From California to London, Signs Pointing Toward Supply Labor Transparency Regulation

U.S. Secretary of Labor Thomas Perez delivers remarks at the ILAB Cocoa Meetings in June 2014, addressing child labor in cocoa production. Photo courtesy of the US Department of Labor. Used with permission.

As I was starting graduate school back in the year 2000, my wife and I bought a used Subaru Outback. Once we did, we couldn’t help but notice how many there were on the road. They seemed to be everywhere.

Our purchase did not, of course, expand the universe of Outbacks or coincide with an explosion in the number of Subarus on the road; it only increased our awareness of the ones that were already there. Reality didn’t change, only our perception of reality.

It has been something like that for me with the issue of farm labor in the coffee sector.

Ever since I started focusing intentionally on farm labor in the coffee sector more than two years ago, I feel like I see farmworkers everywhere in coffee. But farmworkers, of course, are hardly new. Our food systems — and coffee supply chains — have depended on them from their inception. My sudden interest in farmworkers did not coincide with an explosion in the number of farmworkers or the prominence of farmworker issues in coffee, it only increased my awareness of them.

But in one important respect, reality does seem to be changing where farmworkers overseas are concerned. From California to London, there has been a wave of new regulations over the past few years pushing for greater transparency in supply chains — regulations that have implications for how we engage with farmworkers in coffee.

California

SB657

Better known as the California Transparency in Supply Chains Act, SB657 obligates companies operating in California with more than $100 million in annual global sales revenues to make annual public disclosures of the efforts they are taking to eradicate human trafficking and slavery from their supply chains. Specifically, they are required to report what they are doing in regards to:

• Verification to identify and address sources of risk in their supply chains;
• Auditing to assess suppliers and their compliance with the terms of SB657;
• Certification to assure that materials from suppliers are free from human trafficking and slavery;
• Accountability to establish and maintain clear internal standards for dealing with employees and contractors who do not comply;
• Training to prepare management and other employees involved in supply chain management to identify and address risks of human trafficking and slavery in the supply chain.

To date, Starbucks is the only coffee roaster that has been affected by the legislation, but more will certainly follow.

The SB in SB657 may just stand for state bill, but this influential legislation has been the model for similar measures from Washington to London. This summer, draft legislation inspired by SB657 was introduced in both houses of the U.S. Congress, and SB657 was referenced in discussions around new legislation across the Atlantic in the United Kingdom.

Washington D.C.

H.R. 3226 (S. 1968)

When I first mentioned SB657 here back in February, I reported that there were efforts underway to develop national legislation based on the landmark California bill. And sure enough, in late July Mr. Smith went to Washington. That’s Rep. Chris Smith (R-NJ), who together with Rep. Carolyn Maloney (D-NY) introduced H.R. 3226 in the U.S. House of Representatives: the Business Supply Chain Transparency on Trafficking and Slavery Act of 2015. An identical bill with the same name was introduced the following week in the Senate as S. 1968 by senators Richard Blumenthal (D-CT) and Edward Markey (D-MA). The draft bill, which is in committee in both houses now, applies the same $100 million annual sales threshold for compulsory reporting as SB657, but goes further than the California law in its annual reporting requirements regarding forced labor, slavery, human trafficking and the worst forms of child labor, to also include provisions on:

• Corporate policy. Companies must report whether or not they have a formal policy to “identify and eliminate” risks, publish the text of that policy or a “substantive description” of its key elements, and declare what actions the company has taken as a result of/in lieu of its formal policy.
• Sexual abuse. Companies must specify whether or not they and their supply chain partners have policies prohibiting employees from engaging in commercial sex with minors.
• Engagement with labor. Companies must describe the processes they have in place to identify, assess and address risks, including information on whether/how labor organizations or labor representatives were consulted in the process, and evidence that labor’s inputs were incorporated into the company’s response.
• Remediation. Companies must describe their efforts at remediation of victims in their supply chains and their support for industry-wide programs to prevent similar abuses.

This is just a proposal, of course, and my colleagues working on Capitol Hill to support the measure suggest that winning passage will be an uphill battle. But the battle lines are drawn.

London

Modern Slavery Act

The UK authored a new chapter in its long history of abolitionism earlier this year with the passage of the Modern Slavery Act (MSA), which refreshes the country’s tradition of fighting slavery for a new and decidedly different context. Originally, the measure was designed to address only human trafficking and slavery within the borders of the UK. Under pressure from leaders in the business community and nonprofits, however, a section titled “Transparency In Supply Chains Etc.” was added to extend the scope of the law to require all companies doing business in the UK to also report on supply chain activities outside the UK.

Compulsory reporting under the MSA begins at a lower level than the U.S. legislation (£36 million in annual sales as opposed to $100 million), and it is comparatively less specific in what “commercial organizations” must include in their annual reports. But it is more prescriptive about who must sign off on them: for publicly traded companies, statements must be approved by the Board of Directors and signed by a director; for limited liability partnerships and other partnerships, firm partners must sign.

“Culture Changers”

What do all these measures have in common? They are mostly toothless. They don’t obligate companies to actually do anything, only to report on what they are doing — or not doing — now.

Still, that’s not to say they aren’t important.

Michael Pollitt is a researcher at the British House of Commons and a contributor to the venerable London-based weekly the New Statesman, which has published several of his articles on the Modern Slavery Act. In one of them, Pollitt argues that despite the voluntary nature of disclosure and the lack of automatic sanctions for noncompliance, the bill will be a “culture changer.”

If the MSA and the other measures profiled here can change the culture of supply chain transparency, promote active identification and mitigation of supply chain risk and incentivize deeper engagement with farm labor, they will have made no small contribution to making agricultural supply chains — including coffee chains — more responsible.