April 30, 2018 CHTCS

Headlines in 2018

Chocolatiers Prepare for Lawsuits

In February, a Consumer class action lawsuit was filed by consumer Danell Tomasell in the U.S. District Court for the District of Massachusetts against Nestlé USA and in March, a second consumer class action lawsuit against Mars Inc. and Mars Chocolate North America LLC. The woman alleges the chocolatiers deceived consumers by failing to adequately inform consumers that child labor was involved in the cocoa beans used in the defendants’ products. According to the complaints, the defendant’s chocolate products are made from cocoa beans from West Africa. Both suits argue that had consumers known the products may contain cocoa procured from child or slave labor, they would not have purchased the products. The consumer class action lawsuits seeks judgment against the defendants, awarding plaintiff and the class all appropriate damages including trebling, attorneys’ fees, costs, interest, and further relief to be determined. Similar failed Consumer class action cases against Nestlé USA , Hershey and Mars Inc. were thrown out of court in 2016.

Canada’s First-Ever Violations of International Law Case

In November of 2014, three Eritreans filed a lawsuit against the Vancouver, Canada-based company, Nevsun Resources. The lawsuit alleges that Nevsun was complicit in the use of forced labor by their sub-contractor, Segen Construction (owned by Eritrea’s ruling party), at the Bisha mine in Eritrea. Nevsun Resources, headquartered in Vancouver, has denied the allegations, in what has been labeled the first lawsuit in Canada where claims are based directly on violations of international law.

The three plaintiffs, Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab Yemane Tekle, claim they were held against their will at the Bisha mine and subject to “cruel, inhuman, and degrading treatment.” They claim they were forced to work long hours and live in constant feat of threats of torture. Nevsun has rejected the allegations, claiming that the Bisha mine adheres to international standards of governance and safety.

The Supreme Court of British Columbia rejected Nevsun’s motion to dismiss the lawsuit in 2016. The case will proceed in British Columbia thanks to doubts that the plaintiffs would receive a fair trial in Eritreat, a ruling which Nevsun has also appealed.

In November of 2017, the British Columbia Court of Appeals rejected Nevsun’s appeal to dismiss the suit. The court has also allowed claims of slavery, forced labor, torture, and crimes against humanity to go forward against Nevsun, making this claim the first time an appellate court in Canada permitted a mass tort claim for modern slavery.On January 19th, 2018, Nevsun filed an application with the Canadian Supreme Court, requesting an appeal to the British Columbia ruling.

Apple Negotiates Buying Minerals Directly from Miners

The California technology giant, Apple Inc., is in talks to buy long-term supplies of cobalt directly from miners for the first time. Considering the highly competitive technology industry and potential growth in the electric car industry, cobalt is a highly competitive resource seeing companies from BMW AG and Volkswagen AG to Samsung SDI Co. signing multi-year cobalt contracts with mining companies. Apple, on the other hand, has been negotiating the purchase of cobalt mines to safeguard supplies used in its electronics. Currently, Apple secures only refined cobalt smelted in China, Belgium and Finland and only from the Democratic Republic of the Congo (DRC) if it can provide safeguards against child labor. The DRC, a politically tumultuous country ripe with war-displaced populations and forced labor, is the single-source for two-thirds of the world’s cobalt production.

Forced Child Labor Still Found in Cobalt Mines

Spurred by the two-year old Amnesty International report which revealed that cobalt mined by children was used in products from several companies to include Apple, Microsoft, Tesla, and Samsung, a recent CBS News investigation finds the continued use of children in cobalt mining. The complicated cobalt supply chain beings with artisanal cobalt mines of the Democratic Republic of Congo (DRC) where children as young as four-years old were found packing bags of cobalt in the mines, washing cobalt in the river or lugging it to market where middlemen from China purchase truckloads of cobalt for Chinese refineries. An estimated 40,000 children are working in DRC mines according to the latest research by United Nations Children’s Fund (UNICEF). Twenty percent of the DRC’s cobalt production is mined by hand based on research by the London-based research company, Darton Commodities Limited.

Form I-9 Compliance in 2018

RESPECT – The Responsible and Ethical Private Sector Against Trafficking

Babson College’s Initiative on Human Trafficking and Modern Slavery, the International Organization for Migration (IOM) and the Global Initiative against Transnational Organized Crime recently founded the RESPECT initiative: The Responsible and Ethical Private Sector Coalition Against Trafficking. This powerful initiative will assemble key thought leaders, practitioners, and policy makers to identify solutions to public and private sector challenges surrounding modern slavery. Particularly, RESPECT aims to add value where it can in facilitating debate between diverse stakeholders, providing relevant contributions to the research basis, building linkages to other crimes, and developing effective public policy towards a more effective global response.

Colombia Receives High Marks for Improved Labor

Based on its first periodic review of progress addressing issues identified in a January 2017 report, the Department of Labor recognizes Colombia has made “meaningful progress” on labor issues. According to the review, Colombia’s Ministry of Labor installed an electronic case management system in all regional offices and two special administrative offices and have required labor inspectors and their managers to use and update this system. It also requires they publish a bulletin with various inspection statistics comparing data from the third quarter of 2017 to the third quarter of 2016, including the number of investigations initiated and number of fines imposed, as well as the total amount of fines collected over all four quarters of 2016 and the first three quarters of 2017.

In addition, the Colombian Ministry commits to converting 804 of its 904 existing inspector positions to career civil service positions by the end of 2018 and improve the training that all labor inspectors receive. An internal training bureau was launched that will manage and ensure the relevance of trainings and is working with a DOL-funded project being implemented by the International Labor Organization to design updated training curricula. A labor inspector has also been embedded in remote communities for short periods of time to give workers and employers a chance for direct engagement with a labor authority.

Leading Retailers Join Cotton LEADS™Program

The growing Cotton LEADSTM program, a jointly initiated Australian and United States cotton industries partnership to promote responsible cotton production practices, recently welcomed Gap Inc., Walmart and L.L. Bean to the program. Joining more than 470 program partners, the three new partners are committing to sustainable raw material sourcing and responsible production practices by cotton growers. Gap Inc. which includes Gap, Banana Republic, Old Navy and Athleta Brands has previously announced a range of sustainability goals, including a 50% reduction of greenhouse gas emissions (GHG) from their global operations by the end of 2020. In April, Gap brand committed to sourcing 100% of its cotton from more sustainable sources by 2021, and Athleta aims to use 80% sustainable fibers in Athleta apparel by 2020.

Walmart joined the Cotton LEADS™ program “… in hopes to learn from and collaborate on efforts that U.S. cotton farmers are taking to be responsible and sustainable producers,” as explained by Walmart’s vice president, General Merchandise, Technical, Quality and Sustainability. Similarly, L.L. Bean also enlisted in the Cotton LEADS™ program to help ensure the cotton they use is as responsibly produced as possible, with less water and fewer chemicals

Improved Social Responsibility Program for the Toy Industry

With an updated mission and strategy, the ICTI CARE Foundation, formerly a non-profit foundation dedicated to promoting responsible sourcing programs in the toy industry, has evolved into the ICTI Ethical Toy Program. With an updated mission and strategy, the ICTI Ethical Toy Program will deliver certification following standards to support the rights and well-being of factory workers beginning with the updated Ethical Toy Program Audit Checklist. Expanding beyond the International Council of Toy industries (ICTI) Code of Business Practices, the audit checklist now draws on the conventions of the International Labor Organization (ILO) and other initiatives to promote fair labor practices and incorporate other ethical issues and best practices. The simple 5-step ECTI Ethical Toy Program certification process offers access to the “connect” platform database where companies can access Audit Reports and Corrective Action Plans, connect with other certified members and promote audit certification to customers. Membership fees do apply but are relatively low compared to other programs.

Southeast Asian Workers Enjoy Wage Increases

In the last few months, minimum wage increases for Southeast Asian workers are on the rise. In Myanmar with political pressure from protestors, the daily minimum wage increased from 3,600 ($2.70) to 4,800 ($3.60) kyat. In Cambodia, Prime Minister Hun Sen advocated for workers to receive a wage increase resulting in an 11% hike to USD$170 a month. Indonesia saw a boost in wages by 8.7% in major areas like Jakarta although it made a 43.9% wage increase back in 2013. Dependent on the area, Vietnam increased wages by 6.1% to 7%, and Malaysia, as well, is expecting an increase from 1,000 ringgit ($258) after a biennial review of monthly wages later this year. Minimum wages in some parts of Southeast Asia have more than doubled in the past five years.

With increasing wages, so does increased economic growth and additional political considerations. As many businesses consider alternative cheaper labor costs versus increasing costs in Southeast Asia, the minimum wage hikes are exceeding expected inflation rates. According to the International Monetary Fund, consumer prices in Cambodia will rise 3.5%, in Indonesia 3.9%, in Malaysia 2.9%, in Myanmar 6.1%, and in Vietnam 4%. It is too early to determine if the seemingly politically motivated wage increases will hurt local economies as businesses seek less expensive labor in the Middle East or Africa.

Monthly Minimum Wage Levels