Research – Seventh Generation Interfaith Coalition for Responsible Investing

2023 TIP Report cites the weaknesses of social audits

June 27, 2023August 29, 2023Chris Cox

Last week, the U.S. State Department issued the 2023 Trafficking in Persons Report. This annual report is a critical tool to monitor and assess efforts to eliminate human trafficking. As investors, we expect companies, in the course of their human rights due diligence, to act based on the report’s identification of salient risks to people in their operations and supply chain. In her message at the beginning of the report, Ambassador Cindy Dyer wrote:

Getting ahead of the traffickers requires us—governments, civil society, front-line workers, and the private sector—to harness advanced tools and to forge new relationships. Effective partnerships manifest the power to transform anti-trafficking efforts from prevention to protection to prosecution.
Message from the Ambassador-at-Large, 2023 Trafficking in Persons Report

2023 Trafficking in Persons Report Launch

One of the more insightful commentaries on the new TIP Report comes from Martina E. Vandenberg, founder and president of The Human Trafficking Legal Center. In the coming days and weeks, we’ll see more analysis and commentary, but I’d like to highlight one innovation in this year’s report: a section entitled “Deceiving the Watchdogs: How Unscrupulous Manufacturers Conceal Forced Labor and Other Labor Abuses” (pp 50-52). This section highlights the limits of supply chain social audits conducted by companies and third-party providers. The report identifies “a cottage industry” to help factories “pass” the audits by falsifying records, concealing passport retention, and manipulating workers, among other tactics. Among the nine recommendations proposed in the report, six point toward worker-led social responsibility. A more substantive human rights due diligence, I believe, captures the spirit of “partnership” called for by Ambassador Cindy Dyer.

When SGI members talk with companies about their human rights due diligence, most companies trumpet their codes of conduct. Those documents herald a “zero tolerance” for forced labor, prison labor, and child labor. The codes outline a regime of factory social audits to document compliance. The companies may even lift up the silence in reports from their grievance mechanism as proof of their success. For years, we have been telling companies that these are not adequate measures. Those measures exist to protect the company, but additional measures are required to protect people in the supply chain. Companies need to “pay attention,” as attention is owed to people who are endangered. A code of conduct and social audits are necessary but insufficient for human rights due diligence.

That reliance on social audits is insufficient to protect rights holders ought to be self-evident based on front-page news. Operation Blooming Onion uncovered dozens of trafficked persons in criminal acts that reaped more than $200 million. Other recent events, just in the U.S., include:

US Department of Labor investigation results in judge debarring North Carolina farm labor contractor for numerous guest worker visa program violations(US Department of Labor, 3/16/21 – judgment against H-2A LC) “Sleepy Creek Farms provides berries to retailers such as Trader Joe’s, Harris Teeter, Driscoll’s, and Food Lion, among others.”
Lancaster Meat Processing Plant Endangered Minors By Allowing Them To Perform Hazardous Tasks, Work More Than The Law PERMITS(US Department of Labor, 2/14/23) “Located in Central Kentucky, Marksbury Farm Foods LLC distributes food in Kentucky, Ohio, Indiana and Michigan, including at Kroger and Whole Foods Market locations.”
Court Sentences Florida Labor Contractor To Nearly 10 Years In Prison In Case Involving Forced Labor, Part Of US Department Of Labor Investigation(US Department of Labor, 2/2/23 – criminal conviction against H-2A LC.) “Los Villatoros Harvesting LLC employed workers to harvest watermelons for Carlton Farms Inc., operating as Sun Fresh Farms Inc. in Wauchula, Florida, for sale to Walmart and Kroger locations. In Indiana, the employer provided crews for Cardinal Farms in Oaktown and Wonning Melons in Vincennes to pack melons for sale through a distributor to chains including Kroger, Schnucks and Sam’s Clubs.”
Federal Investigation Finds Oregon Labor Contractor Violated Multiple Federal Laws Related To Van Crash That Killed Three Migrant Farmworkers(US Department of Labor, 4/26/21) “The division found that JMG Labor Contractor of Salem had employed the workers at Holiday Tree Farms, a large Corvallis-based grower of Christmas trees sold at Home Depot and Costco stores.”

W e have seen how child labor cases have increased significantly in the United States over the past five years. A recent investigation by the New York Times found children working exhausting and often highly dangerous jobs across the United States in violation of child labor laws.

Simply put, a company that performs worker-focused human rights due diligence shows that it better understands social-related risks and opportunities in general and the extent to which it is equipped to identify and manage these issues more effectively than a company that relies on its code of conduct and social audits. Too many companies continue to rely on this discredited approach, and workers pay the price as companies cling to an ineffective model that fails to protect human rights. Worker voice plays a critical role in addressing supply chain abuses, as exemplified in the success of the Fair Food Program and the International Accord.

We are glad that the 2023 TIP Report joins the chorus of those calling for a worker-centered human rights due diligence.

As always, the largest component of the report is a series of country-by-country technical assessments. The report categorizes 188 countries and territories with regard to their compliance with the standards of the Trafficking Victims Protection Act (TVPA) of 2000. Each country is tiered according to compliance:

Tier 1: those governments who fully comply with the TVPA’s minimum standards
Tier 2: while not fully complying, governments with significant efforts to bring themselves into compliance with those standards
Tier 2 watch list: not fully complying along with a significant absolute number of trafficking victims, or a failure to increase efforts, or a determination that the country is in fact committed to making significant progress in the coming year
Tier 3: those governments who do not fully comply with the minimum standards and are not making significant efforts to do so
Special cases: countries where a civil or humanitarian crisis makes gaining information difficult

Tier 1, which includes the United States, is simply compliance with the minimum standards. A tier 3 designation means that the U.S. can restrict assistance or withdraw support for the country at global funding organizations like the International Monetary Fund.

The report includes a country by country analysis of human trafficking and intends to offer “homework” to governments based on their tier. The image above lists the countries of the tier 2 watch list, tier 3, and special case categories.

To read about a previous year’s TIP Report, please see the 2021 edition here, 2020 edition here, and the 2019 here.

Crypto: The Fifth C

January 11, 2022February 23, 2022Chris Cox

If you’ve been cooped up inside due to weather or COVID, you have probably seen a fair bit of football on television, along with a lot of high-priced advertising. Both will reach their apex on Super Bowl Sunday. A ubiquitous ad this season features Matt Damon touting how “Fortune favors the brave” in an ad for crypto.com. I’d urge us to think of another fact when we see this ad: “Trafficking preys on the vulnerable.”

Today, January 11^th, is National Trafficking Awareness Day. Just yesterday, the U.S. Government Accountability Office released a new report: Virtual Currencies: Additional Information Could Improve Federal Agency Efforts to Counter Human and Drug Trafficking. The report notes that human and drug traffickers increasingly turn to cryptocurrencies to facilitate their illicit businesses.

Often, when experts speak about trafficking, they refer to the four Cs: chocolate, clothes, coffee, and cellphones. Sadly, now, I need to add a fifth.

So when you see the ad this weekend, remember that Matt Damon also advocates strongly against food insecurity and for water stewardship. Remember, too, as Damon says in the ad, “History is filled with almosts.” With this glaring exception, his body of work almost gets it right.

Highest Youth Tobacco Use since 2000, says CDC

December 6, 2019July 8, 2020Chris Cox

This morning, the Center for Disease Control released its latest National Youth Tobacco Survey (NYTS), and the results can only be described as alarming.

The report concludes:

Findings from NYTS indicate that in 2019, approximately half of high school students (53.3%) and one in four middle school students (24.3%) had ever used a tobacco product. Furthermore, approximately three in 10 high school students (31.2%) and approximately one in eight middle school students (12.5%) had used a tobacco product during the past 30 days
National Youth Tobacco Survey, p. 10

According to reporting by Axios, this is the highest youth tobacco use report since 2000.

Alongside this news, please, remember that the NYTS follows Wednesday’s update (Dec. 4) that identifies 2,291 cases of hospitalized e-cigarette, or vaping, product use associated lung injury (EVALI) reported to CDC from all 50 states, the District of Columbia, and 2 U.S. territories (Puerto Rico and U.S. Virgin Islands). Further, another forty-eight deaths have been confirmed in 25 states and the District of Columbia.

Each day that administration debates its course forward amid concerns for public health and election and jobs impact, more young people risk getting hooked on tobacco products. Both of these CDC reports, the weekly update on EVALI and the NYTS, underscore the critical need for public health policy and action at local, state, and federal levels.

Shareholders, too have a critical role to play. Recently, we have written about SGI’s commitment to continue this work that originated decades ago with Fr. Mike Crosby, O.F.M., Cap. For instance, today is the filing deadline for two resolutions at Altria Group, Inc. One resolution concerns greater transparency regarding Altria’s lobbying efforts, and the other calls upon Altria to review corporate adherence to Altria’s principles and policies aimed at discouraging the use of their nicotine delivery products to young people and to report to shareholders. Both of these resolutions deserve broad support from shareholders.

Homework with the Trafficking in Persons Report

July 3, 2019Chris Cox

The Trafficking in Persons Report, or TIP Report, is an annual report issued by the U.S. State Department’s Office to Monitor and Combat Trafficking in Persons. The TIP Report ranks governments based on their perceived efforts to acknowledge and combat human trafficking. Thursday, June 20th, the 2019 edition was issued.

The report categorizes countries of the world with regard to their adherence to the standards of the Trafficking Victims Protection Act (TVPA) of 2000. Each country is tiered according to compliance:

Tier 1 (those governments who fully comply with the TVPA’s minimum standards)
Tier 2 (while not fully complying, governments with significant efforts to bring themselves into compliance with those standards)
Tier 2 watch list (not fully complying along with a significant absolute number of trafficking victims, or a failure to increase efforts, or a determination that the country is in fact committed to making significant progress in the coming year)
Tier 3 (those governments who do not fully comply with the minimum standards and are not making significant efforts to do so)
Special cases (countries where a civil or humanitarian crisis makes gaining information difficult).

Remember that tier 1, which includes the United States, is simply compliance with the minimum standards. A tier 3 designation means that the U.S. can restrict assistance or withdraw support for the country at global funding organizations like the International Monetary Fund. Some regard the tier 2 watch list with suspicion as some determinations have suggested a reward to governments allied with the U.S. who otherwise would be in tier 3.

The report intends to offer “homework” to governments based on their tier. The image below lists the countries of the tier 2 watch list, tier 3, and special case categories. The report includes a country by country analysis of human trafficking.

I don’t want companies to avoid sourcing from these countries: I prefer companies to promote improved standards and conditions in those countries. Even if the governmental authorities do not adhere to a recognized global minimum, companies have a responsibility to act responsibly, to act in accord with the protection of human rights. A company, working in those countries, must take extra steps to reduce human trafficking and to care for the victims of trafficking in their supply chains.

The resolutions that SGI members introduced at Kraft Heinz, Macy’s, TJX, and Wendy’s aimed to do just that. We asked those companies to do a human rights impact assessment, to look through their supply chains at the most vulnerable workers. They then would mitigate the human rights abuses and remedy those workers whose rights were violated. Over time, those learnings are compiled and integrated into the ongoing processes of the company to insure greater adherence to human rights in their supply chain.

Now for some personal homework. I would recommend printing off the image above. Perhaps, you may want to laminate it to carry it with you.

When going to bed this evening, take a look at the countries of origin for the clothing you have worn. I’d be willing to bet that much of your clothing comes from a country listed above. Many of the electronic items that we use daily have supply chains woven through these countries. I bring that to your attention, kind reader, not to shame you or make you feel guilty, but, in the hopes, that we might see– along with the companies who provide us those products– that we have real power to change the situation in those countries.

An eyebrow raising statistic

December 4, 2017December 4, 2017Chris Cox

Annually, Oxfam, in conjunction with Forbes magazine and its global rich list, publishes a report on how many of the world’s wealthiest are needed to match the wealth of the bottom half of the planet. In recent years, as market values have soared and wealth has concentrated evermore increasingly, the number has shrunk from 80 wealthiest in 2015 to just eight men holding the same wealth as the bottom 3.6 billion people in 2017.

Recently, researchers from the Institute for Policy Studies refined the statistics to reflect the U.S. alone. Their conclusions were eyebrow raising:

It can be hard to grasp just how much money is concentrated in just a few hands in our lopsided economy today. But here’s a start: The richest three people in the United States — Jeff Bezos, Bill Gates and Warren Buffett — together have more wealth than the entire bottom half of the country combined.

To put an even finer point on it: That’s three people versus about 160 million people.

To really comprehend just how insane the wealth concentration has become, consider Bezos, the head of Amazon. Worth about $90 billion, he recently was declared the richest man in the world. In October alone, his wealth jumped by $10 billion — or about $4 million per second.

The authors made a particular point that the wealthiest of the group, Jeff Bezos, pays some of his warehouse workers as little as $12.84 an hour.

The report initially appeared in the Los Angeles Times, and more information can be found on the IPS website.