RBI commits to better supply chain due diligence

Earlier this year, SHARE helped the Pension Plan of the United Church of Canada (PPUCC) file a shareholder proposal at Restaurant Brands International (RBI) asking the board to report on the company’s process for identifying and mitigating risks of child or forced labour in the coffee supply chain.

Some of the results of our extensive engagement with the company are reflected in RBI’s newly released Sustainability Report. .

RBI owns Tim Hortons, Burger King and Popeye Chicken restaurants. While RBI, like many other companies, has adopted a supplier code of conduct, its efforts to assess human rights risks in the coffee supply chain were limited. Their due diligence policy only extended to inspections at the dry mill level (i.e. the exporters of the coffee) and did not include supplier practices at the coffee farms and plantations where its coffee is actually grown and harvested.

Yet the US Department of Labor has warned of risks of child labour violations in jurisdictions from which RBI sources its coffee (e.g: Colombia, Guatemala, Nicaragua, Honduras), and has listed coffee as a particular commodity with risks of use of child labour in those countries. These risks are linked to farm-level practices, which were not being assessed by the company. We saw that as a potential risk.

We recognize that there are challenges in tracing the commodity down to the farm level due to the way coffee is harvested and sold, and we recognize also that addressing family farm-level child labour risks in a responsible manner can be complex.

But we firmly believe that companies have a responsibility to develop proactive due diligence systems to identify and mitigate human rights risks where possible, and that RBI had the capacity to do better. That’s why SHARE and the PPUCC engaged in constructive dialogue with RBI to identify means of improving the company’s due diligence system.

The good news for RBI shareholders is that, after extensive discussions, RBI made substantial commitments to expand its work in this area, and as a result the PPUCC agreed to withdraw its shareholder proposal.

Most importantly, RBI has committed to developing a pilot verification program at the farm level in 2018, which we see as an important step towards creating a viable and meaningful due diligence program. As part of the pilot development, RBI will review current and future opportunities for increased traceability within its supply chain, including back to the farm.

In addition, RBI has agreed to conduct a commodity supply chain analysis, to be completed later this year, which will include assessment of forced and child labour risks in the coffee supply chain.

RBI has also announced plans to collaborate with its suppliers, National Coffee Associations, and local coffee authorities to develop training that addresses family farming and labour practices in the coffee supply chain, , to be implemented in 2018.

Lastly,  RBI agreed to adopt new social indicators for farmer training and farm-level audits concerning child labour practices, consistent with the UN Convention on the Rights of the Child and/or local laws that are equivalent or greater.

Good supply chain practices that truly address human rights risks are complicated, and it takes time and persistence to get them right. It’s not just a matter of having a code of conduct for vendors. SHARE is committed to working with investors, companies and policy makers to address child and forced labour in global supply chains in a meaningful way, and we welcome these initial steps from RBI in that direction. We will continue to engage with RBI to support the ongoing development of new systems to identify and mitigate human rights risks in its supply chain.

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