Legal actions and sanctions against companies over human rights issues are increasing worldwide, and KPMG cautions Malaysian companies to wake up to this risk before it's too late.
A check of the Withhold Release Orders (WRO) list issued by the US Customs and Border Protection (CBP) included four companies from Malaysia as of December 2020: Sime Darby Plantation Bhd, FGV Holdings Bhd, Top Glove Sdn Bhd and TG Medical Sdn Bhd. The WRO effectively prevents imported goods from entering the US if suspected to be produced by forced labor. Based on the updated active list, Malaysia currently has the second highest number of companies in the WRO - second only to China.
KPMG's Governance and Sustainability advisory unit executive director Phang Oy Cheng commented: "For unprepared companies, receiving a WRO or import sanction can be costly not least for the impact to the company's future earnings.Failure to identify and respond to human rights issues will lead to costly and disruptive legal actions, cause investor divestment, negative publicity, reputation damage and significant financial loss. "The damages cause by poor human rights risk management have a perpetual effect that will take companies tremendous effort and resources to repair."
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