Human Rights and Forced Labor Due Diligence Lessons from the Sime Darby Palm Oil Matter

This article is a companion to our earlier discussion of the distinction between human rights due diligence and documentary compliance in the context of forced labor import restrictions, and to our survey of the proliferating forced labor import bans now taking root worldwide. It considers the Sime Darby Plantation matter as an illustration of human rights governance and remediation steps that can satisfy customs officials.

Human Rights Due Diligence and Forced Labor Import Restrictions

As discussed in our companion articles, forced labor import restrictions are spreading rapidly around the world. Compliance will require mapping and traceability, including expectations that companies will collect detailed and reliable documentation regarding their shipments – including details regarding their supply chains, the origin of materials and products, transportation documents, and proof of pricing and payment, among other things. However, whether under Section 307 of the Tariff Act of 1930 or the European Union's Forced Labour Regulation, guidance from Customs and Border Protection (CBP) and the European Commission (EC) emphasize that traditional human rights due diligence is critical.

In that respect, the successful response of Sime Darby Plantation Berhad (SDP), now SD Guthrie, to CBP's 2020 Withhold Release Order (WRO), resulting ultimately in a modified Finding that permitted covered products to be imported into the US, is highly instructive. While the facts of every case will be different, the Sime Darby matter illustrates a broader reality of modern forced labor enforcement: while traceability and documentation remain essential, authorities also look for evidence that companies have processes to identify, address, and remediate risks to international labor rights.

The CBP Action Against Sime Darby Plantation

Palm oil supply chains have faced sustained global scrutiny concerning the treatment of migrant workers, including recruitment practices, worker mobility, wages, working and living conditions, and access to effective grievance mechanisms. SDP is a major Malaysian palm oil producer. On December 30, 2020, CBP issued a WRO covering palm oil and derivative products produced by SDP, its subsidiaries, joint ventures, and affiliated entities in Malaysia, authorizing CBP to detain covered palm oil and derivative products from SDP at the US border, absent proof of admissibility. The WRO issued based on information reflecting the presence of all 11 International Labour Organization (ILO) forced labor indicators in SDP's production process, relying in part on evidence from civil society and media reports. The action had material implications for SDP, of course, but also the downstream purchasers, traders, manufacturers, and importers that relied on SDP's palm oil supply.

A year later, in January 2022, CBP escalated its enforcement posture. While a WRO authorizes detention of covered merchandise at the border pending proof of admissibility, CBP issued a definitive Finding of forced labor, effective January 28, 2022, converting its earlier "reasonably-indicates" assessment into a conclusive determination, as investigators reportedly gathered first-hand worker testimonies that matched across separate geographical plantations and SDP reportedly did not provide mapping and traceability data to the contrary. CBP concluded that multiple forced labor indicators operated in a mutually reinforcing manner, including debt-related vulnerabilities, restrictions on worker mobility, and controls over worker documentation.

SDP's Remediation and Human Rights Due Diligence Program

A year after that, however, on February 3, 2023, CBP announced that it had modified the Finding, effective immediately, after determining that SDP had remediated the forced labor indicators underlying the original enforcement action. From the issuance of the WRO to CBP's modification of the Findings the process took approximately 25 months. Nor was SDP the first Malaysian exporter to exit a Finding or WRO through remediation and governance changes. CBP previously modified its Finding against Top Glove Corporation Bhd. in September 2021 after verified repayment of more than $36 million in recruitment fees to over 12,000 workers, and later modified its September 2020 WRO against FGV Holdings Berhad, which included substantial infrastructure investments and financial reimbursements of over 23,000 workers.

Significantly, the path to modification for these companies, and SDP, involved much more than the production of supply-chain records or corrective-action plans, and reimbursing workers. According to SDP and CBP, in addition to a comprehensive scheme to repay migrant workers fees charged by third-party labor brokers, SDP instituted a thorough human rights governance scheme. It included:

• Risk identification. According to SDP's public reporting, it conducted assessments to explicitly trace operational realities against all 11 ILO forced labor indicators rather than local labor laws alone. It also evaluated its extended migrant worker recruitment channels, including vulnerabilities associated with third-party recruitment agencies in workers’ countries of origin, across countries like Bangladesh, India, and Indonesia
• Mitigation and Prevention. To systematically prevent debt bondage, SDP claimed it adopted a strict "No Recruitment Fee" policy, shifting all hiring costs to the corporation. It also established strict vendor vetting guidelines, blacklisting non-compliant agencies. The firm further sought to halt passport retention and workplace confinement by installing individualized, secure locker units managed strictly by the workers themselves and abolishing curfew-style physical restrictions on plantation grounds. To prevent the deceptive recruitment of vulnerable workers, SDP further implemented transparent, multi-lingual contract signing protocols in home countries, taking steps to ensure that laborers fully understand their wages, rights, and duties before deployment.
• Monitoring. SDP stated that it subjected its Malaysian operations to continuous, unannounced field monitoring and worker document reviews by external human rights organizations, followed by extensive remediation training and operational restructuring based on gaps identified. It also institutionalized wide-ranging governance changes and continuous internal programs to permanently monitor human rights policies and maintain long-term compliance, including a board-level oversight committee, embedding specialized compliance teams directly into its regional plantation management structures, instituting continuous, localized training programs for estate managers and field supervisors, and deploying enhanced monitoring systems and compliance-management tools to track implementation and identify emerging risks.
• Reporting. SDP reported that it formalized public disclosure streams, providing transparent progress metrics regarding their systemic human rights adjustments. It also presented exhaustive supply chain traceability and operational proof-of-compliance reports directly to CBP.
• Grievance Mechanisms. SDP stated that it introduced multi-lingual whistleblowing hotlines administered by independent third parties, granting marginalized migrant laborers a secure method to report exploitation without threat of retaliatory deportation. The firm also institutionalized localized worker councils and feedback loops, strengthening processes surrounding worker voice, and allowing field laborers to collectively raise welfare concerns directly to executive management.
• Remediation. SDP reported establishing a retroactive remediation fund to systematically calculate, verify, and directly repay migrant workers for extortionate fees charged by third-party labor brokers.   

Lessons Learned

Public statements by CBP and SDP indicate that SDP's remediation program included recruitment-fee remediation, strengthened recruitment controls, measures relating to worker documents and mobility, enhanced worker grievance and voice mechanisms, and strengthened monitoring and governance. Taken together, the measures illustrate the core elements of an effective human rights due-diligence program consistent with CBP expectations: identifying the underlying risks and impacts to affected workers; addressing them, including changing the systems and controls that contributed to the risk; monitoring implementation; and remediating.

1. Use the ILO indicators as the risk framework. Use the ILO indicators as a forced-labor risk-screening lens in addition to local-law compliance. Passing a conventional labor inspection or social audit does not necessarily resolve forced labor concerns. Indeed, SDP had routinely passed local regulatory checks, yet its operations still exhibited conditions associated with all 11 ILO forced labor indicators.
2. Implement responsible-recruitment controls. Companies should consider an employer-pays, zero-fee recruitment model; conduct due diligence on labor brokers and recruitment agents; establish contractual and monitoring controls; and assess whether workers have paid recruitment-related costs directly or indirectly.
3. Test worker protections in practice. Policies concerning identity documents, worker mobility, wages, contracts, working time, accommodation, and access to grievance channels should be tested through worker-informed diligence. The key question is not simply whether a policy exists, but whether workers can exercise the intended protections in practice.
4. Combine traceability with worker-centered diligence.
   Mapping and traceability are essential to identify the producer and supply chain associated with imported goods. But companies should supplement documentary review with risk-based assessment methods, which may include confidential worker interviews, site visits, targeted record review, and, where appropriate, independent external expertise.
5. Establish senior-level ownership and cross-functional engagement. Human rights due diligence requires coordination among legal, compliance, human rights, procurement, operations, and senior management teams. Governance should provide clear accountability, resourcing, escalation routes, and oversight of remediation.
6. Build effective operational grievance mechanisms. Companies should establish mechanisms for workers to raise concerns through accessible, trusted, and appropriately confidential channels. The mechanisms should address language, literacy, retaliation, immigration-status, and other barriers that may affect migrant workers, and should connect to investigation and remediation processes.
7. Demonstrate remediation, not merely corrective action. Enforcement authorities increasingly expect evidence that affected workers have been made whole where possible and that corrective measures have been implemented and tested. Policies, training programs, and commitments may be important, but companies should also be prepared to demonstrate outcomes, including reimbursement of improper fees, restoration of worker rights, closure of identified gaps, and evidence that corrective measures are functioning in practice.

Conclusion

The Sime Darby matter demonstrates the growing connection between forced labor import enforcement and meaningful human rights due diligence. While establishing mapping and traceability is critical in the context of investigations and questioned shipments, the case—as well as the recent CBP and EC guidance documents—reminds companies of the importance of instituting practical, credible, and well-documented processes for identifying risks, engaging affected stakeholders, investigating concerns, remediating impacts, and testing whether corrective actions are effective. That connection is also about to become structural. The EUFLR's decision-review mechanism permits withdrawal of a violation decision where the operator demonstrates that it has eliminated forced labor from the relevant supply chain, and the recent EC guidance details the strikingly similar evidence required to make that showing. The remediation playbook that Sime Darby ran under CBP's regime is, in other words, becoming the template for avoiding and exiting enforcement under proliferating forced labor import bans.