Can a Business Be a “Force For Good” If It Uses Child Labor?

by Lela Nargi

Published: 7/20/22, Last updated: 7/20/22

The coffee industry is notorious for persistent human rights and environmental abuses such as low and fluctuating wages; dangerous levels of pesticide and heat exposure for workers; child labor; and, increasingly, deforestation and forest degradation, according to the 2020 Coffee Barometer. So when Nestlé subsidiary Nespresso earned B Corp certification this past May, it caused a small uproar in the community that claims to champion “business as a force for good,” in B Corp marketing lingo.

Fair trade certification watchdog Fair World Project (FWP) released a lengthy statement that highlighted Nespresso’s many documented ethics violations — factory worker abuse and wage theft among them. It also called out the environmental impacts of Nespresso’s single-use aluminum coffee pods, which The Guardian reports are tricky to recycle and thereby contribute an estimated 12,600 tonnes of aluminum to landfills every year; mining aluminum also generates toxic pollutants that are released into the air. These, FWP argues, run counter to B Corp certification standards that are meant to signify that companies that are operating with a high level of accountability on a roster of social and environmental metrics.

A History of Human Rights Violations

The B Corp news came just a couple of years after the revelation that Nespresso was purchasing coffee beans from farms that employed children as young eight and paid them less than £5 a day. “I thought, That was fast,” says FWP campaigns manager Anna Canning, who wrote FWP’s statement, in explaining what piqued her interest in researching how Nespresso’s certification came to pass.

Thirty Certified B Corp companies, including 11 involved in coffee production, penned an open letter to B Corp certifying body B Lab (also signed by FWP and posted on the organization’s blog) decrying the threat to the integrity and relevance of B Corp standards that Nespresso’s certification engendered.

“Nespresso’s extractive business model is publicly known to be fundamentally at odds with the ethical and just future B Corps want to build and should have structurally been a barrier to Nespresso’s B Corp Certification,” they wrote. “Collectively, we envision a world where B Corp values can scale to include companies of any size, but this must not happen in a way that dilutes the integrity of the movement the certification stands for.” (B Lab declined a request for comment from FoodPrint but told Organic Insider that it would “not be revoking Nespresso’s certification due to the open letter”.)

Dean Cycon, CEO and founder of coffee company Dean’s Beans, who signed the letter, says that Nespresso’s certification “is the big crack in this wall of mission-based B Corp organizations. Consumers see the little [B Corp] symbol on our bag, then they look next to us on the shelf and there’s Nespresso and they think, Dean’s Beans and Nespresso do the same thing.”

Squeaking by on Points

B Corp certification requires companies to generate a minimum score of 80 out of 200 points on a long questionnaire, on metrics having to do with governance, workers, community, environment and customers, and which might include such specifics as employee benefits, charitable giving and supply chain practices. Nespresso “squeaked by” on the questionnaire, Canning says, racking up 84.3 points — .7 points less than B Lab recommends that small and medium companies minimally attain (they do not make this recommendation for large companies with annual revenue of over $100 million; Nespresso had reported sales of over $89 billion in 2021).

But Canning also points out that the questionnaire represents only part of B Corp’s three-pronged certification process. There’s the requirement that a company commit to changing its corporate governance to be accountable to stakeholders beyond shareholders. And there’s a form where companies make transparent disclosures, about things like business model and human rights challenges, and this is where admissions of child labor issues, for example, turn up. Nespresso did indeed disclose its child labor issues here, Canning’s research found. But “their score is not impacted by that child labor problem,” she says.

“Is doing a little less bad the same as actually being a force for good?”

Anna Canning

Campaigns Manger, Fair World Project

Many human rights watchers over the years have called for B Lab to change the way its standards are weighted, and to make other changes that better forefront social justice issues. That’s because scoring tends to favor “having a nice work environment at the office over fundamental human rights,” Canning says. This means that having an employee wellness program that includes something like a company-sponsored steps-counting program (worth .8 points) is scored higher than an employee handbook where, in the US, workers’ right to organize or prohibition of child labor or grievance resolution are outlined (worth .28 points). “Is doing a little less bad the same as actually being a force for good?” Canning asks.

Christopher Marquis, a professor at the University of Cambridge and author of “Better Business: How the B Corp Movement is Remaking Capitalism,” calls Nespresso’s certification “potentially concerning.” He says that for B Corp certification to represent an authentic and transparent system, “there need to be non-negotiable types of issues, and child labor should certainly be a non-negotiable issue.” Moving forward, he thinks B Lab needs to change its standards so that even if a company like Nespresso were to score a perfect 200 on its questionnaire, “if you have a baseline number on something like [child labor] you couldn’t qualify” for certification, he says.

Signatories of the open letter to B Lab likely “want a system that means something,” says Marquis. He also believes there’s a good chance B Lab, which has a process of updating standards every two to three years, might evolve its standards in ways that meet demands to do better. There’s historic precedent for this; “They’ve already undergone six iterations” of standards, he says, since their founding in 2006.

Cycon, though, isn’t so sure that B Lab has much incentive to improve. He compares B Lab’s willingness to certify Nespresso to diminishing of standards within other certification schemes and seals. (Notably, both Fair Trade and Rainforest Alliance certifications have come under fire for corporate capture and failure to support ethical systems.) “They all start out…mission-based and very focused on, Let’s make the world a better place and get companies to up their game,” he says. “Over time, big companies realize there’s marketing fodder to be made from these things and they try to figure out how they can participate without changing their fundamental behavior.” In turn, certification programs begin to court the big players because they bring in larger licensing revenues. “The rules start to change and ultimately the [scheme] becomes less and less impactful as it becomes more and more mainstream,” says Cycon.

Canning agrees: “What we’ve seen is over and over is that these certifications don’t have the mechanisms in place to truly move the biggest food companies; instead, the biggest companies end up moving them and their standards over time.” This renders Nespresso’s announcement that certification will inspire the company to “do more” in creating a positive impact in the world — and B Corp Europe’s assertion that the company will be compelled to improve by other B Corps — somewhat suspect. (Nespresso did not respond to a request for comment.)

Key Demands

Canning and the other signatories of the open letter are calling for are five key changes related to, among other demands, strengthening certification criteria and developing a protocol that requires certified companies to show continuous improvement over time — or risk losing their certification. This, she feels, will have some positive impact for certification beyond Nespresso since she says there are companies that are B Corp certified — like New Seasons Market, the first grocer to earn B Corp status — “whose scores have gone down every year,” she says, from 120.5 in 2013 to 80.4 today.

Meanwhile, laws already exist in the US that address some forced and trafficked labor issues regardless of companies’ own actions on the matters; Customs and Border Control, for one, currently has the authority to seize tomatoes coming from China and some regions of Mexico due to potential human rights abuses. Nevertheless, this tool, whose use is “on the rise…can be slow,” says Canning. For US consumers hoping their dollars will support ethical company practices, certification schemes like B Corp, without governmental enforcement to address human rights abuses, “are no guarantee that meaningful interventions are happening,” she says.

Marquis suggests that B Lab could freeze certifications for certain industries with troublesome human rights histories, until standards are updated to address them. In addition to the mandates issued by the open letter, Cycon would like to see B Lab “form a committee of all our stakeholders, and have sincere licensees open up the books so we can take a look at how we can do this better,” he says. If B Corp can be compelled to “tighten up” their standards, he says, it can still repair the damage its done.

Top photo by balky79/Adobe Stock.

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