BankTrack report assesses responses of 15 banks to evidence of serious labour abuses by company they financed, IOI Corp.
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Author: IOI Corp
IOI is committed to safeguarding the rights and welfare of all our staff and workers. As mentioned in your report, we have appointed a Malaysian NGO, Tenaganita to review the labour and working conditions in our operations. Tenaganita will be visiting our operating units to conduct stakeholder engagements and to review our systems and processes. These visits are to follow up on our corrective measures and action plan that was published in December 2014 and also to conduct further investigations and verification with our workers to provide a gap analysis to allow IOI to identify areas for enhancement. Tenaganita’s review and visits are presently in progress and we expect some preliminary reports by May 2016. IOI welcome and appreciate all constructive feedback and comments especially when they are balanced and factual where all parties have been given an opportunity to response. We proactively strive to improve and enhance our systems and processes to raise our standards upon receiving valid information. As evident in our Sustainability Policy, IOI is fully committed to upholding the Universal Declaration of Human Rights, furthermore, as a founding member of the RSPO we are in compliance with all the ratified ILO Conventions. We would, specifically, like to highlight the following issues concerning the rights and welfare of our workers...
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- This is a response from the following companies: IOI Group
IOI Corporation is one of Malaysia’s largest conglomerates and one the world’s largest palm oil growers and traders, estimated as representing around one-tenth of the global trade in palm oil. A 2014 investigation by the Finnish corporate responsibility NGO Finnwatch found severe violations of labour standards in a number of the company’s Malaysian plantations. These include withholding workers’ passports, denying their rights to join trade unions, and failure to pay the minimum wage. Fifteen of the world’s largest commercial banks have been found to have been involved in financing IOI Corporation over the last five years, primarily by providing corporate loans, underwriting bond issuances for the company or owning or managing its shares....We contacted the 15 banks identified as linked to the company to request details of the due diligence processes they have used to assess the risks of actual or potential human rights impacts caused by the company, and how they have responded to the issues identified. We analyse the response of the 14 banks which responded below.
New BankTrack Human Rights Impact Briefing: Labour standards violations in IOI Corporation’s Malaysian plantations
Author: Bank Track
Banks must do more to meet their obligations under UN guidelines to disclose how they respond to specific human rights impacts linked to their finance. This is the main conclusion of a the first in a new series of Human Rights Impact Briefings released by BankTrack today, which assesses the responses of fifteen large commercial banks to evidence of serious labour standards violations by a company they financed, the Malaysian palm oil grower IOI Corporation. The series of briefings intends to shed light on the extent to which banks are living up to their responsibilities under the UN Guiding Principles, by examining specific instances of human rights violations linked to bank finance, and asking banks to explain how they have responded. For this first briefing, BankTrack presented banks with existing research by Finnwatch...which documented how IOI Corporation had blocked foreign workers on their plantations from joining trade unions, withheld their passports - a recognised indicator of forced labour, and failed to pay some workers the minimum wage. Banks were asked to detail how they had met their responsibilities to seek to prevent or mitigate these impacts. Under the UN Guiding Principles on Business and Human Rights, adopted in 2011, all businesses are required to seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships. Further, they have a responsibility to account for how they address such human rights impacts by communicating this externally. While all banks but one responded, half of these did not acknowledge their links to IOI Corporation or discuss the specific impacts raised in the briefing. This is despite the evidence of these financial links being available either publicly or on industry databases to which banks themselves provide information. Four banks cited concerns around customer confidentiality as reasons for not providing further disclosure.
How banks responded
1. No response: Bank of China
2. Response with no comment on specific case: Credit Suisse; HSBC; Mitsubishi UFJ Financial; Mizuho Financial; Morgan Stanley; Sumitomo Mitsui Financial; UBS
3. Confirmation of link with IOI Corporation, but no response to issues raised: Citigroup; Intesa Sanpaolo; Société Générale; Standard Chartered
4. Response outlining some action taken in response to the issues raised: Crédit Agricole; Deutsche Bank; JPMorgan Chase