Apple (Pie), Cotton Comfort and Hershey's Kisses: S'More on International Human Rights Due Diligence

Profession:Greenbaum, Rowe, Smith & Davis LLP
 
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Article by Raymond M. Brown, Chair White Collar Defense, Corporate and International Human Rights Compliance Group

On June 8th hundreds of students and concerned consumers gathered in front of the Hershey Store in Times Square to call on the company to eliminate child labor from its cocoa production supply chain. Eight days later on the same island, the UN Human Rights Council endorsed the "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework" proposed by UN Special Representative John Ruggie. The juxtaposition of these two events provides an ironic picture of the erratic enforcement of human rights issues and the multilayered net of liabilities waiting to ensnare multinational corporations.

Irony exists in this situation because when companies invest in socially responsible behavior, human rights compliance being one, there is a proven positive correlation between such corporate social responsibility and financial performance. This "virtuous circle" bestows financial benefits on all stakeholders -- customers, employees, shareholders, suppliers, business partners and community members. What the intentional or accidental ironists fail to comprehend is that the financial risk from reputational damage springing from even an alleged human rights violation far outweighs the cost of prophylactic compliance.

There is a backstory about how the two events of June converge in a meaningful way regarding human rights due diligence. Years after the major chocolate companies, Hershey included, agreed to eliminate child labor, forced labor and trafficking from their supply chains in West Africa, these human rights abuses continue. In fact, Hershey, which owns the largest market share in the US at 42.5%, has not started using Fair Trade Certified cocoa, which guarantees farmers stable prices (reducing the use of child labor) and community development funds. Over 30,000 US consumers have taken action to communicate their dissatisfaction to Hershey.

Now, turn on your IPad or use your IPhone to fact check. Google the facts; you can do so in this country and get reliable information, but you can't get uncensored results in China, where Google has fled to Hong Kong to avoid censorship. At the present time, Microsoft (interestingly both Google and Microsoft are members of the Global Network Initiative, a multistakeholder organization, the intent of which is to find a common platform on privacy and human rights issues) is forming a partnership with China's search engine, Baidu, which when operating, will certainly be censored. In another ironic twist, potentially a man bites dog moment for US companies, industry rumors point to China mounting an effort, aided by Citibank, to buy a "meaningful" number of Facebook shares.

As you take off your jacket to sit at your desk, note where the item was made. Chances are that your clothing, gadgets (and the chocolate treats you were hiding) were sourced and produced in countries that have abysmal records for using child labor, China (manufacturing, cotton), India (ditto) and Cote D'Ivoire (cocoa) among them. As Maplecroft, an international human rights compliance consultancy, has reported "[our] new study has identified the key emerging economies that supply the...

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