Multinational corporations under scrutiny for human rights issues and supply chain practices, with Candriam highlighting seven notable companies
In a recent investigation, asset management company Candriam has shed light on the human rights risks in the supply chains of coffee, cocoa, and palm oil. The study primarily focuses on extreme poverty conditions leading to child labor and poor labour standards, particularly in cocoa farming regions like Côte d’Ivoire.
The research reveals that over 800,000 children are affected by child labour in cocoa farms, driven by an average producer income often less than one dollar per day. This perpetuates a cycle of poverty and exploitation.
Besides child labour, these supply chains face risks related to environmental degradation, such as deforestation resulting from efforts to maintain cocoa yields under organic farming practices. This environmental damage can further compound social vulnerabilities in the communities involved.
The study also highlights that although rising commodity prices have slightly improved producer incomes, they remain insufficient to eliminate systemic human rights abuses without structured policies and responsible consumption practices supporting sustainable livelihoods.
Key risks identified include child labour and exploitation due to poverty, low wages and poor incomes for small producers, environmental harm like deforestation tied to agricultural practices, and insufficient safeguards to sustainably improve socio-economic conditions in producing regions.
Candriam's study focused on Nestlé SA, one of the major consumer goods companies linked to these commodities. The research found that between 21% and 30% of Nestlé SA's 2021 revenue depends on coffee. However, the study did not provide information on the percentage of Nestlé SA's revenue that depends on cocoa.
The assessment aimed to evaluate the revenue dependence of these companies on certain commodities and their exposure to human rights risks. The study did not evaluate the revenue dependence or exposure to human rights risks for any other companies besides the seven previously mentioned consumer goods companies.
The food industry has made significant progress in managing and disclosing human rights practices in supply chains, but information and analysis of human rights risks remain a challenge for investors. The collection of information on supply chains and the determination of what is disclosed and what is kept private relies solely on each company's judgment.
Out of 97 food and beverage companies evaluated by the Alliance for Corporate Transparency, only 3.2% have made their supplier lists for high-risk supply chains public. In the food and beverage sector, 68.4% do not provide information about the structure and risks of their supply chain.
Looking specifically at human rights risks, only 30.5% of food and beverage companies have provided specific descriptions of these risks. The study underscores the need for greater transparency and standardization in the reporting requirements of the food industry.
References: [1] Candriam Research, "Assessing the Revenue Dependence and Exposure to Human Rights Risks in the Food Supply Chain," November 2021.
- International finance institutions might consider the human rights risks in the food-and-drink industry, such as child labor and environmental degradation, when investing in businesses like Candriam's focus on Nestlé SA, given the company's revenue dependence on commodities like coffee and cocoa.
- To promote personal-finance growth and sustainable lifestyle choices, social-media influencers might raise awareness of the impact of consuming products tied to human rights abuses and environmental harm, like certain chocolate or coffee brands.
- The business community can play a role in addressing human rights risks in the food-and-drink industry: they can strive for transparency in their supply chains and implement responsible consumption practices to support sustainable livelihoods, as suggested by Candriam's study.
- Entertainment platforms can contribute to the fight against human rights abuses and environmental degradation by featuring documentaries or producing content spotlighting the extreme poverty conditions and labor issues in cocoa-farming regions like Côte d’Ivoire, and the need for change in the food-and-drink industry.
