Institution Theme Category Industry
  • BlackRock
  • Social
  • Social & Human Capital
  • Consumer Goods
Company Year Market Link
Top Glove Corporation Bhd. 2021 N/A https://www.blackrock.com/corporate/literature/press-release/blk-vote-bulletin-top-glove-jan-2021.pdf

BIS has conducted multiple engagements with Top Glove’s management and board of directors since the company was placed on the United Nations Global Compact (UNGC) Watchlist in 2018 for an investigation into its alleged use of forced labor and subjecting its workers to excessive working hours, amongst other issues.
BIS had several engagements with the company in 2020 after two of its subsidiaries received a Work Release Order (WRO) on its disposable gloves from the U.S. Customs and Border Protection (CBP) in July following the US CBP’s determination that there was reasonable evidence of forced labor at Top Glove’s manufacturing facilities.
Through engagement and public statements issued by the company, we note several actions taken to address the issue of debt bondage and the amelioration of workers’ conditions. This includes the return of workers’ identification documents for their personal safekeeping as opposed to the utilization of lockers, the introduction of a ‘Zero Recruitment Fee Policy’ in January 2019, as well as the hiring of an independent consultant in August 2020 to recommend and verify the company’s remediation payments to its migrant workers.
However, we are concerned that Top Glove is the subject of 19 investigations by Malaysia’s Ministry of Human Resources (MoHR) for non-compliance to the Workers’ Minimum Standards of Housing and Amenities Act 1990 (Act 446) – which includes the provision of a minimum area of living space per worker, amongst other requirements. Regrettably, its workers’ dormitories became the site of Malaysia’s largest COVID-19 cluster in November 2020, with more than 5,000 workers (a quarter of the company’s workforce) infected and one reported fatality. The outbreak resulted in the 28-day closure of 28 of its 41 factories by the Malaysian government to contain the spread. The company also was subjected to further public scrutiny in December 2020 after it was revealed that it dismissed an employee in October for sharing pictures of overcrowding and a lack of social distancing amongst workers to an organization focused on Nepali workers’ rights. Notably, after hiring an independent consultant, Top Glove’s management has since improved its whistleblowing processes and has committed not to terminate whistleblowers in the future.
Moreover, we understand from the company that its independent consultant did not find any violations of the International Labor Organization (ILO)’s 11 forced labor indicators; it is also in the midst of implementing corrective measures towards improving workers’ living quarters to ensure compliance to Act 446 by 2021.
However, at the time BIS voted, we remain concerned about the company’s approach to worker protections. The company is still on the UNGC Watchlist and faces pending investigations by both the US CBP and the Malaysian government.

Details

  • Proponent
  • Management
  • Resolution
  • Election of Directors (Lim Han Boon, Rainer Althoff, Noripah Kamso, Norma Mansor, Sharmila Sekarajasekaran, Lim Andy) and Approval of Non-Executive Director (Lim Han Boon)
  • Vote
  • AGAINST
  • Rationale
  • N/A
  • Details
  • …the COVID-19 pandemic has exposed severe shortcomings in management and oversight of worker health and safety-related issues.
    Despite the board and management’s reassurance that COVID-19 preventive measures have been implemented since the start of the pandemic, a quarter of its workers have since been infected with the virus, with one associated death. The investigations conducted by MoHR and US CBP, together with the whistleblower’s account and other media reports, have shown that Top Glove’s workers live in dense, unsuitable accommodations with a lack of proper ventilation and physical distancing – a stark contrast to what the board has conveyed to shareholders.
    Given Top Glove’s role as a leading Personal Protective Equipment (PPE) manufacturer, we view the board’s ineffectiveness in COVID-19 mitigation and inadequate oversight of worker health and safety issues as especially egregious with potentially serious implications for its reputation as a supplier of such equipment to hospitals around the world.
    As the COVID-19 pandemic ravaged the region, the board failed in a key aspect of its oversight responsibility given that it did not identify and set policies to manage risks including the health and safety of workers living in its dormitories…As such, BIS voted against the re-election of six Independent Non-Executive Directors (INEDs) and a separate proposal for Senior Independent Director Lim Han Boon to continue in office as an INED…
    …We also intend to hold other incumbent directors not on ballot at this AGM accountable by voting against their re-election at future shareholder meetings.