Forced labor risk: major food and beverage brands response inadequate, says KnowTheChain

Across seven measurement areas, the average company score is 30 out of a possible 100, with a significant disparity between a few leading brands and the rest. Unilever (scoring 65/100), Coca-Cola (58) and Nestlé (57) score highest. All other companies score under 50 points, and four companies (Fomento Economico Mexicano, Kraft Heinz, Monster Beverage, and Tyson Foods) score under 15 points.

"Every day we eat and drink products tainted by forced labor," said Kilian Moote, Director of KnowTheChain. "Workers, companies, and investors are connected to the risks of forced labor. This benchmark reveals the work that remains to be done by the food and beverage sector to root out exploitation from their supply chains."

Food industry supply chains pose acute risks unique to the industry: workers in sourcing regions can easily fall victim to forced labor. Despite increasing regulations requiring companies to disclose steps they are taking to combat forced labor—including the UK Modern Slavery Act and the California Supply Chains Transparency Act—the industry has still been too slow to act.

Agricultural workers in particular, including migrants and women, are some of the poorest paid and most exploited workers in the world. Weak labor laws and enforcement in the sector, together with isolated workplaces where housing tends to be provided by the employer, aggravates typically poor working conditions leaving workers vulnerable and dependent on their employers. In the United States alone, an estimated 5% of farm workers are in situations of forced labor.

Companies are falling particularly short in their approach to recruitment. The average score in this area of 10/100 is concerning for a sector where the majority of the workforce is composed of seasonal and migrant workers who often rely on recruitment agencies for their jobs. Only seven companies require that no fees be charged during any recruitment processes conducted throughout the supply chain. The food and beverage sector needs to promote direct hiring of supply chain workers and, where that is not possible, perform due diligence of third-party recruitment agencies.

Some findings are encouraging. Seventeen of the 20 companies have processes in place to trace some aspects of their supply chains, however no company has achieved full traceability. Also promising is that 15 of the companies integrate labor standards (including a prohibition on forced labor) into their supplier contracts; however few complement this with purchasing practices that support suppliers that have strong labor practices such as offering long-term contracts.

KnowTheChain partners reacted to the latest benchmark report:

"Agricultural workers are among the workers most at risk of forced labour. Many work in harsh conditions on isolated farms under the complete control of their employers. Yet food and beverage companies are only starting to wake up to this exploitation in their supply chains. We hope this benchmark helps the industry as a whole take steps to eradicate the worst working conditions for people who produce our food," said Annabel Short, Business & Human Rights Resource Centre Deputy Director.

"This benchmark is a sobering reminder that the food and beverage industry needs to do much more to understand and address the risks of forced labor in the production of their products. We hope this report will continue to advance awareness and action by these companies," said Ed Marcum, Managing Director at Humanity United.

"KnowTheChain's latest benchmark report sheds important light on the transparency and accountability mechanisms of some of the world's largest food and beverage companies. While the report shows that some companies are taking important, replicable steps to address forced labor in their supply chains, it also reveals that many more in the industry are doing too little to protect vulnerable workers. This benchmark provides a unique opportunity to advance the good practices it describes and demonstrates that the time for such action is now," said Shawn MacDonald, Verité CEO.

"KnowTheChain's Benchmark provides investors with a powerful tool to make more informed decisions and engage with companies on this critical issue. We applaud KnowTheChain for generating attention on forced labor practices and hope it yields positive changes throughout the food and beverage industry," said Sustainalytics' Executive Vice President of Research, Simon MacMahon.

The companies were selected for the benchmark on the basis of their size (market cap), and the extent to which they derive their revenues from corporate-branded food and drink products, meaning those companies have more leverage and direct oversight as they directly source commodities. KnowTheChain assessed information available on each company's own website, as well as additional public disclosure that companies provided in response to engagement questions. Sustainalytics, a leading global provider of environmental, social and governance (ESG) research and ratings, supported the development of the benchmark methodology, conducted the company research and contributed to the key findings report.

The full report and company scores can be found here: https://knowthechain.org/benchmarks/2/

KnowTheChain released a benchmark on the Information and Communications Technology sector earlier this year, and will release an additional benchmark report focused on the Apparel & Footwear sector at the end of the year.

KnowTheChain is a resource for businesses and investors who need to understand and address forced labor abuses within their supply chains. It benchmarks current corporate practices, develops insights, and provides practical resources that inform investor decisions and enable companies to comply with growing legal obligations while operating more transparently and responsibly. www.knowthechain.org

Contact: Tania Stewart
[email protected], 202-478-6174

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SOURCE KnowTheChain

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