California wants to know who's harvesting your shrimp

Large companies are now required to disclose what they are doing to tackle labor abuses in their supply chain. For some activists, lawsuits offer a path to accountability. Part 13 in a series on solutions to labor trafficking. 

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SAN FRANCISCO – For a quick, easy meal, you buy some frozen shrimp. The label tells you the shrimp came from Thailand. It doesn’t tell you there’s a good chance they were fed with fishmeal derived from slave labor.

Should the store be forced to put such information on the packaging? Would you buy it if it did?

A cluster of California class-action lawsuits against corporations such as Costco is pushing the envelope on accountability for human trafficking and slavery in supply chains. The keyword is transparency: If companies are forced to disclose when labor abuses are involved in making a product, they may be more likely to vigorously police their suppliers.

That level of disclosure would go significantly beyond the letter of a 2010 law in California that has already prompted many business owners to scrutinize, as they never have before, the labor conditions in the complex web of raw materials, manufacturing, and packaging on which they depend.

The California Transparency in Supply Chains Act requires large retail and manufacturing companies to disclose on their websites what, if anything, they are doing to eradicate trafficking and slavery among suppliers. That’s a substantial nudge, given how many companies do business here.

Since rooting out forced labor is a complex undertaking, some labor-rights activists argue that it’s not realistic, at least not yet, to expect companies to label products as either slave-tainted or slave-free.

“I’m confident that one day we’ll get there with labeling, but certain commodities are easier than others,” says Christopher Miller, senior policy advisor to Free the Slaves, a Washington-based nonprofit.

Transparency is a means to an end – an important first step, but one that assumes consumers and investors will do their part to combat labor trafficking.

Thanks to California’s law – and a 2015 UK law modeled after it – customers of thousands of companies around the globe can now find out whether those businesses monitor their suppliers for compliance with labor standards. Another requirement is for companies to train staff about how to reduce the risk of trafficking.

Setting benchmarks

It took the first few years for the California Attorney General’s office to release guidance and begin investigating compliance with the disclosure law. Now, advocacy groups can start comparing company statements and setting benchmarks.

But how many shoppers pore over corporate websites before they open their wallets? Can such a basic disclosure requirement really make a difference for workers in the global economy?

It has made some inroads, backers of the law say. At Walmart, even before the law took effect in 2012, an executive reached out to Free the Slaves for advice about how to confront trafficking in its massive supply chain. “They realized what a task they had,” says Kevin Bales, the group’s co-founder.

Walmart ended up working with Free the Slaves to make and distribute to its suppliers a DVD about modern slavery and how it wouldn’t be tolerated. The need for such actions was underscored last month when The Associated Press identified Walmart as among several US food stores and retailers that had sold Thai shrimp peeled using slave labor. 

The Safeway grocery chain also sought advice from anti-trafficking groups and stepped up monitoring of its suppliers. These actions went further than the disclosure required by the law.

The California law applies to companies that do any part of their business here, if they have at least $100 million in gross receipts worldwide. Members of the US Congress have proposed a federal transparency law based on California’s. Companies that contract with the federal government are already subject to such disclosure rules under a 2012 executive order that recently took effect.

With so many laws coming down the pike, companies really need to get to grips with labor issues in their supply chains, or they’ll “feel like they’re playing legislative whack-a-mole,” says Kilian Moote, an activist who helped craft the California law. Companies that embrace the spirit of the laws and “change their management process, in the long term they’ll actually save money,” says Mr. Moote, project director of KnowtheChain.org, a nonprofit resource site in San Francisco.

That’s a gradualist approach that rewards patience. Derek Howard, a Mill Valley, Calif., lawyer who specializes in consumer and employee rights, reckons that companies can do more, and that one way to prod faster action is through the courts.

Consumers “would not buy a product if they knew it was brought to their dinner plate by trafficking,” he says. Mr. Howard is among those representing the lead consumer plaintiff, Monica Sud, in the lawsuit against Costco Wholesale Corp. and Charoen Pokphand Foods (CPF), a multinational owned by Thailand’s richest businessman.

He argues that Costco knows that the supply chain for farmed shrimp from CPF and other southeast Asia sources is tainted with human trafficking and slavery, so to not disclose that to consumers amounts to an unfair business practice under various California laws. 

The lawsuit seeks better labeling, or to block the companies altogether from distributing products tainted with such labor abuses. 

Costco and CP Foods say the lawsuit has no merit. Costco says in its transparency statement that if violations of its code of conduct are found among suppliers, it prefers to work with them to correct the problems, rather than immediately terminating the relationship.

Both companies have said that they have been working with the Thai fishing industry and the Thai government to address concerns about forced labor.

The judge in a US District Court in Oakland postponed the first hearing in December, asking each side for more legal briefs. 

A similar lawsuit against Nestlé, related to seafood in Fancy Feast pet food, was recently dismissed by another US District Court in Santa Ana, Calif.

The judge sided with Nestlé’s argument that it had a “safe harbor.” That means it shouldn’t be expected to go beyond the requirements of the transparency law, namely to disclose steps that they have taken voluntarily to guard against such abuses. On Jan. 7, the plaintiff filed an appeal; the case could take another year to resolve. 

Creativity and controversy

The consumer lawsuits are high-profile attempts to use California’s laws to push companies to root out forced labor. But are they the right strategy?

“We appreciate the creativity,” says Kay Buck, executive director of CAST, a Los Angeles anti-trafficking group that lobbied for the law.

The lawsuits do help raise public awareness, Ms. Buck says, and that keeps the pressure on businesses to get to the bottom of labor abuses in their supply chains. But she says it’s too soon to tell how effective court action will be.

On the other hand, some antislavery advocates say some companies are making genuine efforts for reform, and these lawsuits may be a distraction.

“What bugs me is how much money [and time] will be spent … fighting the lawsuits as opposed to fixing the problem,” says Mr. Bales, who teaches about slavery at the University of Hull, England and is the author of “Blood and Earth: Modern Slavery, Ecocide, and the Secret to Saving the World.”

Yes, the public should demand that businesses do more to eradicate slavery, but they should be encouraged and enabled to work with companies as they strive to do the right thing, Bales says. Instead of just moral outrage, he says, “there’s a role for patience and engagement by consumers.”

Exhibit A is the Shrimp Sustainable Supply Chain Task Force. It was set up in 2014 by retailers such as Costco, which banded together with manufacturers and nongovernmental organizations after a wave of media exposés about slavery on Asian fishing vessels. It has initiated a round of independent audits expected to be complete by July. 

That industry response happened much more quickly than it used to, and the way the task force is structured suggests it could have a strong impact, says Dan Viederman, CEO of Verité, a nonprofit consultancy in Amherst, Mass. Verité, which helps businesses investigate and solve labor abuses, is advising one of the task force’s working groups. “Ultimately the test will be whether workers see any difference in their working conditions,” he says.

Some activists warn that the lawsuits could make companies less inclined to disclose any problems they are finding in their supply chains.

With Nestlé, however, that appears not to have been the case. While the lawsuit against it was still pending, it released an investigation by Verité that showed labor abuses in its Thai-sourced seafood, as it had planned to do before the lawsuit arose. The company outlined plans to tackle the problems, and noted that other companies that do business there face the same risks. 

Bales offers up the global chocolate industry as an example of engagement that yields a long-term solution. Companies came together and formed a charitable organization that they fund with about $5 million a year, Bales says. The money goes to anti-slavery workers in West Africa, who go village to village helping to stop child labor.

“It’s not about busting people. It’s cultural change,” he says.

Howard, the attorney suing Costco, disagrees that the lawsuit is a resource drain, especially given how huge the shrimp market is. Instead, he says, it is one way to motivate companies to do the right thing: “Anytime the corporations understand that their current practices are deemed by others not to be either legally or morally appropriate, that’s a positive.”

If consumers are waiting for anti-slavery labels that tell them what to buy, “we are still a long way off,” says Mr. Viederman. For an approximation with coffee, chocolate, and some commodities, shoppers can look for the Fairtrade label, and for rugs they can look for the GoodWeave label. Meanwhile, US farm workers are using labels to certify produce as “clean” from labor abuses. 

Such labeling could serve to engage a wider public. Sophia Martinetti, a shopper in the Costco parking lot in Richmond, Calif., says she hasn’t heard about the lawsuit or the California transparency law.

“It’s good to be aware as much as possible where your food and drink comes from, but there’s an extent to which we can go as consumers and not take five hours to shop,” says the 30-year-old northern California native.

“If they made some kind of easy guide or rating system … that would be more useful” than having to read corporate disclosures, Ms. Martinetti says. But she would like to be better informed. “Ultimately, that’s other people just like you and me on the other end, and they’re not being treated well.”