Agricultural Sector Companies Face Increased Scrutiny on Human Rights-Related Risks

Tomatoes in a wooden bowlAgricultural sector companies, and companies with large agricultural supply chains, face new scrutiny from investors and other stakeholders concerning human rights-related risks in their corporate supply chains. Key issues for this sector include the risks of human trafficking and forced labor and the potential for suppliers to be complicit in land grabs which displace vulnerable populations.

In early December, a group of faith-based and socially responsible investors announced that they would launch a campaign in January 2014 urging fifteen companies in the food-agricultural and hospitality sectors to take steps to address risks of human rights abuses in their corporate supply chains. Investors engaged in the campaign are members of the Interfaith Center on Corporate Responsibility, which recently released a Statement of Principles and Recommended Practices for Confronting Human Trafficking and Modern Day Slavery, a document which will serve as a platform for advocacy and dialogue during the campaign. The Statement of Principles calls on companies:

to scrutinize their operations and supply chains to ensure that they are not inadvertently complicit in abuses associated with trafficking and modern day slavery, including forced labor, bonded labor, child labor and sexual servitude.

Companies are also facing questions regarding the extent to which land acquisition for agricultural development is impacting the rights of local communities, especially in developing countries. In early November, in an industry-leading move, The Coca-Cola Company announced a new zero-tolerance policy for suppliers that fail to protect the land rights of local communities. The company committed to observe the principle of free, prior, and informed consent, and will require its suppliers to do the same.

Coca-Cola also announced that it would conduct third-party social, environmental and human rights impact assessments in countries critical to the sugar supply chain. The first assessments will be conducted in Brazil, Colombia, Guatemala, India, Philippines, Thailand and South Africa, and the company has stated that:

The assessments will specifically include impacts related to land and land conflicts, and will be conducted with the participation of affected communities.

Coca-Cola’s announcement came about after Oxfam released a report, Sugar Rush, that focused on the land acquisition practices of the agricultural sector, particularly sugar producers. Oxfam alleges that, in some cases, sugar producers displace traditional land owners with no or inadequate compensation, thus negatively affecting an array of human rights. Notably, in its announcement, Coca-Cola observed that “risks exist for land tenure violations” in each of the seven countries that will be the subject of initial assessments.

The concerns being raised by investors and civil society raise a number of key legal, reputational, and operational risks for companies with agricultural supply chains. Impacted companies range from large food processing and consumer goods companies to retail restaurants. These companies have faced pressure related to human rights-related risks before, ranging from allegations regarding child labor and working conditions to concerns regarding the security provided for large land tracts.

More recently, a convergence of expectations related to the corporate responsibility to respect human rights, including the expectation that companies should conduct human rights due diligence, has provided a new platform for advocacy in this sector. More and more companies will find themselves needing to address questions from stakeholders regarding how they are managing human rights-related risks in the context of agricultural supply chains.

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