It’s Haze Time Again… (in America) and More

August represent the beginning of the haze season in Southeast Asia. This means two things.

First, and most importantly, is the potential threat to human health and forest areas.

Second is campaigns and finger-pointing at the palm oil sector, and claims against the Indonesian government.

It’s therefore worth putting together a situation report before the end of the dry season so we clearly understand what the region is dealing with this year, particularly as Indonesia is gripped by tragic COVID infection numbers.

Weather predictions indicate that this year will be what’s known as a La Niña – the opposite of El Niño. This generally means wetter conditions across most of Indonesia – as happened last year, with one of the wettest seasons on record.

This meant 2020 was one of the least problematic haze seasons on record, as pointed out by the Singapore Institute of International Affairs. This resulted in an 82 per cent drop in burned area in 2020 compared to 2019, which was also relatively low. We are now expecting a similar situation for 2021.

How does this compare globally?

Residents of the US would be well aware of the smoke haze from California is now stretching to the east coast of the US, with air quality in New York now hitting some of its worst levels on record.

Russian authorities are currently battling fires in Siberia covering an area roughly half the size of Switzerland.

Brazil has recorded its worst June fires in almost 15 years.

Just so we’re clear, over the past 12 months, burned area in the US has been more than 30 times that recorded in Indonesia, with similar figures for Brazil.

Several observers pointed out that this summer’s wildfires in the US have released around 41 million tonnes of CO2 equivalent – on par with annual GHG emissions from Hong Kong.

These events across the world are unquestionably tragic. But it puts Indonesia’s situation this year into context, particularly as its COVID cases top more than 3 million – a situation that is requiring the full attention of its government. 

The numbers – as they have in the past – are a timely reminder that it’s not palm oil that causes haze.

This year’s situation is also a reminder of the differential coverage in Western media. Previous haze seasons in Indonesia have been greeted with apocalyptic coverage in European media. When the fires are in rich countries – as they are now – it just isn’t news for some reason.

EU Due Diligence Gets Closer

The European Commission Directorate General for Trade has released its draft guidance on human and labour rights in supply chains. A quick reading of the guidance document at first glance indicates an approach that is sensible for what it is attempting to do: assist European companies ensure that they are not using products that have been produced with forced labour.

The document is potentially a preview of what the EU Commission might introduce in terms of its mandatory human rights and environmental due diligence, which is likely to emerge later this year.

There are three main risk factor areas that the document uses:

  • country risk factors – which includes among other things ILO treaty status, state labour programmes, access to unions and outlawed strike action;
  • migration risk factors – which includes high numbers of migrant workers, informal employment and recruitment;
  • debt risk factors – including restrictions placed on access to salaries, identity documents and pay for overtime.

It also lays out possible actions by companies, including guidance on risk assessments, actions to address problems, remediation and disengagement.

In the context of palm oil, the industry more broadly seems quite well positioned compared with other commodities. The widespread presence of certification and the labour requirements across ISPO and RSPO, for example, provide a good starting point for engagement by European companies.

This all starts with record keeping documentation. ISPO, for example, requires that palm producers facilitate access between workers and unions, and document the facilitation accordingly.

This type of process should – in theory – give EU companies a greater degree of comfort when assessing their palm oil supply chains.

The unknown, however, is what the forthcoming regulatory measure will actually look like. Although this guidance has been published by the Commission DG Trade, precisely where the European Parliament and Member States take it is unpredictable.

As we pointed out last week, Italy and Germany have both been labelled by the U.S. State Department as ‘Tier 2’ countries when it comes to trafficked labour. Other EU countries such as Greece have been named as particularly high risk countries on the Global Slavery Index.

What will be interesting going forward is how the EU deals with the problems in its own backyard.

DoL Goes to Borneo

Staying on labor, the US Department of Labor (DOL) has issued a funding opportunity document for a project to combat forced labor and child labor in Malaysia, with a specific focus on both garments and palm oil. The project also focuses – almost entirely – on Sabah and Sarawak.

The grant is part of the DOL’s Bureau of International Labor Affairs (ILAB) and set for USD5 million for a multi-year project. 

The project is looking for three major outcomes:

  • Outcome 1: Increased advocacy by workers and civil society to address forced labor and/or child labor in the production of Malaysian palm oil and garments;
  • Outcome 2: Increased worker voice in the implementation of a social compliance system aimed at eliminating forced labor and/or child labor in the production of Malaysian palm oil and garments; and
  • Outcome 3: Increased access to remedies for workers exploited for forced labor and/or child labor in the production of Malaysian palm oil and garments.

This is a significant point for the Malaysian industry; as has been well noted it has come under increased scrutiny in the United States for both palm oil and rubber gloves. The Biden Administration has underlined that it is placing worker rights and human rights on its trade agenda, just as the EU is stepping up its action.