When SB 657 Compliance is Transparent but Indifferent

As public awareness of modern-day slavery grows, many businesses are taking a closer look at forced labor and human trafficking within their supply chains.  From shrimp processing to cotton production, factory floors to hotel laundry rooms, adults and children are too often exploited for their…

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June 25, 2014
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As public awareness of modern-day slavery grows, many businesses are taking a closer look at forced labor and human trafficking within their supply chains.  From shrimp processing to cotton production, factory floors to hotel laundry rooms, adults and children are too often exploited for their labor along the supply chains that produce consumers’ everyday goods.

With existing legislation like the California Transparency in Supply Chains Act of 2010, and other legislative and executive efforts, companies can no longer ignore the responsibility that comes with their extensive supply chains.

Humanity United is a proud partner of KnowTheChain, a resource website created to promote greater transparency and dialogue around the issue of trafficking in supply chains. In just six months, KnowTheChain has already assessed nearly 500 companies to identify whether they meet the minimum disclosure standards mandated for large retailers and manufacturers by the California Supply Chains Act. Although the list of companies to which the law applies has not been made public, KnowTheChain’s research indicates that these companies are likely to be covered by the Act. These evaluations show that some companies have embraced the spirit of the law, developing robust policies, while others lag behind. Of these companies, over 100 have no or insufficient statements regarding their efforts to eliminate slavery from their supply chains.

Among the companies beginning to make an effort to evaluate their supply chains for forced labor is Coca-Cola, which has made commitments to prohibit worker recruitment fees and convened leaders from all sectors to craft solutions to problems like debt bondage in international migration. “We are committed to upholding responsible and ethical human and workplace rights everywhere we do business,” says Ed Potter, Coca-Cola Company Director of Global Workplace Rights. “We are proud of our efforts to encourage other global corporations to recognize the critical role business can play in ending human trafficking and all forms of modern-day slavery.” Meanwhile, companies like Trader Joe’s and Whole Foods Market have joined the Coalition of Immokalee Workers’ Fair Food Program, allowing independent oversight of at least their tomato supply chains to ensure that forced labor and other human rights abuses do not occur or are quickly remedied.

On the other hand, KnowTheChain’s data has found that some complying companies have openly chosen not to address the risk of slavery in their supply chains, despite posting a disclosure statement. For example, Hyundai’s disclosure reads: “In compliance with the disclosure requirements of California Senate Bill 657…Hyundai supplies the following information: Hyundai has no policy regarding, and does not monitor, human trafficking and slavery in its direct product supply chain.” 

Similarly, though technically compliant with the letter of the Supply Chains Act requirements, the following ten companies have released disclosure statements that demonstrate a lack of concern about the issue and the responsibility for even basic policies or procedures to assess, enforce, or remedy trafficking issues:

  1. Caterpillar Inc. (Industrials)
  2. Commercial Metals (Information Technology)
  3. Danaher Corp. (Industrials)
  4. Hyundai Motor America (Consumer Discretionary)
  5. IDEX Corporation (Industrials)
  6. Johnson Matthey Inc. (Materials)
  7. Krispy Kreme Doughnuts, Inc. (Consumer Discretionary)
  8. Manufactured Packaging Products (Materials)
  9. Overhill Farms, Inc. (Consumer Staples)
  10. Valero Energy Corp. (Energy)

Companies cannot afford to dismiss this issue. Investors, consumers, and legislators are increasingly taking note of human rights abuses within corporate supply chains and resources for companies have become plentiful, advising companies how to take steps to find and remedy labor exploitation and trafficking in their supply chains.

Multi-stakeholder initiatives like the Ethical Trading Initiative are beginning to integrate trafficking-specific guidelines to help companies cooperate to solve the biggest challenges in cleaning supply chains. Global buying companies working on the Global Social Compliance Programme to consolidate recommendations and tools are now considering how those platforms can be augmented to handle the special challenges associated with human trafficking. For ease of use, the U.S. Department of Labor provides a toolkit for good practices on addressing forced and child labor, as well as a watchlist of goods and countries likely to be at risk. 

Innovative companies plan now for the market in ten, twenty, or fifty years. Those who can take proactive steps on ethical supply chains today will see the rewards to their brand and bottom line, in the near and long term.

Ed Marcum is Vice President for Investments at Humanity United.