Americas

US Child Labour “Alive and Well”

Investors urged to renew engagement after failed shareholder proposal seeking greater transparency on child labour risks at Tyson Foods.   

US-based investors are having to face up to the reality that examples of child labour lie close to home, with evidence and scrutiny mounting in the food sector.  

A proposal on child labour filed at Arkansas-based processing giant Tyson Foods by the American Baptist Home Mission Society, alongside six faith-based co-filers, was rejected last week.  

“Child labour is alive and well in the US,” said Nadira Narine, Senior Programme Director at the Interfaith Center on Corporate Responsibility (ICCR). “Tyson has a long record of labour issues – from the impact of line speed on workers, to the lack of adequate health and safety protections for workers and child labour.” 

Proponents for the proposal called for the audit to evaluate Tyson’s policies and practices regarding slaughter and processing facilities, third-party contractors, and suppliers linked to child labour violations. Additionally, they asked for the audit to conduct a meaningful consultation with workers, suppliers, and other relevant stakeholders to inform solutions and ensure compliance with federal child labour requirements. 

The resolution follows increasing concern about the prevalence of child labour in the US food processing industry. 

In February 2023, the US Department of Labor (DOL) found that more than 100 children were illegally employed by Packers Sanitation Services (PSSI), a company that contracts with meat-packing companies to clean slaughterhouses. Some of these children were employed at two Tyson facilities in Arkansas and Tennessee. PSSI was fined US$1.5 million. 

“It is unclear whether Tyson has terminated all of its contracts with PSSI, and how they are assessing relationships with other subcontractors,” noted Narine. 

In 2023, the US DOL wage and hour division reported 835 cases of child labour violations across the country affecting 3,876 minors, with 688 minors employed in hazardous occupations. This represents a 283% increase since 2015. 

Last year, the Biden administration sent a letter to 18 companies that represent 70% of US meat and poultry production by volume – including Tyson Foods – calling on them to examine their supply chains for evidence of child labour. 

“There have been several high-profile cases of child labour uncovered in [the US food sector] in recent months,” said Eleanor Harry, CEO of HACE: Data Changing Child Labour, an AI-powered rating provider. 

As well as processing firms, a number of food service corporations faced fines over child labour violations in 2023, including McDonald’s, Chipotle, Subway, and Popeye’s. 

To be able to account for and address child labour, companies first need to improve transparency of their supply chains, according to Harry.  

“A forward-thinking business, particularly in the food processing sector, which is currently under the spotlight, can lead the industry by adopting [third-party] auditing and best practice, regardless of whether they think child labour is present or not,” said Harry. 

Squeezed out 

Despite these mounting concerns, the shareholder resolution failed to pass at Tyson’s AGM due to the company’s a dual class share structure (DCSS). This effectively means no shareholder proposal will receive majority support unless the Tyson family supports it. 

On paper, the proposal received just over 12% of the votes, which would suggest a low percentage of investors were in favour of a third-party audit on child labour.  

“But this figure doesn’t account for Tyson’s DCSS,” said Aaron Acosta, Programme Director at the Investor Advocates for Social Justice (IASJ). 

“We did an independent calculation where we assumed that all insider shares voted against the proposal. We then excluded those shares and calculated who was for and against among independent shareholders.” 

The IASJ concluded that independent shareholders were 54.5% in favour of the proposal.  

“When a company has a DCSS, it’s so important to highlight how the independent shareholders voted in comparison,” Acosta insisted.  

Child labour is not the only social-focused issue Tyson Foods has yet to act on. 

In 2021, the firm committed to conducting a racial equity audit, but has yet to follow through. 

The IASJ’s engagements with the company on the delivery of this audit have broken down, Acosta admitted, noting that “our dialogue with the company completely ceased in April 2023”. 

Investors must continue to engage with Tyson and other food sector companies on this their treatment of workers, Narine from ICCR insisted. “Investors should be doing their due diligence [and] asking key questions about how Tyson is working to prevent child labour in operations and its supply chain,” Narine said.  

There is more work to be done to ensure investors treat child labour as a standalone risk, said Harry from HACE, rather than conflated with forced labour and modern slavery,. “While they are all serious matters, occurrences of child labour are nearly six times more prevalent than forced labour, yet the social issue is not given the same prominence as other human rights abuses and environmental harms in the supply chain.” 

Two bipartisan bills focused on protecting children in the workplace and installing robust penalties are currently passing through Congress.  

One of these bills aims to ensure Congress receives a detailed annual report from the DOL on its work to investigate and enforce against violations of federal child labour laws. The other would prohibit federal agencies from contracting with companies that have violated federal child labour laws or employs vendors that have failed to address child labour infractions. 

“Child labour is illegal,” said Narine. “All companies and investors should be appalled. Instead of opposing the proposal, Tyson should have supported the proposal to ensure it is making every effort to eliminate child labour.”

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