The complaint notes that as far back as 2001, reports on
the systemic use of child labor, forced labor and human trafficking on cocoa
farms in West Africa raised awareness of the U.S. House of Representatives to
the problem. The House passed a proposed amendment to the FDA and Related
Agencies Appropriations Act that would require "slave-free" labeling
for cocoa products.
Before the Amendment was presented for a Senate vote,
major cocoa producers, including Hershey, promised to correct these human
rights abuses without need for legislation. Later that year, Hershey and the
companies signed the Harkin-Engel Protocol, a compact to eliminate illegal
child labor in high cocoa producing countries in West Africa.
The complaint notes that despite the adoption of the
Protocol in 2001, numerous reports have revealed that its signatories have
failed to comply with their obligations and that forced labor and illegal child
labor remain prevalent within the industry.
Shareholders point to one study
on West African child labor, conducted by Tulane University Law School through
a grant from the U.S. Department of Labor, that found in 2011 that a majority
of cocoa farmers and related suppliers in Ghana and the Ivory Coast employing
children are having them engage in hazardous illegal work conditions. The study
determined in 2010 that there was substantial evidence that West African
countries violate human trafficking laws. The Ivory Coast and Ghana were both
mentioned as destinations for trafficked children.
Hershey's Commitment to Children in Question
Grant & Eisenhofer's complaint details Hershey's tacit
support of child labor law violations in some West African countries, despite
the company branding itself as a protector of disadvantaged children, thereby
continuing founder Milton Hershey's century-old legacy of commitment to
consumers, communities and children.
The complaint alleges that Hershey has steadfastly refused
to disclose the names of its cocoa suppliers, although its 2011 Corporate
Social Responsibility Report includes Ghana and the Ivory Coast as "Major
Sourcing Countries." In 2006, a separate shareholder group requested that
management report on all sources of cocoa purchased, but Hershey declined to
disclose information on its suppliers. According to the complaint, two years
later, the board acknowledged that problems continued, noting that instances of
illegal child trafficking had been found in its supply chain.
Plaintiffs argue that the Harkin-Engel Protocol has done
little to eliminate child labor law violations from the West African cocoa
trade. Hershey and other signatories swore commitment to implementing
industry-wide standards by 2005 that cocoa products would be produced without
illegal child labor. However, the company now claims it will take until 2020 to
honor its obligations, announcing earlier this month that it will require eight
more years to make headway in solving the problems of child labor and human
trafficking on West African cocoa farms.
Hershey has previously conceded its difficulty in
determining whether its suppliers are making illegal use of children,
maintaining in its CSR Report that "many cocoa-growing communities are
located in remote and often difficult-to-access areas." According to the
complaint, Hershey has contended that West African children are often involved
in daily farming activities, which are difficult to monitor.
In the complaint, Grant & Eisenhofer argues that
Hershey's continued delays in certifying its products as slave-free has
resulted in an erosion of the company's reputation. This past August, a group
of 65 retailers sent a letter to Hershey's board voicing concerns over the
company's inadequate efforts to address child and slave labor practices within
their supply chain. Shareholders contend that Hershey's conduct is beginning to
harm its business relationships, which could ultimately cost the company
millions in profits.
Hershey Denies Latest Shareholder Requests
Grant & Eisenhofer issued its initial demand letter to
Hershey on behalf of shareholders earlier this month, requesting that the
company allow inspection of the minutes of any board meeting during which there
was discussion of unlawful labor or trafficking in the company's supply chain,
as well as compliance with the Harkin-Engel Protocol. The law firm also
requested a complete list of suppliers from which Hershey has purchased cocoa
over the past 10 years.
The complaint states that Hershey denied the requests. The
company replied in an Oct. 12 letter that the demand was based on speculative
assertions, and that the company does not "directly purchase any cocoa
beans from West African farms," but that the "overwhelmingly vast
majority of the cocoa materials purchased by Hershey . . . are processed cocoa
products such as cocoa liquor, cocoa butter and cocoa powder which are
purchased from large multi-national companies." The company further tried
to deflect accountability by arguing that the cocoa beans it purchases from
West Africa come through third party suppliers. Hershey continues to claim that
it is doing its part to address potential human rights violations by committing
to use only independently "certified" cocoa by 2020.
Mr. Eisenhofer challenged Hershey's justifications for
refusing to allow inspection of the corporate records. "Astonishingly,
Hershey's board continues to pass the buck," he said. "That Hershey
buys most of its cocoa products from other suppliers doesn't change the
obligation it undertook in 2001 to certify that its products weren't made by
slave labor. The argument that Hershey's records cannot be made available
because the company doesn't directly purchase beans from West African farms is
absurd. Even indirect purchases of cocoa products support farms operating illegally
on the backs of child labor."
He continued, "The fact that Hershey cannot commit to
using 'certified' cocoa until 2020, 19 years after signing the Harkin-Engel
Protocol, is tantamount to an admission that it currently doesn't use
'certified' cocoa, and is in violation of the law. We hope the court will grant
our request to inspect books and records, so we can move to determine whether
the board breached its fiduciary duties, and the extent to which the company is
violating international child labor, forced labor and human trafficking laws
and safeguards."
The complaint notes that as far back as 2001, reports on
the systemic use of child labor, forced labor and human trafficking on cocoa
farms in West Africa raised awareness of the U.S. House of Representatives to
the problem. The House passed a proposed amendment to the FDA and Related
Agencies Appropriations Act that would require "slave-free" labeling
for cocoa products.
Before the Amendment was presented for a Senate vote,
major cocoa producers, including Hershey, promised to correct these human
rights abuses without need for legislation. Later that year, Hershey and the
companies signed the Harkin-Engel Protocol, a compact to eliminate illegal
child labor in high cocoa producing countries in West Africa.
The complaint notes that despite the adoption of the
Protocol in 2001, numerous reports have revealed that its signatories have
failed to comply with their obligations and that forced labor and illegal child
labor remain prevalent within the industry.
Shareholders point to one study
on West African child labor, conducted by Tulane University Law School through
a grant from the U.S. Department of Labor, that found in 2011 that a majority
of cocoa farmers and related suppliers in Ghana and the Ivory Coast employing
children are having them engage in hazardous illegal work conditions. The study
determined in 2010 that there was substantial evidence that West African
countries violate human trafficking laws. The Ivory Coast and Ghana were both
mentioned as destinations for trafficked children.
Hershey's Commitment to Children in Question
Grant & Eisenhofer's complaint details Hershey's tacit
support of child labor law violations in some West African countries, despite
the company branding itself as a protector of disadvantaged children, thereby
continuing founder Milton Hershey's century-old legacy of commitment to
consumers, communities and children.
The complaint alleges that Hershey has steadfastly refused
to disclose the names of its cocoa suppliers, although its 2011 Corporate
Social Responsibility Report includes Ghana and the Ivory Coast as "Major
Sourcing Countries." In 2006, a separate shareholder group requested that
management report on all sources of cocoa purchased, but Hershey declined to
disclose information on its suppliers. According to the complaint, two years
later, the board acknowledged that problems continued, noting that instances of
illegal child trafficking had been found in its supply chain.
Plaintiffs argue that the Harkin-Engel Protocol has done
little to eliminate child labor law violations from the West African cocoa
trade. Hershey and other signatories swore commitment to implementing
industry-wide standards by 2005 that cocoa products would be produced without
illegal child labor. However, the company now claims it will take until 2020 to
honor its obligations, announcing earlier this month that it will require eight
more years to make headway in solving the problems of child labor and human
trafficking on West African cocoa farms.
Hershey has previously conceded its difficulty in
determining whether its suppliers are making illegal use of children,
maintaining in its CSR Report that "many cocoa-growing communities are
located in remote and often difficult-to-access areas." According to the
complaint, Hershey has contended that West African children are often involved
in daily farming activities, which are difficult to monitor.
In the complaint, Grant & Eisenhofer argues that
Hershey's continued delays in certifying its products as slave-free has
resulted in an erosion of the company's reputation. This past August, a group
of 65 retailers sent a letter to Hershey's board voicing concerns over the
company's inadequate efforts to address child and slave labor practices within
their supply chain. Shareholders contend that Hershey's conduct is beginning to
harm its business relationships, which could ultimately cost the company
millions in profits.
Hershey Denies Latest Shareholder Requests
Grant & Eisenhofer issued its initial demand letter to
Hershey on behalf of shareholders earlier this month, requesting that the
company allow inspection of the minutes of any board meeting during which there
was discussion of unlawful labor or trafficking in the company's supply chain,
as well as compliance with the Harkin-Engel Protocol. The law firm also
requested a complete list of suppliers from which Hershey has purchased cocoa
over the past 10 years.
The complaint states that Hershey denied the requests. The
company replied in an Oct. 12 letter that the demand was based on speculative
assertions, and that the company does not "directly purchase any cocoa
beans from West African farms," but that the "overwhelmingly vast
majority of the cocoa materials purchased by Hershey . . . are processed cocoa
products such as cocoa liquor, cocoa butter and cocoa powder which are
purchased from large multi-national companies." The company further tried
to deflect accountability by arguing that the cocoa beans it purchases from
West Africa come through third party suppliers. Hershey continues to claim that
it is doing its part to address potential human rights violations by committing
to use only independently "certified" cocoa by 2020.
Mr. Eisenhofer challenged Hershey's justifications for
refusing to allow inspection of the corporate records. "Astonishingly,
Hershey's board continues to pass the buck," he said. "That Hershey
buys most of its cocoa products from other suppliers doesn't change the
obligation it undertook in 2001 to certify that its products weren't made by
slave labor. The argument that Hershey's records cannot be made available
because the company doesn't directly purchase beans from West African farms is
absurd. Even indirect purchases of cocoa products support farms operating illegally
on the backs of child labor."
He continued, "The fact that Hershey cannot commit to
using 'certified' cocoa until 2020, 19 years after signing the Harkin-Engel
Protocol, is tantamount to an admission that it currently doesn't use
'certified' cocoa, and is in violation of the law. We hope the court will grant
our request to inspect books and records, so we can move to determine whether
the board breached its fiduciary duties, and the extent to which the company is
violating international child labor, forced labor and human trafficking laws
and safeguards."
No comments:
Post a Comment