By Peter Nestor, Associate, Advisory Services, BSR
When the United Nations endorsed the Guiding Principles on Business and Human Rights 18 months ago, businesses in nearly every industry took a more serious look at their human rights impacts. For food, beverage, and agriculture companies, labor rights are often the most well-understood and critical human rights risks. But a holistic approach to assessing human rights will uncover several other potential impacts that are often overlooked.
This article reviews four risks and impacts in the agriculture supply chain through a human rights lens: labor rights, the right to water, resettlement of indigenous populations, and challenges related to food security and the production of biofuels.
By taking a proactive approach to understanding these impacts, companies can improve risk management and identify areas to collaborate for smarter, more effective solutions.
Labor rights—including child labor, excessive hours with low wages, and human trafficking—are often the leading human rights concerns for agriculture companies. These rights are protected in several articles of the Universal Declaration of Human Rights (UDHR) and the International Labor Organization (ILO) Core Labor Conventions, and they are incorporated into the Guiding Principles.
According to the ILO, 60 percent of global child labor occurs in the agriculture sector. The ILO guidance suggests setting a minimum age of 15, and defines child labor as becoming an issue when the work “harms a child's well-being and hinders his or her education, development, and future livelihood."
Distinguishing between legitimate and illegitimate child labor can be difficult. Many parents living on small farms are proud to teach their children agricultural skills or groom their kids to take over the family business. In some rural, developing countries, full-time child laborers often come from poor families who lack access to educational resources. Removing children from work and placing them in school could exacerbate their family’s poverty and increase vulnerability to trafficking.
In the cocoa supply chain, which has several well-documented cases of child labor, companies like Mars and the industry group the World Cocoa Foundation have begun to address the root causes of child labor. Nestlé, one of the first companies to invite the Fair Labor Association to review its cocoa supply chain, began efforts to provide better access to education for children in high-risk countries. In another commodity, Monsanto was criticized for child labor on cotton farms in India, but since 2005 has reduced the number of known child laborers from 10 percent to 0.2 percent, despite a tenfold increase in total laborers over the same time.
Agricultural workers are particularly susceptible to excessive hours and low wages. According to Article 23 of the UDHR, “Everyone who works has the right to just and favorable remuneration ensuring . . . an existence worthy of human dignity.” Article 25 adds that, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food clothing, housing and medical care.”
Work in the agriculture supply chain is labor-intensive and often occurs in seasonal bursts, requiring more temporary and migrant workers. Temporary workers are often employed with short-term contracts that do not always include protections or benefits provided to full-time workers. Workers hired by third-party recruitment agencies are particularly vulnerable to abuse because agencies rarely provide social protections in contracts or enforce hours and wages requirements.
As part of broader social and political trends to address inequality, food and beverage companies will face increasing pressure to implement a living wage. The U.K.’s first Living Wage Week was launched late last year, and a handful of U.S. cities and states now have living wage ordinances. Last year, clothing company H&M pressured the Bangladeshi government to increase its minimum wage for the second time in two years.
Paying a living wage can be difficult for companies to control in their supply chains, but many companies directly own processing facilities and could more easily ensure a living wage in those operations. Unfortunately, neither the UDHR nor the Guiding Principles provide clear guidance on how to implement a living wage. BSR providedguidance on calculating and implementing a living wage—as well ashow to define the issue—in a two-part series of articles. New technology, such as secure mobile payment systems, could provide an option for companies to pay wages directly to remote workers to ensure proper payment.
Although the UDHR specifically prohibits slavery (Article 4) and human trafficking (Article 13), the porous, seasonal nature of the agricultural labor market makes it highly susceptible to these abuses. Human trafficking is distinct from legitimate migrant labor because laborers are forced to work through physical or sexual abuse, or through fraudulent promises of better jobs and wages. Labor recruiters often confiscate passports and visas and impose substantial financial debts on workers in exchange for labor.
Human trafficking, particularly in the United States, has attracted mainstream attention over the last several years. In 2010, the U.S. Justice Department dismantled a high-profile trafficking operation that forced more than 400 people in Thailand to work in agriculture jobs. Last year’s California Transparency in Supply Chains Act requires many companies doing business in that state, including food and beverage companies, to disclose steps they are taking to “eradicate” human trafficking in their direct supply chains. In response to U.S. congressional action on human trafficking, the Department of Labor now publishes an annual report that identifies products (including crops) that are more likely to be produced by child and forced labor at the country level. Other organizations, such as Polaris and Not for Sale, have developed ways for individuals to track and help prevent human trafficking in their communities.
Regardless of whether required to do so by law, all companies should seek to understand where human trafficking is a risk in their supply chains and develop a plan to mitigate and eventually eradicate these practices.
More than 780 million people lack access to safe drinking water, 2.5 billion lack access to basic water sanitation, and more than 1.5 million children die each year from poor sanitation and water-borne diseases. Given these numbers, the UN passed a resolution in 2010 making access to “safe and clean drinking water and sanitation” a human right.
Accounting for approximately 70 percent of the world’s water usage, the agricultural industry’s impact on the availability of clean water is significant. Most usage is for crop watering, but it’s also important for the industry to consider water inputs used for product ingredients. The water footprint for sugar-sweetened drinks, for example, is significantly higher than the amount of water actually contained in the beverages, due to the water required to grow sugar cane and other sugar-producing crops.
For obvious reasons, water efficiency is most important in water-stressed regions. In Guatemala, sugar cane production resulted in the drainage of at least eight different rivers, leaving surrounding communities with insufficient water supply and forcing the relocation of several indigenous populations. Heavy water use also can create problems when it comes to determining who has the right to this scarce natural resource, and in assessing the quality of water returned to the system. Industrial agricultural practices can affect water quality from excess nutrients, pesticides, and other pollutants.
In response to these challenges, companies are creating policies that echo the UN resolution on water. PepsiCo, for instance, is working with its supply chain in India to train farmers in “direct seeding,” a practice that removes the need for flood irrigation and reduces water use by up to 30 percent. In 2009, the company reported that this practice on 6,500 acres saved more than 5 billion liters of water.
Examining water usage through a human rights lens requires an understanding of how water use in operations and supply chains affects local communities, and will reveal better ways to reduce water inputs and increase efficiency.
A growing population coupled with increased incomes places more pressure on available land for agricultural production. Land conversion can result in significant environmental damage, and it also raises human rights issues under ILO and UN conventions when companies do not fairly compensate legitimate but unofficially recognized landowners; when they fail to obtain free, prior and informed consent (FPIC) from relocated communities; or when they fail to provide equal or better standards of living in resettlement communities.
Human rights are also affected indirectly through conflicts that arise when land expansion occurs without community consent. For example, in response to the global demand for palm oil, small-scale farms and forest communities in Southeast Asia are being converted to palm oil plantations. Many of these areas are inhabited by indigenous populations, but if indigenous land ownership is not recognized by the state, the rightful property owners may not be consulted or fairly compensated, resulting in local resistance to the projects.
Labor strikes, blockades, and armed attacks have arisen recently on palm oil plantations in the Philippines, Indonesia, and Malaysia. In Cambodia, 60 percent of land concessions provided for palm oil production are currently under conflict, and village residents are reportedly routinely intimidated by armed security guards if they try to enter converted plantation areas. A recent UN Food and Agriculture Organization draft report recommends that FPIC “must be effectively implemented as a precondition for any land deals.”
To address these issues, companies should be aware of exactly where their products are being sourced, and under what conditions newly acquired land was obtained. While many companies are often indirectly involved in resettlement issues, the Guiding Principles require companies to hold their suppliers accountable to human rights standards as well.
The development of cleaner-burning fuels—particularly biofuels, which rely on several agriculture products as raw materials—is also creating unintended consequences for human rights.
It is estimated that by 2020, biofuels will comprise 10 percent of the fuel sold in the European Union, 15 percent of the fuel sold in China, and 20 percent of the fuel sold in India. Although these fuels are cleaner and will reduce our dependence on fossil fuel, the process of growing and harvesting biofuels has trade-offs. Growing biofuels requires significantly more water per mile than producing gasoline, and it requires access to land that could be used to grow food—which will likely raise food prices for the people who can least afford it.
While the goal of developing cleaner burning fuel is necessary to achieve, rushing into a solution without fully considering the secondary consequences will make for bad public policy. It's important to evaluate the human rights impacts and trade-off vis-à-vis other sustainability challenges.
Leading companies are beginning to address these and other human rights challenges through several distinct management strategies, in line with the expectations articulated in the Guiding Principles.
Many companies begin by conducting human rights risk or impact assessments at the corporate level, identifying key issues for the company, and then formulating a human rights policy around those risks. Several companies have adopted an internal human rights policy, which demonstrates the company’s commitment to address its issues and provides a useful tool to drive internal compliance. Companies will often focus on the most material risks and impacts within their control and aim to identify hotspots in key countries or steps in the value chain. BSR has worked with companies to develop internal training programs to ensure that all employees understand how the company can reduce its human rights impacts.
The attention on business and human rights will only gain momentum in the coming years, while the sustainability challenges will become more pressing. For companies in the food and agriculture sector, it’s important to consider human rights issues and to evaluate the impacts and trade-offs vis-à-vis other sustainability challenges.
This article first appeared on www.bsr.org.
KEYWORDS: Business & Trade, People, Social Action & Community Engagement, Human Rights, food, agriculture, labor rights, water rights, human trafficking, Child labor, working hour, living wage, sanitation, land rights, food security, biofuels, strategy, BSR