With no end to labour shortages in sight, risk management strategies must continue to adapt

Welcome back to the Future in Focus podcast by LRQA, and if you’re new here, thank you. In this episode, we are joined by returning guest Meghan Quinlan, Vice President of Food & Agriculture at ELEVATE, LRQA’s ESG specialists, to talk about human rights issues, specifically in the food industry, and the growing importance of human rights due diligence, or HRDD.

Transcript

Hello and welcome back to The Future in Focus podcast by LRQA or if you’re new here, thank you. In this episode presenter Holly Plackett is joined by returning guest Meghan Quinlan, Vice President of Food and Agriculture at ELEVATE, LRQA’s ESG specialists to talk about human rights issues specifically in the food industry and the growing importance of due diligence or HRDD.  

Hi Meghan, thanks for joining us, it's great to have you on the podcast again. We’re here today to talk about the responsible sourcing of food products and ingredients and why it is so important to have visibility across your supply chain especially when it comes to ensuring worker welfare. Could we start with an introduction to what human rights due diligence means?

Sure and thanks Holly of course for having me back again, it's always a pleasure. But it is, you know we’ve generally moved from voluntary disclosure laws in 2010 so such as the Calgary Transparency Act or the Modern Slavery Act to managing more due diligence in the 2020s. So acts such as EUCSRD, you have LPA, the Mexico Forced Labour Ban etc., and this is moving from you know tell us what you’re doing in Human Rights and within your due diligence to actually you must do these things. And so these emerging Human Rights due diligence requirements are actually holding companies accountable to ensure that no harm is done to people or environments in the creation of their products or services. So most organisations and countries consider the UN guiding principles on business and human rights as the authority on defining the HRDD principles and so they have used these principles as the foundation of the new laws. And the UN Guiding Principles or the UN GPs basically say states and businesses must respect and protect human rights and are responsible for finding remedies when human rights are breached. So rights can include for example freedom from slavery and freedom from discrimination, but they can also be must broader reaching such as the right to food and the right to clean water. So the overall mandatory due diligence basically means that businesses are now required to design and implement a risk management system which would include identifying adverse human rights impacts and risks, preventing human rights violations in their direct supply chains as well as their supply chains. Remediating violations to an end and then recording and tracking violations, risks, actions, and outcomes.

Thanks, Meghan. And there have been some quite upsetting articles that have emerged recently regarding worker welfare and the exploitation of children in the food industry in the US. Do you think this is just the tip of the iceberg?

Well, you know in all honesty child labour violations in the US have nearly quadrupled since 2015 according to Labour Department data and in ELVATE’s risk report that we published in January based on our EiQ data which pulls from public data but primarily and particularly in this case it's pulling from our audit data from the days we spend in the food processing sites on farms etc. And in that report, we highlighted the growth in child labour over the last several years, so you know what I can say is this is not an isolated incident but I think companies and especially with all of the press are coming to terms with this. The root cause though is a labour shortage and that continues which is why the trend continues of course. What I do think though is most interesting and maybe this goes to your point about the tip of the iceberg, and what I think is most interesting is the timing. So whilst companies are reporting up to their boards on their policies and programming related to HRDD or Human Rights Due Diligence as we just discussed and then also even more specifically on child labour due to all this press that we’re seeing. But at the same time what we’re seeing is due to the labour shortage some states are suggesting or publishing legislation to loosen restrictions on child labour which is often in contrast with the ILO guidance and kind of the frameworks of Human Rights Due Diligence. So maybe perhaps there’s time to get into that a little bit later.

With that in mind, it seems supply chain transparency is more crucial than ever. Can we talk a bit about that?

Sure, I mean transparency is certainly a first step and it’s transparency to the actors in your supply chain, transparency to the inherent and/or actual risk that they represent. So there’s a few key pieces at work here. At the end of the day, no one wants to hear it to be honest with you but there’s no sexy data-based solution to automatically map your supply chain. The nice visualisation only happens once the laborious work of really engaging heavily with your suppliers and collecting those SAQs happen and you know in some ways in terms of risk this can be guided by the 80 to 20 rule so using some predictive analytics to focus in on where your risk is, or using AI to help you understand trade flows and again be getting at risk. Or better triangulating the data available to you in your organisation on suppliers such as integrating some of your food safety data. But really at the end of the day what you need, what we need is reliable data from our suppliers. And the other tricky part that is highly related is the significant presence of labour agents and agencies throughout the supply chain. So you may map your supply chain and the sites and the sub-tiers but you also need to map your labour so to speak because some of the sites that we’re working with, some of the sites that our clients and many of our companies are working with, may have 10 or 12, 15 labour agents at one site so even getting access to the sub-tier is not sufficient you need to also understand the labour agents and the mapping as well.
 
Thanks, Meghan. Of course, no food brand wants to be involved in a scandal, but unfortunately, these events keep occurring. What is the impact of a worker welfare scandal on these businesses and what can they do to avoid it?

Well, I think the challenge that the Human Rights and responsible supply chain professionals right now are really grappling with is that per UNGP guidance on remediation, a corner stone of remediation is ensuring that impacted stakeholders, children in this case of all the recent press are not in a worse position than they were. But then we’ve also seen subsequent articles from the New York Times that due to the recent raids and investigations, there have been a number of negative consequences such as children have been dismissed by their jobs but are working at other local meat plants, they may not be in school, and in some cases, their families have been exposed to child abuse charges and maybe serving jail time and maybe facing potential deportation. So you know for those of us that have been around for a long time and remember the exposés of child labour in stitching soccer balls back in the 1990s for the world cup for example, we learned how do we put children not in a worse position than they were, right. And I think in this case ultimately the industry did work together and it’s led to the mitigation of some of the Human Rights impacts and interestingly there were three pillars to this work. The first was prevent and progressively eliminate child labour through workplace monitoring. The second was to provide social protection to the affected children and the third was to strengthen the Pakistani government and GOs to prevent and progressively eliminate child labour. So you know in the modern-day world and this US context, monitoring needs to include a combination of site assessments including for example expanding them to include night-time surveillance. It needs to include labour agency assessments and grievance mechanisms. So while many companies already assess their US sites, labour agency assessments are not yet the norm and there’s not an industry-wide grievance mechanism. As noted above, including labour agencies in your scope is a life but its, you know it's certainly part of the answer. Likewise, grievance mechanisms can be profoundly effective especially when looked at from an industry perspective. You can take for example ELEVATE’s Amador Koth Bangladesh which is a sector-wide grievance mechanism established after the collapse of Rana Plaza. Even after 10 years, it receives 10,000 calls per month which are then followed up on and remediated appropriately. And so I think the learning here though is that for grievance mechanisms to be effective they need to not only follow the UNGPs but in order to do this effectively and at a reasonable cost this actually requires a significant scale and hence significant collaboration. On the second pillar, you know providing social protections to children could include identifying and working with local NGOs and legal aid partners already trusted by the immigrant population. You know my view is that a collaboration between these NGOs and particularly the legal aid groups through the implementation of an industry grievance mechanism could be incredibly, incredibly powerful. But I think it's this third pillar that’s one of the most interesting but honestly, one of the most provocative areas and this is the concept of engaging and strengthening governments because in this case, it's actually the US government. So if we look at 2023 you know we’ve seen eight bills to weaken child labour protection that have been introduced across various Mid-Western states. So for example, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and you know keeping it in mind that’s where a lot of our food companies are also based is within the Mid-West. You know in Arkansaw a bill repealing restrictions on work for 14 and 15 year olds has now been signed into law, and the Iowa senate actually passed a bill allowing minors as young as 14 to work night shifts. Similarly, the states like Missouri and Ohio are considering bills that allow teenagers to work longer hours in jobs that were previously considered too dangerous. So these state bills and this is what’s interesting, are often supported by state industry and business associations that are comprised of global companies that are simultaneously strengthening their human rights commitments. So in some cases what we’re seeing these laws may not be in alignment with existing codes of conduct or the general direction that many companies in the industry is going with their codes of conducts which is alignment with the ILO conventions on child labour. Therefore I think a first step could be potentially strengthening internal collaboration and alignment between human rights and government affairs teams to ensure alignment and/or you know making sure at least it’s incorporated into the conversation. Secondarily, I wonder if we need to go farther and think a little bit differently given the juxtaposition that we’re currently in and the pressure that is being put on businesses as it relates to labour and human rights. So while government affairs teams have typically been more focused on trade or business access, supply chain resiliency again as we learned through the pandemic is really affected by labour. I think really, we need to ask ourselves whether we’re at a time where we need to therefore engage differently. So just you know a couple of examples, last year prior to launching guidance on US labour agencies and their expectations at the CBP Conference in June, the US DOL and the US AID reached out to some retailers for endorsement of this policy and guidance. However, perhaps it’s time for the Legal and Government Affairs Divisions to not you know be asked to sign off on it or endorse it later, but to instead, more aggressively attempt to shape such guidance before they are ready to be published. Likewise, maybe there is an opportunity to support or you know have influence on bills designed to address the root cause of labour shortage such as the now defunct Farm Worker Force Modernisation Act. The latter of course companies will shy away from but ultimately you know the root cause is labour shortage, so we need to be thinking about how do we address that, because that is what our suppliers are saying, you know, again and again we hear them loud and clear that is a lot of the challenge that they’re facing in terms of child labour in particular,

I think you touched on this just now, but how exactly can food brands level up their due diligence programmes to ensure they know exactly where their ingredients are coming from, what factory they were prepared in and the welfare of all workers involved?

Sure, yeah and if we talk on a little a bit above particularly as it relates to mapping. However, overall you know what we need to remember is that companies are being asked to go broader in their supply chains and operations, so extending their programmes to labour agencies logistic suppliers etc. They’re clearly being held accountable for those but they also need to go deeper, so they need to go all the way through the sub tiers to the production. So what this means is there needs to be a much more rigorous prioritisation than we’ve even seen, the scope is tens of thousands of suppliers at a minimum so also as we learned in the pandemic change you know is the new normal, looking at updating risk every two or three years is not sufficient. Human Rights risks need to be monitored on a closer to real-time basis. So I think that’s part of it, another part of it is recognising that it's no longer one size fits all auditing model, and what is considered sufficient due diligence is definitely evolving. Therefore tools need to be built and deployed for purpose so for example, tools that address the most salient risk topics whether it be forced labour, child labour, harassment, discrimination, these tools need to be deployed and need to be leveraged with various new technologies that may now be available to us. So from predictive risk AI to effective deployment of worker surveys at scale, or use of apps designed to understand, support and protective migrant workers on their journeys as an example.

Great, thanks, Meghan. To end on a slightly more positive note I wondered if you could share an example of best practice, you have seen or heard about in terms of social sustainability in the food industry.

Oh wow Holly, there’s, there’s so many. It’s a really exciting time that we’re in, to be honest with you and right now particularly companies are working really fast and free, furious to adjust their programmes to meet these new expectations and to protect human rights and are really thinking from an innovative perspective. But I think when I’m most jazzed about, to be honest with you, what I’m most excited about is that I’m seeing such a large uptake in clients rolling out really new and aggressive two to three-year roadmaps. And these roadmaps and internal commitments are taking programmes that have been more kind of pilots or kind of niche programmes such as work around labour agents or worker surveys and really taking those to scale. And what we also see are these clients are taking steps towards truly integrating the programmes, particularly on the data side and those particular clients, those particular programmes are what I’m seeing as having a real leg up in their effectiveness and ability to address human rights impacts.
 
That’s great to hear, and thanks again for joining us, Meghan.

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