Correspondence
Email sent to Shannon Mutschler, Senior Director of External Communications at Sysco in the U.S. January 17, 2023: A letter with the same text as the email dated January 10 was sent by certified mail.
The email said: "I’m writing to you in light of our latest investigation, which concerns abuses in the Chinese squid fishing industry, and a link we’ve discovered between companies engaged in abuses and your supply chain.
This link concerns a Chinese squid jigger owned by the Chinese fishery company, Rongcheng Wangdao Ocean Aquatic Products. In a seven-month period, one crew member died and a second was disembarked for emergency medical treatment after suffering serious mistreatment and abuse while on board the vessel. Our reporting documents multiple indicators of forced labor among crew onboard the vessel: recruitment linked to debt, deceptive recruitment, enforced isolation, degrading living conditions, physical violence, wage withholding, the retention of personal identity documents and strong financial penalties for leaving employment.
We have traced squid caught by that vessel to a large Chinese fisheries company in Shandong province called the Chishan Group. Further to its connections to the vessel, ships owned by the Chishan Group were found fishing in North Korean waters in violation of UN sanctions in 2017 and 2018.
Two of Chishan’s squid processors, Shandong Haidu and Rongcheng Haibo, supply squid products to Ruggiero Seafood. Sysco’s website sells multiple brands of squid from Ruggiero Seafood, including its Ocean Tides brand which is packaged by another Chishan Group processor called Rongcheng Jiamei.
Separately, the Chishan Group also supplies The Town Dock, whose squid is supplied to Sysco subsidiary Buckhead Meat, and which is featured on Sysco’s website. We understand that under Sysco’s Supplier Code of Conduct, Sysco requires its suppliers, their subcontractors and supply chain providers to adhere to a number of specific requirements regarding basic human rights, forced labor, and the provision of a safe and healthy work environment.
Does Sysco have any comment or statement to make on the record in response to this information?"
The Outlaw Ocean Project emailed: "I’m following up my email dated January 10, 2023, with additional details we have uncovered in our investigation into the Chinese squid fishing fleet and links between abuses in that industry and Sysco’s supply chain.
A number of PanaPesca USA calamari products are listed on Sysco’s food service sales website. Import records show that PanaPesca USA has received multiple shipments of squid from Zhejiang Industrial Group, a Chinese seafood processing company.
Two vessels owned by a company under Zhejiang Industrial Group’s majority owner, Zhejiang Shengda Ocean Co., Ltd., have a history of disabling their vessel tracking - activity indicative of possible illegal fishing activity and which is in contravention of Chinese regulations. We have also authenticated footage showing a Zhejiang Industrial Group worker unloading squid for the plant from a vessel on which an Indonesian worker died in controversial circumstances.
In light of this information, does Sysco have any comment to make on the record? We understand Sysco has a food distribution partnership with Darden; can you confirm whether any squid from PanaPesca or Zhejiang Industrial Group is supplied to Darden under this deal? Please respond to this email by end of day March 17, 2023."
The Outlaw Ocean Project emailed Sysco: "I contacted you earlier this year regarding The Outlaw Ocean Project’s investigation into abuses in the Chinese squid fishing industry, as it related to your supply chain. I am contacting you again in light of new findings made as part of our ongoing reporting on human rights and environmental issues connected with the world’s oceans.
Further to my previous correspondence, we have uncovered a link between companies engaged in the use of Uyghur forced labor and a supplier in your supply chain. Sysco stocks Ruggiero Seafood Inc. products. Our investigation has uncovered evidence that Ruggiero’s suppliers Rongcheng Haibo and Shandong Haidu have received persons from the Xinjiang region of China under a state-imposed labor transfer program.
The United Nations, human rights organizations and academic experts agree that since 2018, the Chinese government has systematically subjected Xinjiang’s predominantly Muslim ethnic minorities to forced labor across the country via state-sanctioned employment schemes which use coercive methods in worker enrollment, and obstruct freedom to leave employment. The U.S. has prohibited the importation of goods produced from state-imposed forced labor.
Does Sysco have any comment or statement to make in response to the above information?"
The Outlaw Ocean Project emailed Sysco: "I recently contacted you in relation to our investigation into the use of forced labor in China’s seafood processing industry, as it related to Sysco’s supply chain. The email noted that Sysco stocks Ruggiero Seafood Inc. products. Our investigation has uncovered evidence that Ruggiero’s suppliers Rongcheng Haibo and Shandong Haidu have received persons from the Xinjiang region of China under a state-imposed labor transfer program.
Additionally, we’ve found that Sysco stocks High Liner Foods products, including pollock and cod.
Our investigation has uncovered evidence that High Liner’s supplier Yantai Sanko Fisheries has received persons from Xinjiang through the same state-imposed labor transfer program mentioned above.
Public records show that, since 2018, the Department of Defense has awarded 6,936 contracts to Sysco, through the funding agency Defense Logistics Agency Troop Support, for seafood products such as pollock and cod. The total value of these contracts is over $140 million.
Can you clarify if Sysco sourced any product from Yantai Sanko, or any other Chinese supplier, through High Liner Foods to fulfill any of the Department of Defense contracts, in full or in part?"
Shannon Mutschler replied for Sysco: "We do take this seriously and will investigate the claim below regarding Highliner. Can you please explain more about what you mean by “has received persons from Xinjiang through the same state-imposed labor transfer program?” I recall from your last inquiry the investigation was very complicated and took time to work through. We will respond as soon as we are able."
The Outlaw Ocean Project replied: "We have found evidence that people transferred out of Xinjiang province under a state program were sent to work at the seafood processors Rongcheng Haibo, Shandong Haidu and Yantai Sanko. In December 2021, the U.S. signed into law the Uyghur Forced Labor Protection Act, which introduced a legal presumption that all imports produced “wholly or in part” from the Xinjiang Uyghur Autonomous Region were derived from state-imposed forced labor. This presumption also applies to goods made with Uyghur and other Turkic minority labor transferred out of Xinjiang via labor-transfer programs. Will you be able to come back to us with your response on this before close of business on Monday (July 31)? And does Sysco have any response to our emails dated January 10, March 15 and June 23?"
Shannon Mutschler emailed: "Attached is a response from Highliner we received as part of our inquiry into this matter. Regarding your question about fulfillment of government contracts, I need to get back with the team on our final response for this portion of your inquiry." The attached document was a statement from High Liner signed by Bill DiMento, Vice President Corporate Sustainability & Government Affairs, and which had the same wording as the statement provided by High Liner to The Outlaw Ocean Project: "High Liner Foods takes these allegations very seriously. We have researched the claims made in the inquiry extensively within our Supply Chain team and specifically with our supplier Yantai Sanko Fisheries in China. We can confirm that our Procurement team, based in Dalian, China that Yantai Sanko has never received any workers under a state-imposed labor transfer program. High Liner Foods maintains strict adherence to our Supplier Code of Conduct as part of our supplier approval process. Additionally, Yantai Sanko was successfully audited in September 2022 by a 3rd party auditor using the SMETA social audit standard." In a separate email on the same date, Shannon responded to the earlier queries regarding The Town Dock and the Chishan Group: “Thank you for contacting us. Sysco strongly condemns the actions you describe below. We believe all people deserve to work in a safe environment with fair treatment and equal opportunities to succeed. We expect our suppliers to uphold the rights of every individual they work with, as outlined in the United Nations Declaration of Human Rights and Sysco’s Supplier Code of Conduct (SCOC). The companies you reference below do not currently provide any product for Sysco’s Portico or Buckhead Seafood Brands. We are investigating whether our supply chain includes other products from the companies mentioned below and will take appropriate actions in accordance with our SCOC based on our findings.”
Shannon Mutschler emailed: "I spoke this afternoon with our team that manages our government contracts to discuss this matter. We have one small item to further investigate and I expect I should be able to respond early next week with a final response on this matter."
The Outlaw Ocean Project emailed Sysco: "I am looping back on this matter to see if Sysco has a response ready?"
Shannon Mutschler replied for Sysco: "We did complete our internal investigation into this matter and I’m currently getting our response approved. I’ve also worked with our team to provide you a brief summary of our program with Sysco brand suppliers that is designed to mitigate risk of human rights abuses in our supply chain. This information used to be included in our sustainability report but hasn’t been included in a while, so I thought you may be unaware of the depth of our actions to uphold human rights. Our approval process is a little lengthy, but I expect I’ll have a reply to you by Monday. In addition, I’ve created a summary of the numerous inquiries you’ve sent us and organized a team to ensure we’re responsive to all."
The Outlaw Ocean Project emailed asking for a response from Sysco and Sysco France to the outstanding queries.
The Outlaw Ocean Project emailed Sysco, saying: "Since we were last in contact with Sysco, we have made additional findings in our ongoing investigation into the use of forced labor in China’s seafood processing industry which we wanted to bring to your attention. We have investigators on the ground in China who have been engaging with labor brokers directly involved with the transfer of North Korean workers to factories in China. Through this and other investigative means, including collecting online footage from the plants and interviews with workers recently returned to North Korea from China, we’ve found large numbers of North Korean workers at a range of seafood processing plants in Dandong city, close to China’s border with North Korea. As part of this work, we have information that as recently as December 2023, there were 50-70 workers at Dalian Haiqing Food Co. Ltd. in Dandong.
According to trade records, Sysco Central Texas Warehouse was the consignee for shipments of seafood from Dalian Haiqing between June 2018 and March 2021. The use of North Korean workers was prohibited by the United Nations Security Council in 2017, with Resolution 2397. Furthermore, under the Countering America's Adversaries Through Sanctions Act (CAATSA), passed in 2017, the United States prohibits the import of any goods produced by North Korean nationals. Like the Uyghur Forced Labor Prevention Act (UFLPA), which pertains to Xinjiang labor, CAATSA has a "rebuttable presumption" whereby all North Korean workers are presumed to be state-sponsored forced labor.
As a result, we have several questions: 1) While we understand that you may not be aware of the above issues, we want to ask if Sysco has any comment about this information that we are presenting? 2) Can you please itemize for us, which of your customers receive seafood tied to Dalian Haiqing? 3) Has Sysco conducted any social audits at this plant and if so what type, when, with what result, and were these audits unannounced? 4) If audits were indeed conducted at this plant, what - if any - language or process was included in those audits specifically to identify the presence of North Korean workers?"
The Outlaw Ocean Project emailed: “We haven’t heard back from you on this and wanted to see if you had any response at this time. To clarify, we are referring to a collection of plants at or near this location: Name: Dalian Haiqing Food (大连海青水产有限公司) Address: Floor 1-3, No. 9, Section 2, Jianshe Street, Zhuanghe City, Dalian, Liaoning Province (辽宁省 大连庄河市新华街道小寺委建设大街二段9号1-3层) We are aware that Dalian Haiqing Food has several plants under its umbrella at this general location.”
Ramit Plushnick-Masti, Senior Communications Manager at Sysco Corporation, replied for Sysco: "The following statement can be attributed to a Sysco spokesperson: 'Sysco instructed suppliers to suspend production of our products at all facilities associated with Dalian Haiqing Food as we investigate these allegations. Sysco has already established it does not have any production at the company’s Dadong facilities.
Sysco severs ties with organizations we determine have violated our Supplier Code of Conduct consistent with our zero-tolerance policy for human and labor rights abuses. Our dedication to responsible sourcing is unwavering and we will continue to take necessary actions.'
In addition, as our investigation continues, we would appreciate any information you have pertaining to these allegations that could assist. Thank you."
The Outlaw Ocean Project replied: "Thanks for your email and for Sysco’s engagement with us on this. Thank you for taking seriously the safety concerns that we raised.
We understand your interest in additional details from our research so that you can conduct your own thorough investigation. I’m sure you can appreciate that, given the sensitive nature of these issues and the safety concerns we have for our sources on the ground, we request that none of this information is relayed to any Haiqing staff. If such details are conveyed back to China, there will likely be an attempt to identify who visited the plant on our behalf and/or who presently works there and communicated with us.
We are aware that Dalian Haiqing operates multiple plants from its central site in Zhuanghe City. One of our investigators in China visited this site, providing video footage from the grounds. Haiqing also displays its branding at each of the facilities, and Chinese corporate records indicate it is still the parent company. We used mapping software and open source footage to independently confirm the location of this investigator’s visit. Our investigator who visited the plant was accompanied by a businessman who works with the plant and who said at the time of their visit there were 50-70 North Korean workers at the facilities.
Another investigator on our team has communicated with North Korean workers ███ these facilities. North Korean women ██████ have described in writing to us at The Outlaw Ocean Project a number of serious issues, including sexual abuse and forced prostitution. We also corresponded with a plant manager from Haiqing who ███ the North Korean workers.
The information we have from our on-the-ground investigation is that North Koreans have been working at Haiqing’s facilities since at least 2021.
There are some outstanding questions from our initial query, and we have additional questions in light of your recent email:
- Can you please itemize for us, which of your customers receive seafood tied to Dalian Haiqing?
- Has Sysco conducted any social audits at Haiqing’s facilities and if so what type, when, with what result, and were these audits unannounced?
- If audits were indeed conducted at Haiqing’s facilities, what - if any - language or process was included in those audits specifically to identify the presence of North Korean workers?"
Ramit Plushnick-Masti, Senior Communications Manager, replied for Sysco: "Apologies for our delayed response. Here are our responses to your questions.
Can you please itemize for us, which of your customers receive seafood tied to Dalian Haiqing? Sysco does not disclose customer information.
Has Sysco conducted any social audits at Haiqing’s facilities and if so what type, when, with what result, and were these audits unannounced? All Sysco suppliers or facilities used by Sysco suppliers to package Sysco branded products undergo audits prior to being approved for use.
If audits were indeed conducted at Haiqing’s facilities, what - if any - language or process was included in those audits specifically to identify the presence of North Korean workers? Audits cover several areas including environmental, health and safety, and labor standards. Within the review of labor standards, our auditors aim to identify potential risks related to child and forced labor, wages, working hours, discrimination, worker safety, and living conditions.
Could you please provide us an ETA for publication?"
The Outlaw Ocean Project replied: "Thanks for coming back to us on those questions. Could you please clarify some of the outstanding elements, specifically:
- Were the audits that were carried out for Sysco announced or unannounced?
- Was there any language or process included in those audits to identify the presence of North Korean workers?
- In addition, can Sysco say who carried out these audits at Haiqing’s facilities, and when?
Since our last email to Sysco, we’ve obtained trade records that show Sysco France imported multiple shipments of seafood from Dalian Haiqing between 2019 and 2023.
The French company Cité Marine was also a consignee for shipments from Haiqing over that same period.
We understand that Cité Marine supplies white fish products to Sysco France.
We have the following questions for Sysco France:
- Does Sysco France have any comment on its supply relationship with Dalian Haiqing?
- Have any social audits of Haiqing been carried out for Sysco France separate to those carried out for Sysco as a wider corporation?
- Can Sysco France confirm that it receives white fish from Cité Marine?
You asked for an ETA for publication: Our director, Ian Urbina, is currently on a reporting trip and I don’t have a confirmed publication date to share with you.
Thanks for your insights on the outstanding and additional questions above."
The Outlaw Ocean Project emailed Sysco:
"In your last email to us (February 1, 2024) you disclosed that “All Sysco suppliers or facilities used by Sysco suppliers to package Sysco branded products undergo audits prior to being approved for use” and that these audits “cover several areas including environmental, health and safety, and labor standards”. Since we were last in contact with you, we have spoken with several academics and labor rights experts about the role of social audits, corporate social responsibility programs and ethical certifications as industry tools for detecting labor abuses. We have compiled their insights below together with relevant recent research on the topic and have some further questions for Sysco.
The experts consulted for this included: Dr. Jessica Sparks, Assistant Professor in the Division of Agriculture, Food and Environment at Tufts University; Dr. Katrina Nakamura, Labor Safe Screen and the Sustainability Incubator; and Chris Williams of the International Transport Workers’ Federation (ITF).
As before, we very much appreciate your continued engagement and discussion on the issues impacting workers throughout the seafood supply chain, and we would be very interested to hear your views on the below details as well as any updates you have on your investigation.
Social audits: ‘Profoundly flawed and ineffective’ A growing body of academic research has found that social audits and industry certifications fail to adequately protect workers as they do not detect, address or prevent labor abuses. The findings of these reports and the views expressed by the experts we spoke to raised questions over Sysco’s ongoing reliance on social audits and voluntary corporate social responsibility programs, with the experts saying that neither is considered an effective worker-driven due diligence tool effective at identifying labor abuses. “Study after study has found that tools like social auditing and ethical certification are profoundly flawed and ineffective when it comes to the worst forms of labor exploitation,” Genevieve LeBaron, professor of politics at the University of Sheffield, said in an article for the Thomson Reuters Foundation. One of the key failings in the methodology of audits and certs is that they do not rely on input from workers, as researchers from the University of Nottingham found in their analysis of auditable standards and industry certificates relating to the fishing industry: “While these approaches may build transparency, consensus, and action when setting environmental standards, they disempower workers by allowing outside actors to overshadow worker perspectives or by the outright exclusion of workers from determining what issues need to be addressed and the processes and responsibilities for addressing them,” the researchers said in a paper published in Marine Policy in 2022.
Research shows that audits can compound the problem by giving the misleading impression of workplace practices being fully above board when auditors are instead failing to find or report abusive behaviors. “In other words, a company might be technically complying with an initiative’s standards, but that compliance may be insufficient to address the specific abuse at which the standard is targeted,” the Institute for Multi-Stakeholder Initiative Integrity said in its 2020 report on corporate accountability and human rights. “Thus, harms could persist despite a member being deemed compliant.” This in turn, researchers say, gives consumers and legislators false confidence that industry is adequately addressing forced labor and other workplace abuses without need for further regulatory oversight.
Researchers have also found that the confidential nature of audits means that adverse findings are easier to dismiss or silence, and so offer little support to workers with grievances. “[Audits] come with no meaningful role for workers and their organizations, and virtually no repercussions for the brands when workers’ rights are abused or their safety is put at risk,” openDemocracy has said. “This enables brands to silence findings and walk away if the code of conduct auditors find problems too difficult to fix.”
Our investigation into forced labor in Chinese seafood processing found that all ten of the plants tied to Uyghur forced labor had been certified by the Marine Stewardship Council (MSC), and four by the Aquaculture Stewardship Council (ASC). We found evidence of Uyghurs working at processing plants within days of visits from auditors, including in one case on the very same day that an audit was conducted by the leading social auditor, S.G.S. Five of the fifteen plants that our investigation found to be using North Korean workers were certified by the MSC. Social audits were conducted by leading firms in those five plants, three by Intertek and two by S.C.S. One of those plants also passed a social audit conducted by the auditing firm BCI Compliance Group in December 2022. None of the audits detected the use of North Korean labor.
The MSC said that a recent update to their certification program would “provide seafood buyers and consumers with greater assurances” that certified companies did not use forced or child labor, but certificates were issued after all ten processing plants had accepted Uyghurs through government transfers. In response to the findings, the MSC acknowledged it was reliant on social audit, and was now concerned about the “demonstrated limitations of this independent verification, which is evident in some circumstances.” Sedex – the author of the world’s most widely used social audit standard, and the one used in all known audits of plants tied to Uyghur labor – told us that it was “difficult and risky for auditors themselves to explicitly recognise state-imposed forced labor” that “may have been covered up.”
Recent research on social audits has also raised concerns about the independence of auditors. Given that third-party auditors work as contractors and consultants, there is a high risk of conflict of interest for auditors who have an incentive to make, or overlook, particular findings so as to ensure repeat business from various stakeholders. "Therefore, it is important that companies are involved in other types of measures, such as direct engagement with unions and other groups that represent rights holders and participation in credible multi-stakeholder initiatives," the Danish Institute of Human Rights said in a recently-published due diligence guide for companies in the fisheries value chain. On the subject of bolstering audits, Sparks told us: “The gold standard for a social audit would require a legally binding commitment so that a company has to continue to use the same auditing body regardless of their findings (and that investigative/auditing body needs to be highly trained, use investigators that speak the language of the workers, etc.). This is what occurs in the Fair Food Program and other worker-driven social responsibility models.”
Announced audits were of particular concern among the experts we spoke to as an insufficiently robust method of checking worker welfare and accurately gauging conditions because the workplace knows exactly when the auditors are coming on site. As Chris Williams of the International Transport Workers’ Federation (ITF) said: “Any audit or inspection that is announced is unlikely to detect problems, it's like telling a drug dealer you are going to raid their property at 6pm next Tuesday; it is only unannounced inspections that are likely to uncover wrongdoing and issues around forced labor.”
‘Worker-led human rights due diligence’ Direct engagement with workers is fundamental to developing and implementing meaningful labor protections, according to myriad recent reports on the topic, including from the Danish Institute of Human Rights in 2024, the International Labour Organization in 2023, and the Institute for Multi- Stakeholder Initiative Integrity in 2020. “Even worker grievance mechanisms tied to social audits do not improve data verifiability or assurances of working conditions,” according to this study in Marine Policy. “This is because the voluntary, non-governmental social governance tools are not associated with meaningful company engagement of workers.” The level of worker engagement in social audits and corporate responsibility programs was a point that came up repeatedly in our discussions with labor rights researchers. They questioned a lack of clear human rights due diligence engagement with workers, and suggested more essential incorporation of workers’ views. Rather than rely on third-party audits such as the widely-used SMETA program, companies “should be steered towards worker-led or centered human rights due diligence that includes workers or unions in the design, monitoring and implementation,” said Williams.
The sudden suspension of trade relations with companies at the center of workplace abuse allegations could leave workers in limbo, the experts warned, and limit the effectiveness of efforts to improve worker conditions. “While this might be an effective solution to eliminating risk in their supply chain, it does not alleviate the harm to workers, and could potentially put them at greater risk,” said Sparks. Williams of the ITF added: “What about protections and remedy for the workers affected?”
Having a grievance procedure in place is a critical tool for hearing directly from workers about issues in the workplace, but that procedure must be carefully designed for the specific context of the workers involved. “The process, for example, must provide timely, affordable, and meaningful access to a procedure that is capable of addressing the violation, and the outcome must repair the harm of the violation,” the Danish Institute of Human Rights report said. “Ultimately, the question of whether harms against rights holders are, or could be, remediated by a remedial process is the central inquiry when examining the adequacy and effectiveness of remedial processes.” The experts we spoke to also emphasized the importance of designing grievance mechanisms with which workers can safely and effectively engage. Sparks said important elements to consider are: how workers prefer to report grievances, if cultural factors have been taken into consideration when designing the mechanism, if any barriers to reporting a grievance have been identified, and if the process is trusted by the workers themselves. Grievance mechanisms need to go beyond focusing on severe issues like forced labor, Sparks added, “towards preventing unacceptable conditions or even detecting unacceptable working conditions that may not reach the threshold of forced labor.”
‘China has not hidden its work programs and incentives’ The socio-political context of doing business in China was an important consideration among the experts to whom we spoke. American companies who use Chinese manufacturers or processors should be aware that they are working with partners who operate in a very different regulatory and legal context, they said, one that carries different labor abuse risks, such as North Korean forced labor. They added that U.S. companies should inform and update their trading partners overseas about U.S. regulatory or legislative requirements that could impact on imports from that company, such as the Countering America's Adversaries Through Sanctions Act in 2017 or the Uyghur Forced Labor Prevention Act of 2022. “U.S. companies should not try to defend their purchasing to date on the basis that their suppliers in China should operate as though they are not in China under its regulatory and legal frameworks,” said Nakamura. “It is not sufficient or meaningful for a U.S. company to say that its goods made in China along the North Korean border could not possibly be made by North Korean workers. As a business strategy, it won't work in China because it is not enforceable. China has not hidden its work programs and incentives for North Korean and Uyghur labor transfers in any way.”
This also reflects the findings of our investigation into labor abuses in China’s seafood processing industry, particularly as regards the state-imported forced labor of Uyghurs which is actively promoted by the government, corporate groups and individual companies themselves. Company newsletters by one corporate entity, the Chishan Group, published multiple articles on the practicalities involved, including details of senior management cooperation with the agency involved in state transfers of Uygur labor, the arrival of Uyghur workers at the company’s sites in Shandong province, and special measures to provide a canteen for the Uyghurs.
These issues arising from U.S. businesses engaging factories in China as part of their supply chains reflect concerns in the seafood industry generally. As you may be aware, the Aquaculture Stewardship Council announced last week that it is ceasing its operations and investment in China. The move came in the wake of our reporting on Uyghur and North Korean forced labor in China’s seafood processing industry.
And the social auditing blind spots in China are not just a seafood problem. In December 2020, two shipments of clothes made at a factory in Dandong by North Korean workers were stopped at the port of Newark in violation of the Countering America’s Adversaries Through Sanctions Act, or CAATSA, which imposes heavy fines on companies that import products tied to North Korean labor. A representative of the clothing manufacturer protested the seizure and submitted two social audits as evidence that no forced labor existed at the plant. An administrative law judge subsequently denied their claim explaining that the social auditors who visited the plants likely made no effort to distinguish nationality so as to check for North Koreans, nor did the auditor speak Korean so as to interview any such workers.
In July 2021, the U.S. State Department said in a business advisory that social audits, especially in China, are inadequate for identifying forced labor because auditors are commonly detained or harassed, audits often rely on government translators, and workers face reprisals for reporting abuses. And in November 2023, U.S. Customs and Border Protection advised companies that a social audit can only be used as credible evidence clearing a company accused of forced labor if it was unannounced, addressed all indicators of forced labor, and conducted interviews in workers’ native languages. These conditions are rarely met for social audits conducted in China, according to various human rights groups such as the Worker Rights Consortium, which offered testimony before a Senate hearing in February 2023.
Ultimately, social audits and industry certifications are just two elements in a wider systemic problem of companies relying on corporate social responsibility to address industry abuses and shortcomings without making structural changes that can have a meaningful impact on labor conditions, according to researchers. As OpenDemocracy put it: “The same models get tried and tried again, yielding disappointing results, yet advocates of CSR [corporate social responsibility] continue to declare that the next time will be different.”
“Social audits are designed to show the firm in a good light, not a bad light,” Nakamura told us. “By design and intent, social standards are market-based promotional instruments used to deflect liability and not problem-solving or investigative tools to enforce labor and trade laws or detect violations.”
Questions for Sysco:
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Your initial response to our investigation focused on actions being taken at the plants that we identified, but obviously the flaws in the underlying auditing system imply that there is probably need for a broader review of all your plants. Plants had documented cases of forced labor on the premises, but the auditing that should have caught the presence of those workers clearly failed. Would Sysco be willing to provide a list of all the seafood processing plants that it uses for supply in China, so we can see if we have evidence of state-sponsored forced labor in the form of North Koreans or Uyghurs at any of these other plants?
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You have said that Sysco would investigate further. Can you please provide a timetable of when that investigation will be finished, and will you be making the findings public or only sharing it internally?
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Severing ties with one plant has been compared to us by some experts as removing a tumor, but not really confronting the underlying disease. In the spirit of that metaphor, we wondered if Sysco is going to take steps at all of the plants that supply Sysco, directly or indirectly?
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Many of the experts we spoke to said there are certain issues in China that are too politically sensitive to raise, such as human rights generally or more specifically the treatment of North Korean or Uyghur workers. We’ve been told by experts that if auditors raise those hot button issues in writing or otherwise there’s a very good chance that the firm conducting the audits will not be allowed to continue operating in China. Will you comment on this inherent challenge and the way that these issues are supposed to be policed?
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In your email of February 1, 2024, you said that the audits conducted for Sysco “cover several areas including environmental, health and safety, and labor standards. Within the review of labor standards, our auditors aim to identify potential risks related to child and forced labor, wages, working hours, discrimination, worker safety, and living conditions.” Who conducts these audits for Sysco? Are they carried out under set third-party standards or are they tailored by Sysco to better detect the types of issues raised in our reporting (for example, the use of North Korean forced labor and allegations of sexual abuse)?
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Some researchers have said there’s an inherent conflict of interest in the structure of auditing whereby the companies being audited are paying the auditing firms to do that work. This has been criticized as a system in which firms are being paid to police their own clients. How does Sysco check or monitor auditor independence to address this?
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Many of the prior questions we’ve asked about audits concern actions that may not be feasible in China because of the nature of the government there. If this is true and indeed direct interviews with workers and unannounced spot checks are not permitted, has Sysco considered relocating its work outside of China?
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Are factory workers and fishers interviewed as part of Sysco’s audits? If so, how are these interviews conducted? Are auditors aware of any barriers which deter workers in these contexts from disclosing abusive practices or mistreatment? How does Sysco go about identifying and removing these barriers before interviewing workers?
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What, if any, complaints process does Sysco have in place for workers in supplier facilities or on fishing vessels? If such a complaints process is currently in place, can you provide any statistics on the complaints raised to date this year, by number, grievance type and resolution?
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What are the consequences, if any, following the discovery of previously undetected unacceptable work conditions missed by third-party audit? And what remedy does Sysco offer the affected workers?
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We’ve heard from experts and industry insiders that plants are frequently informed about an upcoming audit which is supposed to be ‘unannounced’ and that unannounced audits are not possible in practice in China, thereby fundamentally undermining the basic premise of such an audit. What, if anything, does Sysco do to check that inspectors and auditors do actually show up without prior notice to check conditions at plants that supply Sysco?
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Was there any worker input in developing Sysco’s Supplier Code of Conduct? Does Sysco engage with any worker organizations, unions or federations as part of its human rights efforts?
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Does Sysco have any process in place for changing its purchasing practices when required by U.S. trade laws to prevent the import of goods made with forced labor? Does it notify suppliers in pertinent locations immediately of the specific prohibitions when such laws take effect, or could it start to?
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Does Sysco have procedures to respond to human need with direct assistance when it is detected in its supply chain (in addition to procedures for confirming or refuting violations)?"
A coalition of eighteen NGOs wrote to thirteen major seafood distributors and retailers, including Sysco, asking a series of questions connected to the Outlaw Ocean's reporting. Their email to Sysco said: "Dear Sysco,
We are writing to you on behalf of a consortium of human rights NGOs requesting an update on the steps Sysco has taken following the investigation published by The Outlaw Ocean Project. The investigation highlighted concerns about state-imposed Uyghur and North Korean forced labor across the Chinese seafood processing facilities, including within your company’s supply chain.
Given the seriousness of these findings, we are keen to learn about the progress of your internal investigations that your company stated it would conduct. Please refer to the attached letter for detailed inquiries. We look forward to your prompt response by August 2, 2024.
Sincerely, Ethan Hee-Seok Shin, Transitional Justice Working Group Krysta Bisnauth, Freedom United"
The attached letter read:
"Dear Sysco,
The undersigned organizations, experts on human rights, labor rights, Uyghur rights, North Korean rights, and trade law, are requesting an update on the steps Sysco committed to take following the publication of a series of investigations published by The Outlaw Ocean Project. The findings on the investigations, which shed light on the use of state-imposed forced labor in your company’s seafood supply chain, are deeply concerning and demand immediate attention from all stakeholders in the industry.
In 2023, Sysco stated it would investigate exposure to state-imposed forced labor in its downstream supply chains. Given the severity of the harms reported and the gravity of the situation and the potential impact on human rights and environmental sustainability, we are keen to learn about the progress of these investigations into your company's seafood supply chain.
We ask that you provide us with an update on the following points:
- The due diligence conducted to identify whether direct Chinese suppliers or sub-suppliers are using, or at risk of using, Uyghur or North Korean forced labor;
- Any preliminary findings or outcomes from these investigations, e.g., has your company identified Chinese suppliers or sub-suppliers using or at risk of using Uyghur or North Korean forced labor;
- Steps your company has taken or leverage used to cease supplier’s or sub-supplier’s participation in state-imposed forced labor programs, including poverty alleviation programs;
- Where suppliers or sub-suppliers did not cease their participation, or agree to a time bound plan to do so, whether your company disengaged, or has plans to disengage, from that business relationship;
- Steps your company has taken or plans to take to report this information to shareholders (if applicable), companies within your supply chain, consumers, or other stakeholders or otherwise make these findings publicly available.
We believe that maintaining a supply chain free from forced labor is not only a legal and ethical imperative, but also crucial for the sustainability of the seafood industry. Your prompt response and continued diligence in this matter are essential for upholding these standards. Please respond to these questions within three weeks of receipt. Information provided will inform ongoing investigations into forced labor in seafood supply chains.
Sincerely, Transitional Justice Working Group (TJWG) Hubert Younghwan Lee, Executive Director
Human Trafficking Legal Center Martina Vandenberg, Founder and President
The Committee for Human Rights in North Korea (HRNK) Greg Scarlatoiu, Executive Director
Advocates for Public Interest Law (APIL) Shin Young Chung, Attorney
HanVoice Sean Chung, Chief Executive Officer
The Citizens' Alliance for North Korean Human Rights (NKHR) Joanna Hosaniak, Deputy Director General
Corporate Accountability Lab Charity Ryerson, Executive Director and Founder
International Corporate Accountability Roundtable David McKean Deputy Director
Humanity United Action Emily Risko, Associate Program Manager - Forced Labor & Human Trafficking
International Federation for Human Rights (FIDH) Gaelle Dusepulchre, Deputy Director - Business, Human Rights and Environment
Uyghur American Association Elfidar Iltebir, President
Anti-Slavery International Chloe Cranston, Head of Thematic Advocacy Programmes
Uyghur Human Rights Project Omer Kanat, Executive Director
Freedom United Krysta Bisnauth, Advocacy Manager
Global Labor Justice Allison Gill, Legal Director
Investor Alliance for Human Rights Anita Dorett, Director
Campaign For Uyghurs Rushan Abbas, Founder And Executive Director
Worker Rights Consortium Jewher Ilham, Forced Labor Project Coordinator"
Sysco responded to the NGO coalition letter: "Ethan,
I wanted to confirm our receipt of your letter. Sysco is unwavering in its belief that all people deserve to work in a safe environment with fair treatment and equal opportunities to succeed. This is an integral part of our company values. Any act of human trafficking, slavery, forced labor, or child labor within Sysco’s supply chain is unacceptable and, if identified, will be promptly addressed in compliance with our policies and procedures.
We will respond to your inquiry accordingly. In the interim, I can share with you a new webpage we recently launched to help answer some of the questions we have received on these matters. We hope this is helpful.
Shannon"
The Transitional Justice Working Group replied to Sysco: "Dear Shannon, Thank you for confirming the receipt of our letter and for sharing your new webpage with us. We will look forward to your response to our inquiry. Ethan"