KnowTheChain Taking Food, Beverage Brands to Task for Failing to Address Forced Labor Risks

Every day we eat and drink products tainted by forced labor, a new report has found. Agricultural workers in particular, including migrants and women, are some of the poorest paid and most exploited workers in the world. Many work in harsh conditions on isolated farms, where employers can have complete control.

According to KnowTheChain’s latest industry benchmark, the 20 largest global food and beverage companies are failing to address these risks, with an average company score of 30 out of a possible 100.

Released today, KnowTheChain’s Food & Beverage Benchmark Findings Report suggests that food and beverage companies demonstrate a growing awareness and commitment to addressing forced labor, but scored low on across all other themes assessed. Despite increasing regulations requiring companies to disclose steps they are taking to combat forced labor — including the UK Modern Slavery Act and the California Supply Chains Transparency Act — the industry has a long way to go in terms of improving traceability, purchasing and recruitment policies and practices.

“Workers, companies, and investors are connected to the risks of forced labor. This benchmark reveals the work that remains to be done by the food and beverage sector to root out exploitation from their supply chains,” said Kilian Moote, Director of KnowTheChain.

Investors are increasingly interested in the issue of forced labor given the legal and reputational risks and their potential effects on long-term financial performance, according to KnowTheChain and its partners, including Sustainalytics. Sustainalytics’ Executive Vice President of Research, Simon MacMahon called the benchmark “a powerful tool [for investors] to make more informed decisions and engage with companies on this critical issue.”

Just three companies scored over 30 points: Unilever (scoring 65/100), Coca-Cola (58) and Nestlé (57). KnowTheChain found that these three companies have taken steps in each of the seven areas assessed, including for recruitment and worker voice, which few others address.

“At The Coca-Cola Company, we are aware that especially unskilled labor and migrant workers have little social protection and are vulnerable to exploitation and human trafficking,” Brent Wilton, Director of Global Workplace Rights at Coca-Cola commented in the report. “KnowTheChain recognizes steps we have taken to address those risks to workers in our supply chain, for example by evaluating forced labor risks at the farm level in sourcing countries such as Honduras and Guatemala, and by committing that workers have access to their personal identity documents and do not have to pay recruitment fees. By pointing out gaps and achievements, resources such as KnowTheChain can help drive improvements across our industry.”

The remaining companies received overall scores below 50 out of 100 points, half of which scored near the average of 30. PepsiCo (scored 45/100), Wilmar International (40), General Mills (37), Kellogg Company (32), Mondelez International (30), Danone (28), Hershey (27), and ConAgra Foods (25) are among the companies to score between 15 and 50 points.

These companies demonstrated growing commitments by implementing audit and correction programs for their first-tier suppliers, but need to strengthen their existing processes and begin to tackle other areas such as recruitment, worker voice, and remedy. Recruitment was the lowest scoring of all seven themes; no company requires direct employment of supply chain workers, and only 7 require that no fees be charged during any recruitment processes conducted throughout their supply chains.

While none of the companies assessed have achieved full traceability of their supply chains, 17 of them have processes in place to trace some aspects, and traceability was the theme with the highest average score. Over half of the companies disclose tracing palm oil, with sugar, cocoa, and soy also being mentioned by a few of the companies. Notably, there is a multistakeholder initiative for each of those four commodities—the Roundtable on Sustainable Palm Oil (RSPO), Bonsucro, the International Cocoa Initiative, and the Roundtable on Responsible Soy—which KnowTheChain suspects is a key driver behind companies’ efforts.

15 companies integrate labor standards including a prohibition on forced labor into their supplier contracts, but KnowTheChain asserts that these standards must be accompanied by purchasing practices that support and reward suppliers with strong labor practices. The organization recommends that companies take actions such as establishing longer-term relationships with key suppliers which include stable prices and supplier capacity building. Only five of the companies assess forced labor risks at potential suppliers.

“While the report shows that some companies are taking important, replicable steps to address forced labor in their supply chains, it also reveals that many more in the industry are doing too little to protect vulnerable workers,” commented Verité CEO Shawn MacDonald. “This benchmark provides a unique opportunity to advance the good practices it describes and demonstrates that the time for such action is now.”

Four companies scored less than 15 points out of 100, three of which are headquartered in the U.S.: Tyson Foods (scored 13/100), Kraft Heinz (9), and Monster Beverage (0). Coca-Cola’s largest bottling group globally, Mexico-based Fomento Economico Mexicano, S.A.B de C.V. (FEMSA), scored 7 out of 100.

KnowTheChain selected the companies for the benchmark on the basis of their size (market cap), and the extent to which they derive their revenues from corporate-branded food and drink products, in the interest of assessing the companies that have more leverage and direct oversight as they directly source commodities. The organization assessed information available on each company’s own website, as well as additional public disclosure that companies provided in response to engagement questions.

Earlier this year, KnowTheChain released its first benchmark, which focused on the information and communications technology (ICT) industry. By June 2017, the organization plans to release a report on yet sector at high-risk of forced labor: apparel and footwear.

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