Tackling Labor Issues in Supply Chains

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By Kerry Scanlon, Rainforest Alliance Senior Associate of Markets Transformation

During the first of what the Rainforest Alliance is planning as a series of stakeholder workshops focused on pressing issues related to sustainability, representatives from companies and the United States government came together in late January to discuss labor issues in supply chains, focused on coffee and cocoa. This forum was created to provide an open, cross-sectoral space in which stakeholders could share freely and learn from each other’s experiences on visibility into labor conditions upstream in supply chains of these commodities.

Through the day’s discussion it was clear that there are several reasons for companies to be aware of and care about labor issues beyond their own operations. The first, and most obvious reason for many, is because it’s the right thing to do. In terms of social justice, a company should not be supporting suppliers abroad that are mistreating their workforce. Unfortunately, it is not always easy for a company to have that type of visibility into the inner-workings of their suppliers.

The second is compliance. There are several U.S. laws that reference and preclude the use of forced labor in the production of any goods or services imported into the U.S. In 2015, the U.S. Senate enacted The Trade Facilitation and Trade Enforcement Act of 2015, revoking a key clause in the Tariff Act of 1930. Prior to 2015, the Tariff Act stated that no goods or services produced using forced labor could be imported, except for goods or services that could not be procured from within the U.S. Coffee and cocoa, crops that grow in tropical climates, originally fell under this exemption. Additionally, in August 2017 a new act was signed into law, Countering America’s Adversaries Through Sanctions Act (CAATSA). Under this Act, North Korean citizens and nationals are assumed to be forced labor. Given this, any goods produced by a supply chain actor employing North Korean citizens or nationals cannot be imported into the U.S. After the enactment of these two new laws, it is particularly essential for companies to know where their products are coming from and who is producing them.

A third reason is reputational risk. Increasingly, the general population cares that companies are operating in a sustainable and responsible manner. Research shows that 84% of global consumers consider a company’s social and environmental commitments before deciding what to buy or where to shop. Consumers are becoming more conscious in their purchasing habits, with 90% saying they would stop buying a company’s products if they learned of irresponsible or deceptive business, and an equal number likely to switch brands to one associated with a good cause. Advocacy organizations have played a role in this, highlighting the negative practices of some companies around labor and other issues and bringing these to the attention of consumers. The intention is to encourage and empower consumers to make responsible purchasing decisions and, in response, incentivize companies to improve their practices.

So, what can a company do to avoid these legal and reputational risks? As we saw during the event, there are many ways for companies to tackle the problems associated with forced labor, including encouraging a continuous dialogue between their legal and supply chain teams, working with NGOs to identify pain points and potential infractions in the supply chain, and having more complete supply chain maps.

There are several tools that the Rainforest Alliance utilizes when working with companies to help drive transparency and improvements in their supply chains. Certification and traceability are two of these tools. In January 2018 the Rainforest Alliance and UTZ joined forces to form one organization, and the certification programs of both specifically prohibit any use of forced labor on certified farms or in certified Chain of Custody operations which is ensured through regular third-party audits. The combination of certification and traceability provides companies with a means of mapping their supply chains to better understand where their products are coming from while also verifying that the supply chain actors employ certain responsible business practices.

Certification, however, is only one piece of the puzzle. The Rainforest Alliance implements other tools with companies to tackle the problem from different angles. For example, through the First Mile program we are using data that is already collected at farm level and implementing technological collection, analysis and sharing tools to support UTZ certified farmers and to strengthen the UTZ certification system. One way in which this information can be useful is by identifying areas of higher risk for forced labor through proxy data that is collected. This type of risk mapping could help companies to identify potential suppliers using forced labor and allow them to address the issue with the supplier. Overlaying supply chain maps and risk maps is key to identifying points in the supply chain where companies need to be focusing more attention.

Through our merger with UTZ, the new Rainforest Alliance aims to continually improve the ways in which we approach these important aspects of our mission, and we could not do that without effectively engaging with our partners and other stakeholders. We look forward to the next workshop in this series and continuing to push the dialogue and our mission forward.

 

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