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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:

In 2017, KnowTheChain will review its benchmark methodology, and explore how to assess corporate action in lower tiers of the supply chain. 

In 2018 KnowTheChain will benchmark 120 companies across the three sectors.  

For more information, contact Felicitas Weber at [email protected].

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Item
22 June 2017

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.

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23 May 2017

KnowTheChain Apparel & Footwear Action Guide on Supply Chain Forced Labour

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.

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Report
18 April 2017

KnowTheChain report highlights gaps and better practices on worker voice and remedy

Author: KnowTheChain

"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.

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Item
12 April 2017

Outreach to food & beverage companies on forced labour risks in sugar sourcing

Author: KnowTheChain

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...

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Item
27 March 2017

Outreach to footwear and luxury goods companies on forced labor risks in leather sourcing

Author: KnowTheChain

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. 

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Article
28 February 2017

KnowTheChain Food & Beverage Action Guide on Supply Chain Forced Labour

Author: KnowTheChain

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.

Read the full post here

Article
22 February 2017

Are Investors Taking Action to Eradicate Forced Labor and Human Trafficking from Their Portfolios?

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.

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Article
19 December 2016

Hong Kong lags behind in the battle against modern-day slavery

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…

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Article
12 December 2016

Investor calls on peers to hold portfolio companies in the food sector accountable for forced labour

Author: Huffington Post (Boston Common Asset Management)

"Investors Must Hold Food Companies Accountable for Forced Labor in their Supply Chains", 17 November 2016

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."

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Item
10 December 2016

KnowTheChain: Ranking of 20 apparel and footwear companies on efforts to address forced labour in the supply chain

Author: KnowTheChain

Forced labor risk: KnowTheChain apparel and footwear benchmark finds need for worker engagement

Findings report          Company ranking          Disclosure pages

KnowTheChain, which ranked the 20 of the largest global apparel & footwear companies on the steps they are taking to combat forced labor in their supply chain, finds most companies have systems in place to monitor and react to forced labor and human trafficking, but few address systemic causes.

The four highest performing companies (Adidas, Gap, H&M and Lululemon) achieve scores above 60/100. Among the lowest performing companies are Hong Kong-based Belle International Holdings (0/100), Chinese clothing manufacturer Shenzhou International Group Holdings (1/100), and the luxury Italian fashion house, Prada (9/100). Across seven measurement areas, the average company score is 46 out of a possible 100. Overall, luxury brands including Hugo Boss, Kering (holding company of Alexander McQueen, Gucci, Stella McCartney and others) and Ralph Lauren score much lower than high street apparel retailers (such as H&M, Inditex or Primark), with none achieving an above average score.

Worker voice (29/100) is one of the lowest scoring themes of the benchmark. Only four companies proactively communicate the existence of a grievance mechanism to their suppliers' workers, and only five companies engage workers outside of the context of their workplace in a manner that may give more voice to workers. Engagement with supply chain workers is an area where the industry needs to significantly improve, not least as engagement with workers can help identify, resolve, and prevent labor abuses in the supply chain that traditional monitoring systems do not catch.