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Briefing

2020 KnowTheChain Food & Beverage Benchmark

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“There was no break, except for eating and only five minutes,” said Yudha, an Indonesian who was recruited to work on a fishing vessel. “Sometimes, if a tuna came off a hook and the captain was angry at the missed catch, the crew would not eat at all.” While Yudha, unlike many of his colleagues, did not pay with this life, his pay for ten months at sea amounted to only US$638, instead of the promised US$450 per month plus bonuses.
The Guardian (7 July 2020), “’Hold on brother’: final days of doomed crew on Chinese shark finning boat.”

The Covid-19 pandemic brings into sharp focus the importance of food supply chains. It also exposes and exacerbates pre-existing power inequalities and exploitative working conditions in the food and beverage sector. Deemed “essential” around the world, food workers are reportedly forced to work in exploitative and unsafe conditions: workers in a Nigerian rice mill were locked in and forced to work throughout lockdown; migrant workers in a US meat plant were threatened with termination if they called in sick; and thousands of tea workers in India did not get paid, leaving them facing hunger and hardship.

In its third benchmark on the sector, KnowTheChain finds that most of the 43 largest global food and beverage companies fail to address forced labor risks in their supply chains—a litmus test of minimum fair treatment of workers. The average score in the sector is 28/100, with a score range of 0 to 65.

The results show that:

  • Companies score lowest on the themes of Purchasing Practices (17/100) and Worker Voice (16/100). While companies benchmarked in both 2018 and 2020 have demonstrated improvement on benchmark themes such as Commitment & Governance, Traceability & Risk Assessment, and Recruitment, improvements on the themes of Worker Voice and Purchasing were limited. Low scores in these critical areas indicate that companies are ill-equipped to protect workers during the Covid-19 crisis and to contribute to a just recovery.
  • Tesco (65/100) leads the benchmark, overtaking Unilever (60/100). Tesco reports implementing responsible purchasing practices, such as prompt payment and integration of labor performance, into its tender process with suppliers and is the highest-scoring company on Worker Voice (67/100). The company discloses working with unions and NGOs across its supply chains on worker education and freedom of association, and it reports examples of improved working conditions and wages.
  • As meat companies come under the spotlight across the world for poor working conditions and spreading the Covid-19 virus, meat industry giants WH Group (1/100), Tyson (9/100), Hormel (12/100), and JBS (12/100) show little effort to address forced labor risks in their supply chains. The scores of JBS and Tyson, both suppliers to the international fast food chains Burger King and McDonald’s, have continually worsened since measurement started in 2016, demonstrating disregard for workers’ rights and their minimum welfare.

BHRRC

Decisive and long-term action on human rights is needed from companies and investors if they are serious about implementing their commitments to eradicating forced labor and upholding workers’ rights. The highest score in the sector is 65/100, indicating that the entire sector still has a long way to go to address gaps in their efforts to tackle forced labor. Key recommendations for companies, which their investors should hold them accountable against, include:

  • Purchasing Practices Adopt and disclose responsible purchasing practices in supply chains, such as prompt payment, and incentivize strong labor practices at suppliers, such as price premiums.
  • Worker Voice: Engage with independent local or global unions to support freedom of association in supply chains to ensure workers are able to organize and collectively bargain (or, where restrictions on freedom of association exist, ensure that workers can pursue alternative means of organizing and bargaining). Address increased suppression of this right during the pandemic. Involve workers in the design, implementation, and monitoring of supply chain labor rights programs.

The 2020 KTC FB benchmark report analyzes the disclosure and performance of 43 companies against seven benchmark themes and provides good practice examples and more detailed recommendations for companies and for investor action. It also highlights the nature of forced labor risks in the food and beverage sector and explores the role of industry initiatives. Finally, it tracks changes in company practices over time.

Investor action works

The US-based energy drinks company Monster Beverage improved its score from 0/100 in the 2016 benchmark to 26/100 in the 2020 benchmark. This follows a shareholder resolution in 2018, requesting that the company take action on forced labor risks in its supply chains. Since the 2018 benchmark, the company has published information on its supply chain forced labor policies (and provides training on these policies), and it discloses information on internal responsibility and board-level oversight.

Investors need to take decisive action

A shareholder resolution on human rights due diligence at the US-based Tyson Foods, one of the largest global meat processors, gained support from 23% of independent shareholders in 2019. The support increased to 60% in February 2020 when the proposal was supported by proxy advisors ISS and Glass Lewis. The resolution has been refiled for 2021 due to insufficient progress, and support may further increase as the Covid-19 pandemic brings the S in ESG to the forefront of investor attention.

Want to learn more?

KnowTheChain - a partnership between Humanity United, the Business & Human Rights Resource Centre, Sustainalytics, and Verité - is a resource for companies and investors to address forced labor in global supply chains. Our benchmarks and practical resources help companies operate more transparently and responsibly, while also informing investor decisions.

COVID-19 impacts on workers in food and beverage supply chains

The COVID-19 pandemic brings into sharp focus the importance of effective food supply chains. Yet it also shines a light on long-standing power inequalities and exploitative working conditions. Learn what impacts the COVID-19 pandemic has had on workers in food and beverage supply chains.

Learn how investors are using KnowTheChain

By adding their name to the KnowTheChain Investor Statement, investors are demonstrating their support for the United Nations Sustainable Development Goal 8.7 to eradicate forced labor. Investors, armed with KnowTheChain data, have driven change in company policies to address forced labor in supply chains.

Read our Asia brief

Asian food and beverage companies are exposed to significant forced labor risks. What steps have they taken companies taken to address these risks, where do they need to improve? How are Asian companies doing compared to their global peers?