FOOD

Themes Key Findings

2018 Food & Beverage

The 38 Food and Beverage companies were assessed across the benchmark's seven themes, which were developed to capture the key areas where companies need to take action to eradicate forced labor from their supply chains: commitment and governance; traceability and risk assessment; purchasing practices; recruitment; worker voice; monitoring; and remedy. There are a total of 23 indicators across the seven themes. Each theme is weighted equally and determines the company's overall benchmark score on a scale from 0 to 100.

30

Overall Score 2018 Food & Beverage
37 Theme Score

Summary of Results

Purchasing practices is the second-highest scoring theme of the benchmark. Most companies are moving toward the responsible sourcing of raw materials and working to incorporate their supply chain standards into supplier contracts. The number of companies with provisions in place to push standards on forced labor to lower tiers of suppliers has increased since 2016, but remains low.

Three-quarters of companies (30 out of 38) disclose that they are taking steps toward responsible raw materials sourcing, including addressing the risks of forced labor. These steps may include using certifications that cover forced labor, participating in collaborative initiatives that include due diligence on labor issues at the raw material level, or engaging with farmers or working with third parties to improve working conditions at the commodity level. Companies frequently disclose taking part in certifications for commodities such as palm oil, cocoa, sugar, coffee, seafood, and tea. Associated British Foods reports that its tea business, Twinings, has signed a Memorandum of Understanding for the Revitalization of the Malawi tea sector with producers, brokers, tea packers, and development agencies. It discloses that the aim of this initiative is to improve the wage-setting process through greater worker representation and that, based on the introduction of a new quality-based pricing structure, its tea sources are achieving independent certifications such as Rainforest Alliance, UTZ Certified, or Fairtrade, or are monitored in line with the Ethical Tea Partnership standards. Schemes such as these provide actionable road maps for companies to address concerns in the agricultural sector in relation to pricing and worker representation.

However, other areas of purchasing practices are not marked by the same improvements. Only four out of 38 companies (General Mills, Kellogg, Nestlé, and Wesfarmers) describe their adoption of responsible purchasing practices in the first tier of their supply chains, such as sharing purchasing plans with suppliers or improving forecasting alignments. Nestlé, for example, has a supply chain standard that prohibits suppliers from conducting business "using production targets or performance indicators that lead to forced labor or work above reasonable limits…"

Similarly, companies do not report on how they incentivize suppliers by rewarding or supporting good practices, with nine out of 38 companies giving some information on how they seek to provide procurement incentives (such as price premiums and longer-term contracts). Costco reports that it provides Fair Trade premiums to help cover living costs for workers. It also discloses that, in collaboration with Fair Trade USA, it engages with farmworkers directly to provide training on food safety and quality, labor rights, and health and safety.

Fifteen out of 38 companies disclose a supplier selection process that includes an assessment of the risks of forced labor prior to entering into contract with a new supplier. However, only three companies give detail on this process or report on the outcomes of their selection processes (Kellogg, Unilever, and Walmart).

Twenty-six out of 38 companies report that they require suppliers to adhere to their supplier code of conduct by incorporating it within supplier contracts or purchase order terms and conditions, and eight companies disclose the language of such contracts.

The number of companies ensuring that their standards are cascaded further down their supply chains has increased since 2016, when only five companies required their suppliers to cascade standards; 14 out of 38 companies now disclose a supplier code of conduct that requires suppliers to communicate the policy requirements to lower-tier suppliers. A further ten companies encourage their suppliers to cascade standards, but do not include this requirement in their supply chain policy.

Purchasing Practices

The company is taking steps toward responsible raw materials sourcing. It is adopting responsible purchasing practices in the first tier of its supply chains, and provides procurement incentives to first-tier suppliers to encourage or reward good labor practices.

Purchasing practices and pricing may both positively impact labor standards in the company's supply chains, and increase risks of forced labor and human trafficking. The company: (1) is taking steps towards responsible raw materials sourcing; (2) is adopting responsible purchasing practices in the first tier of its supply chains; and (3) provides procurement incentives to first-tier suppliers to encourage or reward good labor practices (such as price premiums, increased orders, and longer-term contracts).

Low: 0
High: 60
28

Supplier Selection

The company assesses risks of forced labor at potential suppliers prior to entering into any contracts with them.

The company: (1) assesses risks of forced labor at potential suppliers prior to entering into any contracts with them.

Low: 0
High: 100
24

Integration into Supplier Contracts

The company integrates supply chain standards addressing forced labor and human trafficking into supplier contracts.

The company: (1) integrates supply chain standards addressing forced labor and human trafficking into supplier contracts.

Low: 0
High: 100
45

Cascading Standards through the Supply Chain

The company extends its supply chain standards beyond its first tier by requiring that its first-tier suppliers ensure that their own suppliers implement standards that are in-line with the company's standards.

The company: (1) requires its first-tier suppliers to ensure that their own suppliers implement standards that are in-line with the company's supply chain standards addressing forced labor and human trafficking.

Low: 0
High: 100
50

Purchasing Practice: Notable Example

Walmart Inc.

Walmart discloses that it is a member of the Coalition of Immokalee Workers' Fair Food Program, and sources from suppliers who best reflect these principles. The program includes legally binding agreements between the Coalition and participating buyers and ensures that a premium is paid to workers.

Recommended Action

Purchasing Practices

Take steps to mitigate the risks resulting from purchasing practices such as not providing purchasing forecasts to suppliers, and incentivize good labor practices, for example, through longer-term contracts and price premiums. Participate in schemes that ensure a stable price for farmers and a fair wage for workers.