Stockholm (NordSIP) – The Nordics are slowly emerging from years of pandemic-induced isolation, yet physical events still feel like a rare luxury. Naturally, this is not the only reason that NordSIP seizes the opportunity to attend a seminar/webinar (hybrids seem here to stay) arranged by AP7 in Stockholm on October 26. A somewhat neglected aspect of ESG, the issue of inadequate working conditions in the global food production chain certainly deserves more attention from investors. The timing is rather appropriate to bring up the topic, too. The EU is just about to unveil its proposal for new legislation, the long-awaited Human Rights Due Diligence (HRDD), expected to place higher demands on how companies treat human rights at the supplier level.
The panel of experts is impressive, representing different stakeholders in the debate. On stage, Oskar Ernerot from LO (Swedish trade unions), Kristina Areskog Bjurling from Axfood and Henrik Lindholm from ETI Sweden, join AP7’s Head of communication and corporate governance Johan Florén. A few minutes into the discussion, skilfully moderated by Mia Odabas, yet another panellist, David Lega, member of the European Parliament, joins the debate, looming over the stage on a video link from Brussels.
For the past three years, AP7 has been deep-diving into the theme ‘Working conditions in the green industries.’ Their efforts have resulted in an extensive report on the topic, examining the state of human rights from the fields and rice plantations in faraway countries to the shelves of our neighbourhood grocery store. Along the whole supply chain, the risk of exposing workers to poor working conditions is often high. Food production is, allegedly, where most of the child-labour and forced labour cases in the world occur.
The seminar addresses an important question: How do consumers’ expectations of low prices and investors’ return requirements weigh against the working conditions of those producing the food? What can each stakeholder do to tackle the problems and affect change?
Somewhat surprisingly, all the panellists agree that more regulation, preferably harmonised on a global level, is needed. “It’s unusual to hear business demanding legislation,” comments the moderator. Yet it makes perfect sense. Although specific examples of combating human rights violations, like the ones the panellists share, are welcome, the issue is challenging to address in a systematic way unless there are clear rules in place.
Whether the incoming EU proposal is going to deliver such rules is not clear yet. Lega expresses his hope that the new regulation will be more than just a paper tiger and that it won’t be too onerous on small and mid-sized businesses. Areskog Bjurling disagrees with him that smaller actors should be exempt from this type of rules. According to her, sourcing sustainable agricultural products should be the norm for everyone, irrespective of their size or narrow specialisation.
We cannot just sit and wait for the regulation either, according to Lindholm. We should work on establishing best practice examples that the legislators can use to create better laws later. Developing more sustainable sourcing methods, for instance, is something companies can work on already.
So, what could investors do to combat human rights violations along the food chain? At AP7, the managers use all the tools in the toolbox, according to Florén. They can and do exclude companies in clear violation of human rights from their investment universe, of course. Yet, the preferred method is engaging with wholesale food retailers, putting pressure on them to act sustainably at all stages of the supply chain.
“We welcome demanding investors like you,” responds Areskog Bjurling. She explains that investors who have done their homework and are looking fro concrete and measurable results help the industry to embrace more sustainable practices. One important takeaway from the seminar is that stakeholders can achieve much more when they cooperate on improving the working conditions for those who produce the food on our plates.