India: Tata Tea-02/Assam
Peoples’ Action for Development; Promotion and Advancement of Justice, Harmony and Rights of Adivasis, Diocesan Board of Social Services.
Labor and working conditions
IFC’s project with Amalgamated Plantations Private Limited (APPL) is to enable the setting up of a company that would acquire and manage the 24 tea plantations located in Assam and West Bengal, currently owned by Tata Tea Limited (TTL), and would implement a sustainable “worker-shareholder” model in which the management and employees have a significant shareholding. The total project cost including capital expenditure and working capital is estimated at $87 million; the IFC investment comprises an equity investment of $7.8 million.
In February 2013, three local NGOs filed a complaint on behalf of tea workers working and living in the company’s tea plantation areas. The complaint raises concerns about labor and working conditions at three different plantations, specifically citing long working hours, unpaid compensation, poor hygiene and health conditions, and a lack of freedom to associate among plantation workers. Furthermore, the complainants question the worker share-buying program, contending workers have been pressured into buying shares, often without proper information about the risks of such an investment.
The compliance appraisal of IFC's investment in APPL was initiated by the CAO Vice President in May 2012 based on unresolved concerns submitted by the International Union of Food Workers (IUF) to IFC's Communication Portal for Performance Standard 2 (PS2). Concerns in relation to the investment were triggered by incidents on two APPL plantations in 2009/10 which led to disputes with unions representing APPL workers. After completing a compliance appraisal in January 2013, CAO concluded that the issues warranted further investigation.
In February 2013, CAO received a complaint from three NGOs on behalf of tea workers working and living in the company’s tea plantations [Tata Tea-02]. The complaint raises concerns about labor and working conditions at three different plantations, specifically citing long working hours, unpaid compensation, poor hygiene and health conditions, and a lack of freedom to associate among plantation workers. Furthermore, the complainants question the worker share-buying program, contending workers have been pressured into buying shares, often without proper information about the risks of such an investment. This complaint was transferred to the compliance function in November 2013. A compliance appraisal in regard to the complaint was finalized in February 2014 with a decision that the issues raised in the complaint merited further investigation.
A combined CAO’s investigation report was released in November 2016. While noting that IFC’s investment in the company had potential for significant development impact, CAO’s investigation identified a number of non-compliance findings related to IFC’s assessment and management of environmental and social (E&S) risk associated with the investment. Given the vulnerable status of workers and the client’s responsibility to provide a range of basic services to workers, CAO found that IFC’s pre-investment E&S review of the investment was not commensurate to risk. Shortcomings in this review led to the development of mitigation measures that were insufficiently detailed and did not address key risk areas. During supervision, CAO found that IFC did not assure itself of compliance with its Performance Standards. As a result, E&S compliance issues raised by the complainants remain unaddressed. CAO’s investigation also made a number of specific non-compliance findings in relation to IFC’s assessment and supervision of living and working conditions on the plantations, reported use of banned pesticides, information disclosure, consultation and response to security incidents.
In response to CAO’s compliance investigation report, IFC noted that APPL was implementing an Action Plan to address shortcomings and legacy issues in key areas as human health, worker health and safety, housing, and sanitation infrastructure. In addition, IFC committed to (a) commission a third-party to undertake an annual audit and worker perception survey across APPL’s 25 estates; (b) update its legal opinion on APPL’s compliance with national minimum wage requirements; and (c) ensure that the Action Plan was disclosed and consulted with workers.
In January 2019, CAO released a compliance monitoring report. Since the release of CAO’s investigation report, APPL has reported progress in implementing some of the Action Plan commitments. The complainants assert that workers were not consulted on the Action Plan and raise concern with the progress and quality of Action Plan implementation. As part of the monitoring process, CAO reviewed project documentation and spoke with IFC staff responsible for supervision of the project. CAO also spoke with representatives of the complainants and the IFC client. CAO's monitoring report concludes that IFC has completed limited supervision of the project and has not satisfactorily addressed CAO’s non-compliance findings. As presented in the original investigation, CAO remains concerned that IFC’s supervision of the project fall short in terms of the requirement to develop and retain information needed to assess its client’s compliance with IFC’s Performance Standards. As a result, CAO concludes that IFC does not have assurance that their client is on track to achieve compliance with the Performance Standards.
CAO published a compliance monitoring report in January 2019, together with a case communique. The case remains open and CAO continues to monitor IFC’s actions to address the investigation findings. CAO expects to issue another monitoring report in the next year. In March 2019, IFC released a response to CAO’s monitoring report.
All documents relating to this case are available under "View Documents" below.
Status as of March 4, 2019