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 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:
- Information & Communications Technology: Explore actions from Apple, Canon or Foxconn (Findings report, Company scorecards, Action and Resource Guide)
- Food & Beverage: Explore actions from Coca-Cola, Kellogg or Wilmar (Findings report, Company scorecards, Action and Resource Guide)
- Apparel & Footwear: Explore actions from Gap, Primark or Prada (Findings report, Company scorecards, Action and Resource Guide)
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 2018 KnowTheChain will benchmark 125 companies across the three sectors.
For more information, contact Felicitas Weber at [email protected].
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KnowTheChain announced the names of the 125 companies with combined assets under management of over USD 6.6 trillion it will be benchmarking in 2018 on their efforts to address forced labour in their supply chains. KnowTheChain will cover global companies across three sectors: Information Communication & Technology (ICT), Food & Beverage, and Apparel & Footwear. Companies include US retail giants Amazon and Walmart, the French luxury brands LVMH and Hermès, the Asian mega suppliers Li & Fung and Yue Yuen, and the Australian food retailers Woolworths and Wesfarmers/Coles.
KnowTheChain has also published its revised methodology for the ICT sector. The revised methodology includes feedback from stakeholders including previously benchmarked companies, the investor community, and civil society organizations. KnowTheChain intends to update the methodology after each benchmarking series to account for the evolving nature of the field. Changes to the 2018 methodology include the inclusion of forced labour allegations, a stronger focus on corporate action below the first tier of supply chains, and alignment of the worker voices and recruitment themes with leading practices in the field.
Further, KnowTheChain announced it will be joining forces with the Thomson Reuters Foundation to increase the number of companies to be benchmarked over the next three years. Through this partnership these benchmarking efforts will become the KnowTheChain – Stop Slavery Index.
Food and beverage companies face the risk of forced labor in countries where they obtain sugarcane but most fall short in efforts to tackle the problem that threatens millions of workers, according to a study [by KnowTheChain (KTC)]...Sugarcane...can be found in a list of household foods and beverages...and is often harvested by rural migrant workers with machetes who work long hours for low wages in hazardous conditions...
The companies studied were Coca-Cola Co., Fomento Economico Mexicano S.A.B de C.V (FEMSA), Monster Beverage Corp., PepsiCo Inc., The Hershey Co., Mondelēz International Inc., Nestlé S.A., Archer Daniels Midland Co., Associated British Foods plc plc (ABF) and Wilmar International Ltd. PepsiCo, Coca-Cola, Nestlé and ABF were the only four companies to undertake forced labor risk assessments of sugarcane supply chains in specific countries, the study said.
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.