impacts with which they are involved. This analysis helps parties and adhering banks to address human rights risks in palm oil collectively and individually.
Mapping of human rights impacts
The parties and adhering banks to the DBA (banks, civil society organisations, government and trade unions) mapped the human rights impacts in the palm oil value chain from their collective areas of expertise. In accordance with principle 24 of UNGPs, they subsequently determined which human rights impacts were most severe and should therefore be addressed with priority. In this process, the prioritization criteria “scale”, “scope” and “remediability” were used, as referred to in the commentary to principle 14 of the UNGPs.
The analysis is based on the expertise of parties and their networks, expertise of local stakeholders, output of expert meetings, input on the consultation version and the findings of the fieldtrip to Indonesia. The involvement of multiple stakeholders, who contributed to the analysis from various perspectives and interests, resulted in a thorough analysis with conclusions and practical follow up actions.
Palm oil is used in many consumer goods ranging from food to cosmetics. It is also used for the production of biofuel. While palm oil is produced in many countries, Malaysia (35%) and Indonesia (55%) are the lead exporters.
The analysis describes the steps, activities and actors in the value chain: from palm oil grower to palm oil consumer. In this value chain more than twenty human rights issues are identified, of which eight are prioritized as most severe human rights impacts that need to be addressed first. These are:
- Living wage/living income – Smallholder farming families
- Labour rights – Trade union rights abuses
- Labour rights – Forced labour
- Labour rights – Health and safety
- Land-related human rights – Governance (land conflict and land grabs)
- Groups facing particular risks – Children (migrant children in Malaysia)
- Groups facing particular risks – Migrants (interstate and domestic)
- Groups facing particular risks – Human rights defenders (Latin America)
Practical follow up actions
Conclusions were formulated on the basis of the analysis. In addition, a number of practical follow-up actions were identified linked to the 8 prioritized human rights issues. For example, parties are going to work on a database of CBA’s (collective bargaining agreements) on Indonesian palm oil plantations and are exploring whether an impact banking project can beset up in the palm oil sector.