Alignment with International Standards

1. No explicit reference to international human rights standards or covers some but not all salient human rights
​2. No explicit role for rights holders in standard setting

Scope

3. No requirement of brands to share responsibility with suppliers
​4. Does not adequately account for vulnerable people
5. Does not adequately account for gender

Audits

​6. Allows the company or supplier being audited to pay directly for and/or choose the auditor
7. No requirement for auditors to have human rights competencies and knowledge of the local context
8. Audits not carried out in person, among other procedural weaknesses
9. Certification granted despite insufficient sample size

Grievance Mechanisms

10. No grievance mechanism at the scheme level and/or no requirement for a grievance mechanism in the certification standard
11. No controls to ensure the effectiveness of the grievance mechanism in providing remedy

Governance & accountability 

12. No or poor communication of the certification requirements to the chain of custody participants
13. No process to suspend or withhold certification until corrective action plans are adopted and implemented
​14. Does not make information on audits, complaints, or compliance public

Go to Red Flag 13

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12. No or Poor Communication of the Certification Requirements to the Chain of Custody Participants

• What this means 
• Why inve​stors should care
• What to look for 
• Checklist

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For a certification to be effective, all actors throughout the supply chain—including, but not limited to, farmers, farmworkers, processor workers, and managers—need to know the purpose and expectations of the certification. This awareness is necessary to build a culture of accountability to the ethical standards of the scheme and nurture best practices across the supply chain.
 
ISEAL’s 10 Credibility Principles captures this idea through its “Transparency” principle. This principle points to the need for the initiative or certification to enable “stakeholders to understand and evaluate the system’s processes, decision-making, results, and impacts,” because “stakeholders [should] have the information they need to actively participate in decisions or raise concerns.”[1]

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[1] ISEAL Alliance, ISEAL Credibility Principles - Version 2 (June 2021), 
​https://www.isealalliance.org/sites/default/files/resource/2021-06/ISEAL-Credibility-Principles-V2-2021_EN_ISEAL_June-21.pdf.

Where chain of custody participants do not understand the certification requirements, they may not understand the priority of changing practices to meet the standards established to prevent negative impacts. A 2023 Corporate Accountability Lab (CAL) report on the Equitable Food Initiative (EFI) and Fair Trade USA (FTUSA) certification of the Mexican produce industry, discloses worker retaliation for reporting abuses, wage theft, and signs of forced labor on farms certified by the EFI and FTUSA. According to the report authors,

Few farmworkers who work on plantations certified by EFI and FTUSA know their rights under federal labor law. Neither certification[‘s] standards emphasize know-your-rights training for workers.[1]

The importance of adequately communicating the fact of the certification to chain of custody participants is also spotlighted in the 2021 lawsuit CAL brought against the Hershey Company and Rainforest Alliance: “Farmers that sold their cocoa to certified cooperatives were often unable to explain what labor standards they were supposed to be complying with and how these standards differed from the standards for non-certified cooperatives.”[2] In the year prior to the lawsuit, Rainforest Alliance revised its certification program for farms certified under a group certification to entail trainings for certificate holders’ group management personnel and other technical staff so as to “foster not only transparency but also responsible business practices from companies throughout the supply chain.”[3] The issue of chain of custody participants being unaware of the certification scheme they are part of mirrors a broader problem in worker rights protections: workers need to know their rights in order to claim them.
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→ Demonstrates: Reputational risk, legal risk

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[1] James Daria and Anna Canning, Certified Exploitation: How Equitable Food Initiative and Fair Trade USA Fail to Protect Farmworkers in the Mexican Produce Industry (Corporate Accountability Lab, October 2023),  https://corpaccountabilitylab.org/certified-exploitation.
[2] Corporate Accountability Lab v. The Hershey Company: Complaint Demand for Jury Trial, Superior Court of the District of Columbia (2021), 16,  https://static1.squarespace.com/static/5810dda3e3df28ce37b58357/t/618167d28dd7f307c90da0e4/1635870679248/CAL+v.+Hersheys+and+RA_Stamped+Complaint.pdf.
[3] Rainforest Alliance, 2020 Sustainable Agriculture Standard: Supply Chain Requirements (last corrected February 6, 2023), 6,  https://www.rainforest-alliance.org/resource-item/2020-sustainable-agriculture-standard-supply-chain-requirements/

Investors can look for a statement on the website of the certification scheme that details how certification requirements are explained or shared with chain of custody participants. For example:

➔    Education is a central part of the Fair Food Program. The Coalition of Immokalee Workers (CIW) conducts on-the-clock education sessions for workers at all of the growers’ farms throughout the season. The sessions are led by farm workers for farm workers using the curriculum they developed. Workers also receive a booklet and video training in either English, Spanish, or Haitian Creole detailing their rights and responsibilities as part of new employee orientation.
 
➔    ​Lesotho-based trade unions and women’s rights organizations and US-based workers’ rights organizations worked together to create the Program to End Gender-Based Violence and Harassment in Lesotho (Anti-GBVH Program). As detailed in the Program’s 2021-2022 annual report, implementation includes a two-day worker education workshop, jointly facilitated by union leadership and women’s rights advocates. The workshop is focused on GBVH and the program’s complaint process and provides payment for the workers time to attend.

Does the scheme require member companies to clearly communicate the purpose and expectations of the scheme to all actors throughout the supply chain? 

• Tier 1
• Tier 1 and 2
  
• Beyond tier 2 
• Scheme has not such requirement