Can Companies Be Held Accountable for Problematic Supply Chains in Chocolate, Coffee and More?

by Lela Nargi

2/05/21

Commodity crops of the world — cocoa, palm oil, sugar cane, tea among them — share a similar suite of human and environmental injustices. Largely grown in the global south by impoverished smallholder farmers with no power in the supply chain, the purchase of these crops by multinational food and beverage corporations — to make your chocolate bars, cookies and more — supports lack of living wages, child/forced/forced child labor, sexual assault, and rampant deforestation.

Abuses have been reported for years and in some cases, decades, with little to no progress to show for them, despite corporate promises to improve and third-party certification schemes that were meant — and yet fail — to monitor these industries. Child slavery in the West African cocoa sector has been found to have worsened in the two decades since the Harkin-Engel Protocol was signed to improve it;  The New York Times reported in 2019 on US sugar industry retaliation against farmers, and last year Florida residents were still decrying polluting burn-offs on local cane fields, according to the Miami Herald; a 2020 AP investigation found evidence of rape and other abuses in the palm oil trade; and studies continue to emerge that track massive tropical deforestation to clear land for commodity crops.

Things aren’t much better in the coffee sector. Just over a year ago, Reuters concluded a six-month investigation of slave labor on Brazilian plantations, for example.

This past December, the Supreme Court heard arguments about whether a much weakened 1789 law called the Alien Tort Statute [ATS] “that lets non-US citizens seek damages in American courts in certain instances,” according to Reuters, could be used as the basis of a case against American company Cargill and an American subsidiary of Swiss company Nestlé, holding them accountable for child slave labor in cocoa. It’s just the beginning of the process; by June, SCOTUS will decide whether or not a trial can move forward. We wondered if this case, in its attempt to hold cocoa companies accountable for egregious behaviors taking place in their name, would have implications for other commodity crops, including coffee. And if not, what actions, if any, might finally begin to curtail the tide of abuses in this sector.

To find out, we spoke to Irit Tamir, Director of Oxfam America’s Private Sector Department, which filed an amicus brief in the SCOTUS cases involving Cargill and Nestlé; Charity Ryerson, director of the Corporate Responsibility Lab, which works to find legal avenues to hold corporations to account for human rights abuses, and which filed two amicus briefs in the SCOTUS cases; and Kaitlin Cordes, lead of Human Rights and Investment at the Columbia Center on Sustainable Investment, which in 2019 released a report titled Ensuring Economic Viability and Sustainability of Coffee Production. Their answers, from three separate conversations, have been edited for clarity and length.

What’s your role in the cases now before SCOTUS?

Irit Tamir: Oxfam filed an amicus brief addressing the economic arguments Nestlé and Cargill made — namely, that if we hold them to account [for human rights violations] the doors will flood open and we will destroy the competitive nature that US companies have abroad. ATS is supposed to ensure that US companies are held to account in the US, but when it comes to their supply chains in other countries, we feel that when it’s something as aggressive as forced labor — effectively, slavery — countries need to be able to hold companies accountable and victims need the opportunity to get a remedy.

Charity Ryserson: We submitted two briefs, on behalf of Tony’s Chocolonely and 19 small chocolate companies which say that insofar as practices like labor trafficking are tolerated and there are no consequences, that’s a disadvantage to the “good” guys.

Could a ruling against Nestlé and Cargill here apply to coffee?

Tamir: Many agricultural commodities suffer from similar conditions. That is, people mostly living in poverty who work as smallholder farmers or agricultural workers; women in particular are often at the bottom rung of these supply chains. These are extractive business models that are notorious for egregious human rights violations and there are opportunities for other commodity sectors to be on alert. For so long, victims of human rights abuses have failed to get a remedy in many awful situations, so it would be a glimmer of hope if the [SCOTUS] case could move forward. But a trial would still have to take place and the victims would still have to prove their case in terms of forced labor.

Ryerson: The Nestlé case was brought under the Alien Tort Statute, which only permits claims for certain egregious human rights abuses, including torture, extrajudicial killing, genocide, and in this case, trafficking. While there are many human rights violations taking place in coffee supply chains, a finding in favor of the plaintiffs in this case would only impact coffee workers who were exposed to that level of abuse. Most of the abuses in the coffee sector arise from extreme poverty and exploitation, which do not rise to the level of abuse this statute covers. So even a good decision here won’t do much for the type of exploitation we see in the coffee sector.

Do you think SCOTUS will rule in favor of ATS?

Kaitlin Cordes: Even if US courts don’t [uphold corporate accountability], it’s possible other court systems might evolve in a way that’s a useful tool for corporate accountability. There’s a patchwork of legal requirements and voluntary standards for due diligence that are coming out of the EU [and individual countries] and if they become standard, they might trickle out beyond the EU for any US company that [does business there].

"There’s so much exploitation built into the system, of producers, workers, the environment; we have this entire food system predicated on exploitation."

Kaitlin Cordes

Lead, Human Rights and Investment at the Columbia Center on Sustainable Investment

What would that look like?

Tamir: The UN’s Guiding Principles for Business and Human Rights talks about human rights due diligence; a number of EU countries are looking at putting mandatory human rights due diligence into law. Essentially, that means companies need to engage with the people that work in their supply chains — workers and farmers and particularly women — to understand how their business might be driving human rights impacts through sourcing, marketing, pricing, business relationships, the way they do contracting. Coffee would certainly benefit from such an effort.

Cordes: There’s so much exploitation built into the system, of producers, workers, the environment; we have this entire food system predicated on exploitation. The coffee price crisis over the last few years was so devastating for coffee producers. A huge amount of them were pushed into extreme poverty because of the incredibly low prices paid. There was increased child labor, worse working conditions, migration out of producer countries; people couldn’t survive on coffee production anymore. The coffee sector was doing a lot of public hand wringing but not offering a lot of specific solutions. Coffee, cocoa, tea, rubber, all these commodities pit smallholder farmers against a global system that doesn’t value what they provide. There are huge power asymmetries with powerful actors that manage to be incredibly profitable while saying they are unable to make any changes to how they do business.

For our coffee [research] project, we put forward the idea of a Global Coffee Fund, recognizing that to make the coffee sector truly sustainable, there was a lot more investment needed. We calculated how much that would cost and came up with $10 billion a year, $2.5 billion of which would come from the industry itself. That proved a sticking point for everybody in coffee, even though you can see how profitable some companies are and that amount only equates to half of one US penny per cup of coffee consumed. So, we said if they were not willing to pay into a fund, we would like to see evidence of concrete action they’re taking to otherwise support producers and ensure proper working conditions: eradicating child and forced labor in supply chains, paying higher prices [for beans], building longer-term relationships with fixed-price contracts to help producers survive when prices are low.

Ryerson: Companies could enter into five-year contracts that are farmer-friendly that say, We will pay you this much [for beans]. If the price rises above X, we will pay you this much more; if it dips below, we will still pay this amount. That way the farmer knows he will always have a customer and can make rational decisions about what to invest in. It’s so basic and nobody does it.

Has anything improved at all in commodity crops, or coffee in particular?

Ryerson: If you look at West Africa and cocoa, [governments] created cartels and boards to establish a price. It’s the right direction; the prices are still too low but at least they’re trying to find way to buffer the farmer from a volatile commodity price. But low wage laborers get hourly wages that have nothing to do with how good their farming is; there’s no relationship between what they do and what they earn. Lots of companies decry child labor and farmer poverty and say on their websites “We’re doing all these things.” But those things are usually educational programs: teaching farmers to use better techniques or diversify their crops, but the price is too damn low, they can’t live off the land, they planted a tree and waited three to five years for it to mature — they made that investment and can’t shift.

Tamir: Too often we see companies on the one hand trying to eliminate forced labor, and on other hand opposed to policies to raise wages, allow collective bargaining and unionization, price increases — things that mitigate and prevent forced labor. Companies have to be willing to hand over some power to stakeholders in the supply chain.

Cordes: I was recently reading a Guardian article about the coffee price crisis in the early 2000s and the companies’ response at time was, This is not our issue, we can’t do anything about it. Then I look at the price crisis in the last couple of years and see that consumers are more aware of a lot of the issues; climate change is creating an existential crisis for humanity and the agricultural community as well. Maybe we’re getting to the right combination of factors that could lead to change. For example, Mars and Unilever have committed to living incomes for farmers in their supply chains, which shows that at some companies are willing to grapple with that responsibility.

Where does that leave consumers grappling with often-empty promises of certification/labeling schemes?

Tamir: Companies hoped that third party certification could help get them out of a fix. But a very, very small percentage of purchasing happens under these certification programs, so even if they were able to solve the problem, which they can’t, certification cannot [replace] a company’s responsibility.

Ryerson: The model is flawed because certification is paid for by the companies, so they have a natural incentive to push down standards. Fair Trade started in coffee and did a good job initially. I used to monitor Central American coffee farms and I’d find some farmers were doing well: still in poverty but getting a fair price, their kids went to school and all had shoes; it was a low but decent standard of living. Then Fair Trade expanded into other industries and with the pressure to produce more certifications, it got watered down beyond recognition. The best alternative model is what the Worker-Driven Social Responsibility Network is talking about, getting organized workers to be monitors, with hotlines they can report [abuses to]. Organizing is essential, but how can they effectively do that without people being retaliated against?

Cordes: One of the things that’s most depressing with coffee is that 50 percent of it is produced under certifications/labeling schemes, but a smaller percentage is actually purchased under that standard. That means farmers expend effort, time, and money to produce under that standard but there’s no market for it. Companies should be explaining to consumers why it’s important — it would make a big difference.

"Companies are making massive profits and every one of them is saying, This is not something we can do. That strains credulity. They’re looking at their stock price, not if their employees are eating this month."

Charity Ryerson

Director, Corporate Responsibility Lab

Is there a future that includes “ethical” coffee?

Tamir: The marketplace wants more sustainable and ethically sourced products; millennials in particular are quite keen to make sure they aren’t contributing to environmental degradation or human rights impacts. That’s an argument against companies saying, This hurts us economically. It’s actually going to help them.

Cordes: I would like to see if producer-driven initiatives and enterprises could reach more consumers. With the internet, there is more of an opening for direct-to-consumer approaches and some specialty companies are doing good, interesting things. For example, I buy Pachamama coffee, which is the only producer-owned vertically integrated company I know of that is selling to US consumers. It would be so helpful if there were some type of consumer-facing marketplace where you could find producer-owned companies to help you cut though the greenwashing.

Ryerson: There are some places where things are better, like Ecuador. Columbia is hit or miss — it’s complicated because of the war. But there needs to be government intervention, there needs to be more regulation, because the power imbalance between international buyers and domestic producers is too great, which means it will continue. Companies are making massive profits and every one of them is saying, This is not something we can do. That strains credulity. They’re looking at their stock price, not if their employees are eating this month.

 

Top photo by aboikis/Adobe Stock.

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