IFC failed to ensure workers' safety at APPL plantations: WB investigator

In response to Business Standard queries, both owners of APPL - IFC and Tata Global Beverages - said they had been working towards improving workers' conditions

The World Bank’s private sector lending arm, the International Finance Corporation (IFC) had failed to address the health and safety concerns of thousands of workers and their families living in the Tata group’s tea plantations in India’s Northeast, the bank’s official investigator found last week. The investigator’s latest findings have come two years after it first exposed the poor living and working conditions of labourers in the Tata group’s plantations, which are partially financed by IFC since 2009.

Over 30,000 workers and their 125,000 family members live on the 25 tea estates owned by the Amalgamated Plantations Private Limited (APPL) —a joint venture between Tata Global Beverages (TGB) and IFC — in Assam and West Bengal. APPL is the second-largest producer and supplier of tea in India.

In 2016, an investigation by the Compliance Advisor Ombudsman (CAO), the World Bank’s official watchdog that audits its private sector investments, had found that the working and living conditions of labourers at these tea plantations did not meet the IFC’s “performance standards”. The performance standards relate to workers’ living conditions, compensation practices, freedom of association & grievance handling, child labour, use of pesticides, security, economic displacement, project impacts on indigenous peoples, consultation around the employee-share-purchase programme, and consultation related to project impacts. IFC is required to follow these standards in all its projects.

The investigation was carried out after workers from three APPL tea estates in Assam complained to the CAO about “long working hours, inadequate compensation, restrictions on freedom of association, poor hygiene and health and inadequate protection for using pesticides.”

IFC had at the time said it was working with APPL to improve workers’ conditions.

But the latest review by CAO has found that IFC has failed to meet its “commitment”. “CAO’s compliance findings regarding living conditions have not been addressed... As a result, IFC does not have assurance that the client (APPL) is on track to achieve Performance Standards compliance,” CAO said in its ‘Compliance Monitoring Report of IFC’s investments in the APPL’, released on January 28. The report added that if the “non- compliance” continued, the IFC, “as part owner of APPL, risks perpetuating a system of employment with well documented negative impacts on workers and their families”.

In response to Business Standard queries on CAO’s report, both IFC and the APPL said they had been working towards improving workers’ conditions.

“As acknowledged in CAO’s first monitoring report related to IFC’s investment in APPL, many of the legacy problems of the tea sector in India, as well as continued financial distress in the industry, have presented challenges to addressing all of the issues in the complaint. While progress has been slow and challenging, APPL has been working steadily towards improving the living and working conditions of workers on its estates. It is clear that progress in addressing the more complex issues in the sector will require a larger, public-private, multi-stakeholder effort,” an IFC spokesperson said. “IFC is committed to continuing to work with APPL on implementing its action plan and to engage with all stakeholders towards identifying a more sustainable path towards economic and social development in the sector,” the spokesperson added. (See Box 1 for detailed response)

On CAO’s finding, TGB spokesperson said: "This is a monitoring report by the Compliance Advisor Ombudsman (CAO) for IFC. It documents actions taken by IFC in response to CAO’s earlier findings in 2016 following an enquiry on how IFC assured itself of the environmental and social performance of its investment in APPL.”

“As a significant shareholder in APPL, Tata Global Beverages had commissioned an independent assessment by Solidaridad into living and working conditions at APPL tea estates in 2014, following which a detailed action plan was put in place by APPL to address the findings. Progress updates on the action plan are available on the APPL website,” added the spokesperson. (See Box 2 for detailed response)

Working hazards

India is the second-largest producer of tea in the world. The tea sector is India’s largest private employer, but it has been traditionally plagued with poor working conditions and economic exploitation of tea workers, according to a 2006 study published in the journal International Review of Social History. According to CAO’s report, most of the tea workers in India’s Northeast, where the large tea estates are concentrated, are descendants of tribal communities from other Indian states who were brought in as bonded or forced labourers before the country’s Independence. “Jobs on tea plantations are traditionally passed from one generation to the next. Having limited access to education or economic opportunity outside of tea plantations, tea workers are highly dependent on their employers,” the report says.

IFC had invested in the plantations in 2009 by buying a 20 per cent stake in APPL with the intention of bringing “fundamental change” in the tea industry through the implementation of “a sustainable employee-owned plantation model”. Workers were made shareholders in the IFC-TGB joint venture.

However, between 2011 and 2013, several complaints were filed by workers and international labour groups with CAO about labour abuse at the tea plantations. These included deaths of some workers due to unsafe working conditions. CAO then initiated its investigation in 2013 and came out with a report in 2016. Apart from poor and unsafe working conditions at the tea estate, CAO also found that workers were not properly consulted on the share-purchase programme.

Action plan ‘hampered’

After the 2016 investigation by CAO, IFC said APPL had formulated an “action plan” to improve the working conditions and that it was working to implement the plan.

However, according to the CAO report, APPL initially reported progress “in repairing houses and sanitation” but later “noted” that “financial losses” suffered by it in recent years “hampered” the implementation of the plan.

The tea workers also continued to demand higher wages during the period of CAO investigation, according to the report. In July 2018, the Assam government increased the minimum daily wage for tea workers in the estate from Rs 137 to Rs 167 per day. This was much below the state-mandated minimum daily wage of Rs 250 for unskilled labourers in Assam.

CAO said, “IFC’s investment in APPL” had “potential for significant positive development impact” as its “business directly supports livelihoods of over 155,000 people, comprising over 30,000 low-income permanent workers, over 10,000 temporary workers, and their families, in poor, remote, and in some instances, conflict-prone areas of India”.

Box 1: IFC's full response:

"As acknowledged in CAO’s first monitoring report related to IFC’s investment in APPL, many of the legacy problems of the tea sector in India, as well as continued financial distress in the industry, have presented challenges to addressing all of the issues in the complaint. While progress has been slow and challenging, APPL has been working steadily towards improving the living and working conditions of workers on its estates. It is clear that progress in addressing the more complex issues in the sector will require a larger, public-private, multi-stakeholder effort. IFC is committed to continuing to work with APPL on implementing its action plan and to engage with all stakeholders towards identifying a more sustainable path towards economic and social development in the sector.”

Box 2: Tata Global Beverages's full response:

"This is a monitoring report by the Compliance Advisor Ombudsman (CAO) for IFC.  It documents actions taken by IFC in response to CAO’s earlier findings in 2016 following an enquiry on how IFC assured itself of the environmental and social performance of its investment in APPL.

As a significant shareholder in APPL, Tata Global Beverages had commissioned an independent assessment by Solidaridad, into living and working conditions at APPL tea estates in  2014, following which a detailed action plan was put in place by APPL to address the findings.  Progress updates on the action plan are available on the APPL website.

Tata Global Beverages is committed to sustainable sourcing and is one of the founding members of Trustea, an initiative led by the Tea Board of India. Trustea is the India Sustainable Agriculture certification for tea and its parameters for certification includes dimensions of environment, human rights, occupational health and safety in the supply chain of tea plantations. and have invested in initiatives in Assam such as the UNICEF ETP programme which has already reached over 35,000 adolescent girls and 30,000 community members with significant socio-cultural impacts including reduction in child marriages, trafficking, school absenteeism etc. Additionally, we directly fund the Research and Referral Hospital (RHRC) in Chubwa Assam that provides affordable healthcare to over 40,000 tea workers and neighbouring communities every year.”