Supermarket Scorecard on Human Rights

Why we need laws to stop exploitation in global food chains. The coronavirus pandemic has brought a whole new meaning to a trip to the supermarket. Despite stockpiling, the people in Germany did not have to worry about their food. Even though individual products were temporarily unavailable, the shelves were usually well stocked.

 

Bananen Ecuador_© M. Haegele_Oxfam

Dr. Franziska Humbert

Franziska Humbert is a doctor of law. She has been working at the international development organisation Oxfam in the area of economics and human rights since 2004. Her work includes collaborating with national and international business and political decision-makers and preparing case studies on companies as well as developing and commenting on draft legislation. In addition to working with Oxfam Germany, Franziska Humbert also researches in the field of human rights and global trade at the University of Bern. She has been a professor on this since 2011 and taught international business law during the 2011 summer semester at the University of Zurich.

Oxfam

However, our seamless supply of food has a darker side: Suffering, exploitation and discrimination are a daily occurrence in the supply chains of German supermarkets. Oxfam has been showing for years how these companies push prices down and enter into unfair contracts with suppliers, which results in people on tea plantations in Assam, India, or fruit plantations in Ecuador and Costa Rica working under inhumane conditions. Our case studies on foods such as tea, grapes and wine or tropical fruits such as bananas and pineapples show: Workers in South America, Africa and Asia have to work for up to 12 hours a day for low wages and under unhealthy conditions. And the corona pandemic has only exacerbated this situation. Social distancing and working from home are not an option for plantation workers and small-scale farmers. COVID-19 puts them at particular risk because they come into contact with toxic pesticides over the years when picking the crops, which can trigger chronic respiratory illnesses.

In reaction to these case studies and the associated pressure from the public, there have been isolated cases of progress for the workers on fruit plantations. However, none of the criticised supermarkets have changed their business model based on dumping prices. Oxfam’s supermarket scorecard aims to help companies do just that.

 

What is the supermarket scorecard?

Since 2018, Oxfam’s annual supermarket scorecard has been analysing the human rights policies of the largest supermarket chains in Germany, the UK, the Netherlands and the USA. Oxfam has used international standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines as a basis for developing almost 100 assessment criteria.

The supermarket scorecard assesses four areas: Transparency and corporate governance, conditions for workers at suppliers, conditions and trade relationships with small-scale farmers as well as gender equality and women’s rights. Publically disclosed information in sustainability reports and on websites are used as a benchmark for this.

 

The most important findings from the 2020 supermarket scorecard

Oxfam’s supermarket scorecard, which is in its third year, shows one thing in particular - it works! Supermarkets can change their business policies and focus more on the rights of those people around the world who plant and harvest food.

 

However, this does not happen without pressure. There is a reason why the company with the best score in Germany is Lidl, which Oxfam has been addressing with campaigns and case studies for ten years.

 

Among the German supermarkets, Lidl made a leap forwards this year and increased its score from nine per cent in the previous year to 31 per cent. Aldi Süd and Rewe have made improvements to their human rights policy and both achieved 25 per cent of the total score. Aldi Nord has also made progress and achieved 18 per cent. Therefore, these three supermarkets are in the middle of the supermarket scorecard.

 

As in 2019, very little has been changed at Edeka, which is at the bottom of the list with a mere 3 per cent – both in Germany and internationally.

The British supermarket chains remain the international forerunners: Tesco and Sainsbury’s received 46 and 44 per cent of the total score – so did not even achieve half of the total possible points.

 

As an interim conclusion, yes, there have been changes, but no turning point. All supermarkets have a long way to go before they are one hundred per cent focused on human rights. Despite making some progress, supermarkets are still doing too little to tackle exploitation of the people who produce the foods on their shelves.

 

Overview of German supermarkets

Aldi Süd and Nord, Lidl and Rewe have started publishing risk analyses on human rights violations during the cultivation of their products around the world. Lidl also makes the majority of its direct suppliers public. This enables workers and trade unions in the production countries to speak directly to the company if there are grievances from the suppliers: A milestone, even though many companies previously claimed that it is almost impossible to create transparency throughout global supply chains.

 

Aldi Süd and Nord and Lidl have also undertaken to develop risk analyses and action plans for risk products together with local trade unions and civil society in order to implement better working conditions. The measures not only improve the conditions for the local workers but also signal a paradigm shift since the discounters refused to enter into a serious dialogue with local trade unions up to now.

 

In January 2020, many German retail companies signed a self-commitment to implement living wages and income in global supply chains. These included Lidl, Rewe and Aldi – but not Edeka. However, supermarkets did not earn points simply by signing; Oxfam considers the public information on specific steps to implement the initiative to be too sparse for this. In addition to the self-commitment, Lidl has launched specific projects to pay a living wage in Brazil, Ghana and Ecuador. Rewe receives points for agreeing to issue a public report on its progress in this area each year.

All supermarket chains, with the exception of Edeka, are conducting projects with small-scale farmers, in which they can earn a higher income with better knowledge.

 

Other than Edeka, all of them have finally improved their women’s rights policy: Lidl has signed the UN Women Empowerment Principles, international principles to empower women in companies and therefore undertakes to support women and ensure gender equality in all its branches around the world as well as among its suppliers. Aldi Süd and Nord have undertaken to conduct a specific risk analysis together with local women for three risk products. Rewe supports small-scale farmers in Ghana to earn higher wages.

Overall, German supermarket chains are still relying too much on questionable labels such as the Organisation Rainforest Alliance. Many studies conducted by civil society organisations, including Oxfam, have proven for years that these labels do not adequately protect human rights.

 

What are British supermarket chains doing better?

Despite the considerable progress made by German supermarket chains, the British companies with the top performers Tesco and Sainsbury’s still achieve the best results. Why? First, both have been working for a long time on focusing their corporate policies on human rights and have made quite a few changes in challenging areas. For example, Tesco has been proactively supporting the self-organisation of workers at its suppliers in Latin America for some time now. And with success: In Peru, for example, all of Tesco’s suppliers have employee representatives.

Another reason for the comparatively high score may be the UK Modern Slavery Act, a law that requires companies to report incidents of and measures to address modern forms of slavery in their supply chains. Yet, all things considered, the British supermarket chains have not even reached 50 per cent of the total score.

 

What is the problem? The issue of price policy.

In the German food retail industry, the Schwarzgruppe (Lidl and Kaufland), Aldi, Rewe and Edeka hold 85 per cent of market shares. This means that manufacturers wanting to sell significant quantities of food on the German market cannot overtake them. As a result, the companies have the power to dictate supplier prices and conditions to their own benefit. And this is at the expense of the wages of the workers and small-scale farmers in cultivation countries of the Global South. In order to substantially improve their situation, a change in price policy would be crucial. However, in January 2020, Edeka advertised cheap prices with the slogan “We are slashing prices”, and a few months later, Aldi joined in with a “Price, Price, Baby” campaign

 

The aggressive advertising with low prices causes a downwards spiral because this makes consumers focus even more on the price. But in the end, it is the workers in the global supply chain who pay for this price battle: Without the fair distribution of costs for higher social standards, they will never receive a living wage.

 

So far, none of the companies evaluated scored points in the purchasing policy indicator, which evaluates whether supermarket chains select their suppliers not just based on low prices but also according to humane working conditions. While Aldi Süd and Nord, Lidl and Rewe say that their purchasing policy includes requirements to observe human rights, they do not provide specific evidence of this – neither do Tesco or Sainsbury‘s.

 

We need laws for more fairness in retail and to care for human rights

Despite the progress that has been mentioned, supermarkets are still not doing enough to prevent the exploitation of the people who produce the food on their shelves. To ensure that companies like Edeka can no longer shirk their responsibility, a binding foundation is required: A supply chain law that is binding on supermarkets and all transnational companies. Only this kind of law can ensure that companies are not left to decide at random whether they observe human rights in their supply chain. A legal framework is also necessary for effective environmental protection by companies abroad. Oxfam is therefore part of the Supply Chain Law Initiative that has developed a specific proposal for a German law.

 

Oxfam also calls for Germany to take this opportunity to ensure more fairness in the food sector i.e. fair supply conditions in the food supply chain and an end to selling food at dumping prices. This is the only way to prevent retailers passing on their costs to suppliers and eliminating respect of human rights in the long term. The EU Directive (2019/633) that prohibits unfair trade practices such as the short-term termination of supply contracts must be implemented into German law with such provisions that are fully effective. This means that at least unfair trade practices are comprehensively prohibited and that authorities with expertise such as the Federal Cartel Office are responsible for their implementation. This is the only way companies can implement business policies that keep up with globalisation in the 21st century and not at the expense of people in farming countries.

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