KnowTheChain: Ranking companies' efforts to address forced labour in their supply chains
KnowTheChain is a resource for businesses and investors who need to understand and address forced labor risks within their supply chains.
In 2018 KnowTheChain benchmarked over 120 global companies across the three sectors.
- 2018 Information & Communications Technology: Compare actions from companies such Apple, Amazon, and Broadcom (Read the findings report)
- 2018 Food & Beverage: Compare actions from companies such as Unilever, Wilmar, and Walmart (read the findings report)
- 2018 Apparel & Footwear: Compare actions from companies such as Adidas and Puma, LVMH and Kering, Amazon and Walmart (Read the findings report)
In 2017, KnowTheChain undertook an analysis across the three sectors, reviewed its benchmark methodology, and evaluated to what extent companies address forced labor risks specifically in sugarcane and leather supply chains.
In 2016, KnowTheChain has ranked 60 of the largest global companies in three high risks sectors on their efforts to address forced labor and human trafficking risks in their supply chains. Each sector benchmark includes individual company scorecards, a findings report and resource and action guide for the sector:
- 2016 Information & Communications Technology: Explore actions from Apple, Canon or Foxconn (Findings report, Company scorecards, Action and Resource Guide)
- 2016 Food & Beverage: Explore actions from Coca-Cola, Kellogg or Wilmar (Findings report, Company scorecards, Action and Resource Guide)
- 2016 Apparel & Footwear: Explore actions from Gap, Primark or Prada (Findings report, Company scorecards, Action and Resource Guide)
For more information, contact Felicitas Weber at [email protected].
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KnowTheChain case study: How food and beverage companies tackle forced labour risks in sugar supply chains
This case study assesses how a sample of 10 chocolate and confectionary manufacturers, beverage companies, and sugar producers address forced labour risks in their sugarcane supply chains.
The study follows KnowTheChain’s first food and beverage benchmark, which found a lack of transparency and adequate action to address forced labor in commodity supply chains such as sugarcane.
- Only a small group of companies have assessed risks and set targets to eradicate forced labor in their supply chains, and all companies in the study need to improve. Workers have few ways to air grievances and no company was able to provide a concrete example of remedy provided to workers when wronged.
- All companies should take concrete follow-up steps at the country level. However, we found steps taken at that level are limited. PepsiCo, Coca-Cola, Nestlé, and ABF are the only companies making efforts to understand and assess forced labour risks in their sugarcane supply chains at the country level.
- All companies disclose where at least some parts of their sugarcane supply chains are located. Coca-Cola discloses a map that highlights all sourcing countries for its key commodities. However, the company did not follow through on its commitment from 2013 to disclose the names of all its direct sugarcane suppliers within three years. Wilmar is the only company that discloses a list with names and addresses of its sugar suppliers.
Additional background on the case study can be found here.
KnowTheChain case study: How are footwear companies and luxury clothing brands tackling forced labour risks in their leather supply chains?
This case study assesses how a sample of five footwear companies and five luxury clothing brands address forced labour risks across their leather supply chains.
The study follows KnowTheChain’s first apparel and footwear benchmark which found a lack of transparency and action to address forced labor abuses beyond first-tier suppliers, particularly in leather. [...]
Key findings of the case study include:
- Publicly available information as well as information provided to us revealed very little on how—apart from auditing suppliers—companies address forced labor risks in countries where they produce hides, process leather, and manufacture leather goods. The German sportswear manufacturer Adidas marks the exception: Adidas trained tanneries in Taiwan and China on how to address forced labor risks and is developing multi-stakeholder partnerships to address risks at third-tier leather hide suppliers in Brazil and Paraguay. This contrasts with the complete lack of disclosure from Belle International, China’s largest shoe retailer. [...]
- Most companies have made commitments to improve supply chain labor conditions. Commitments range from increasing supplier transparency, to undertaking supply chain human rights impact assessments, to developing strategies for social compliance at the tannery level.
- Most companies in our sample participate in more than one multi-stakeholder or other initiative focused on improving labor standards in apparel supply chains. This is an important opportunity for both the initiatives as well as for member companies to work together to ensure robust forced labor standards and accountability mechanisms are developed and implemented, including for lower tiers of supply chains.
- Related stories: KnowTheChain: Ranking companies' efforts to address forced labour in their supply chains
- Related companies: adidas Belle International Holdings Limited Calvin Klein (part of PVH) Hugo Boss Kering Prada Puma PVH (Phillips-Van Heusen) Timberland (part of VF Corp) Tommy Hilfiger (part of PVH) VF Corp
Following the release of KnowTheChain's apparel & footwear sector benchmark, KnowTheChain has published a guide for the sector with recommended resources and actions to address supply chain forced labour.
The company action guide is broken out into the seven themes by which companies where benchmarked: commitment and governance; traceability and risk assessment; purchasing practices; recruitment; worker voice; monitoring; and remedy. It gives a summary of practices that can be implemented and provides resources for companies to engage deeper on each theme.
The goal of this company action guide is to advance the efforts of not only the companies benchmarked by KnowTheChain, but of the apparel & footwear sector as a whole. The company action guide is best reviewed alongside KnowTheChain’s apparel & footwear benchmark findings report.
"Forced Labor Action Compared: Findings from Three Sectors. With recommendations for companies across sectors, business and multi-stakeholder associations, and investors", 18 Apr 2017
In 2016, KnowTheChain ranked 60 companies across three high-risk sectors on their efforts to eradicate forced labor from their global supply chains. Selecting some of the largest companies in information and communications technology (ICT), food and beverage, and apparel and footwear, worth a combined market capitalization of more than US $4 trillion, KnowTheChain produced three benchmarks.
KnowTheChain released an analysis of these benchmarks, including cross-sector comparisons, examples of best practice, and recommendations on common areas where companies can improve.
Some key findings across the three sectors:
- Average sector scores were below 50/100, indicating significant room for improvement across sectors.
- In each sector, one company received a score of 0/100 (Belle International, Monster Beverage, Keyence), indicating a concerning lack of action.
- Apparel companies tend to be more advanced in their efforts, while food & beverage companies lag behind. This reflects the level of media attention and civil society pressure companies in each of the sectors have received.
KnowTheChain’s analysis shows that all evaluated companies have a long way to go to truly address the risk of forced labor in their supply chains. Yet, examples of good practice, particularly from the apparel sector, offer models that low scoring companies can follow. Nike and Primark should be commended for their effective methods of worker engagement, and Adidas and H&M demonstrate strong methods of addressing restrictions to freedom of association and trade union engagement. The report highlights findings that can benefit companies regardless of their sector, and makes recommendations for business associations, multi-stakeholder associations and investors on future steps to combat the risks of forced labor.
KnowTheChain's food & beverage sector benchmark found that a number of companies are tracing their sugar supply chain. Yet information on how companies assess and address forced labour risks in commodities such as sugar cane, where forced labour risks are high, is limited. In order to understand how companies’ headquarter level policies and processes are implemented in lower tiers of the supply chain, and how companies are addressing forced labour risks related to specific commodities, KnowTheChain is reaching out to ten of the companies it benchmarked last year in three sub-sectors sectors where sugar cane is a key commodity: beverage companies, chocolate and confectionary manufacturers, and sugar producers...
KnowTheChain's apparel sector benchmark found very limited information on how companies address forced labour risks in their leather supply chain. In order to understand how companies’ headquarter level policies and processes are implemented in lower tiers of the supply chain, and how companies are addressing forced labour risks related to specific commodities, KnowTheChain is reaching out to ten of the companies it benchmarked recently in two sectors where leather is a key material: footwear and luxury brands.
- Related stories: KnowTheChain: Ranking companies' efforts to address forced labour in their supply chains
- Related in-depth areas: KnowTheChain: Outreach to footwear and luxury goods companies on forced labor risks in leather sourcing
- Related companies: adidas Belle International Holdings Limited Calvin Klein (part of PVH) Gucci (part of Kering) Hugo Boss Kering Nike Prada Puma PVH (Phillips-Van Heusen) Ralph Lauren Timberland (part of VF Corp) Tommy Hilfiger (part of PVH) VF Corp
Following the release of KnowTheChain's food and beverage sector benchmark, KnowTheChain has published a guide with recommended resources and actions for the sector to address supply chain forced labour.
The company action guide is broken out into the seven themes by which companies where benchmarked: commitment and governance; traceability and risk assessment; purchasing practices; recruitment; worker voice; monitoring; and remedy. It gives a summary of practices that can be implemented and provides resources for companies to engage deeper into each specific theme.
The intended goal of this company action guide is to meaningfully advance the efforts of not only the companies benchmarked in our report, but of the food & beverage sector as a whole. The company action guide is best reviewed alongside KnowTheChain’s food and beverage benchmark findings report.
Author: Felicitas Weber, KnowTheChain Project Lead, Business & Human Rights Resource Centre
With investigative journalism and legislation on forced labor and human trafficking on the rise, forced labor risks can translate into concrete negative impacts for investors, both reputational and financial. [....] Are investors addressing these risks?
Here is what companies think: In 2016, the Ethical Trading Initiative (ETI) surveyed over 70 of its corporate members and found that investor interest has significantly increased [...]
Labor rights are high on the agenda of mainstream investors: In 2016, over 1,000 PRI signatory investors reported publicly on their responsible investment efforts.(6) When asked to provide examples of engagements with investee companies, labor rights [...] were the most commonly cited topic for engagement, ahead of other ESG issues including climate change. [...]
Are investors also looking at forced labor risks more specifically? Out of those PRI signatories whom voluntarily report information on engagement examples (57% of those investors that are invested in listed equity), 12.5% reported engaging on forced labor or modern slavery. This included investors from all over the world, including Australia, Europe, Latin America, and North America. Notably, over 30% of investors engaging on the topic are from the UK, the only country which has a national disclosure legislation specific to modern slavery. [...]
Investors should strengthen and disclose their efforts to safeguard their investments and ensure forced labor related concerns are heard by companies: [...] Given over 60% of companies in the MSCI ACWI Index (an index which covers approximately 85% of the global investable equity universe) will be subject to the UK Modern Slavery Act, the California Transparency in Supply Chains Act, or the proposed US Business Supply Chain Transparency on Trafficking and Slavery Act,(8) forced labor should be high on the investor agenda.
Author: Lowell Chow, Business & Human Rights Resource Centre (on South China Morning Post)
"Hong Kong lags behind in the battle against modern-day slavery", 16 Dec 2016
…Walk Free Foundation’s data for 2016 shows 45 million people are victims of modern slavery, which closely relates to almost every aspect of our daily lives…Yet, a new benchmark by KnowTheChain found that, in the global garments industry, action to tackle the scourge is lacking…
Some of the incentives for companies to act is coming from government legislation. In the US, California enacted the Transparency in Supply Chains Act in 2010…UK last year passed its Modern Slavery Act…These laws have played an important role in pushing businesses to at least start looking into the issue…
For its part, the Hong Kong government should consider broadening its current narrow approach to tackling forced labour – focused on trafficking for prostitution – to also encourage companies to prevent exploitation through their supply chains. A strong response from business involves assessing risks to the lowest level of the supply chain, starting with commodities. Cotton and leather are both among the goods produced by forced labour in China, the world’s largest cotton producer and exporter, for example. Moving up the chain, forced labour is also prevalent in the manufacturing stages…
Investor calls on peers to hold portfolio companies in the food sector accountable for forced labour
Author: Huffington Post (Boston Common Asset Management)
Lauren Compere, Director of Shareholder Engagement, Boston Common Asset Management explains forced labor risks in the food industry for investors, action taken by investors to date, and calls on peers to ramp up action:
"Last fall I had the unique opportunity to visit with the Fair Food Program to learn and see first-hand what conditions have been like for some trafficked tomato pickers and the incredible improvement in their lives catalyzed by the Fair Food Program [...]
KnowTheChain’s food & beverage benchmark show that more action is needed particularly in areas such as responsible recruitment and purchasing practices [...]
What are investors doing? Since child labor was discovered in the cocoa fields of Africa in the late 1990s and in cotton fields of Uzbekistan starting in 2007, investors have engaged companies on supply chain traceability and transparency related to these human rights risks. [...] Through a public investor statement, a global coalition of over 80 investors with close to $5 trillion in assets under management is supporting a framework for corporate disclosure on human rights based on the UN Guiding Principles for Business and Human Rights (UNGPs).
There has also been concerted effort to specifically engage on forced labor in the agricultural sector. From 2013-2015 the Principles for Responsible Investment (PRI) have coordinated a collaborative investor-company engagement on labor conditions in the agricultural supply chain. This resulted in improved practices at 23 out of the 34 companies engaged over that period, including a number of large US food & beverage companies. Under the leadership of an advisory committee of global investors (Bâtirente, Boston Common, Hermes, PGGM, and Robeco) the second phase of this project will focus on improving traceability in sourcing and enhancing supplier relationships, and is supported by an investor statement which outlines expectations on company policy, practices. The Interfaith Center on Corporate Responsibility (ICCR) has also achieved success through their “No Fees” Campaign engaging 12 companies sourcing palm oil or seafood to create robust management systems which will ensure that workers in their immediate and extended supply chains are not forced to pay for employment. Their plan is to expand this engagement to over 50 companies.
As we celebrate the five-year anniversary of the UN Guiding Principles for Business and Human Rights (UNGPs), which define a global standard for preventing and addressing the risk of negative human rights impacts by business activity, we need to move beyond principles to practice. To ensure this happens, benchmarks such as KnowTheChain can help put a spotlight on forced labor, make a clear comparison to peer companies, and help identify gaps as well as recognize and put a light on leading practices."
- Related stories: KnowTheChain: Ranking of 20 apparel and footwear companies on efforts to address forced labour in the supply chain
- Related in-depth areas: KnowTheChain - Food and beverage company disclosure