Global Supply Chains & Covid-19 Pandemic Impact on Child Labor

By Ashish Gadnis Co-founder and CEO, BanQu

Why businesses need to step up now and fight harder than ever to end child labor in their supply chains.

A recent report from UNICEF & ILO warns that the current pandemic may push millions more children into child labor.

A grim reality that is a wake up call for all of us but most importantly for the CEOs of major companies that had turned a blind eye (even prior to the pandemic) by talking the talk but not taking real concrete/ tangible actions in their supply chains.

Every time you pickup your smartphone, or jump into your EV Roadster or grab that bar of your favorite chocolate or wear your favorite sneakers or take that sip of $8 latte there is a good chance some child in Congo or Bangladesh or Ghana or Indonesia was forced into child labor. While this list can go on and on, 2 industries have the most documented evidence of child labor yet very little evidence of long-term solutions of ending child labor.

These 2 industries are mining and cocoa. In May 2020, Confectionery News reported major increase in child labor on West African cocoa farms over the past 10 years.  And in Dec 2019 Al Jazeera reported that major tech giants are being sued for child labor deaths in cobalt mines in Congo.

So, why after all this data, companies do so less and get away with publishing a report or MOU committing to ending child labor? The answer may lie in the fact that supply chains are complex and involve many intermediaries where the cocoa fruit changes hands 4 times in Ghana before it ever makes to the factory of the major FMCGs. Similarly the cobalt mined in DRC by innocent children will be taken at gunpoint and will make its way to batteries in China and then to your megapixel smartphone. It then becomes easy to take the Band-Aid approach and fall in the CSR trap – i.e. open a school, or hospital with your brand name on it because it makes for a great photo-op at WEF and life goes on! We can do better than that! Much better!

The solution lies in something more fundamental that has been completely ignored by the major cocoa companies, tech companies and other industries. Taking responsibility of knowing who the cocoa farming household is or taking responsibility of who the mining family is that works in their supplier’s cobalt mines. Invisible households in your supply chains feed invisible children who are forced into child labor. Knowing your farmer or miner is not a gimmick like we see these days when your hear “tip your farmer”! Really?

Take this simple quiz and see how may you answer “yes”.

  1. Does that farmer (or miner) have the ability to prove their existence in your supply chain? Do they have history in your supply chain that they own?
  2. Can that ability be a digital (most smallholder farmers, miners have basic SMS feature phones that can get proof via SMS – so no excuses) proof that makes them bankable for better access to credit, to pay for school fees?
  3. Does that household have the right to an “Economic Passport” that is theirs so they are not yet another 9 digit number in the INGO/ UN Excel spreadsheet?
  4. Can your CEO name one cocoa farmer or cobalt miner?
  5. Do your farmers/ miners have the ability to own, access, monetize and permission data since they are the ones who grow your cocoa and mine your cobalt?

If brands want to really end child labor in their supply chains then it has to start with the absolutely last mile – the household. Without building a true economic identity at the household level ending child labor will only be a dream. Once the household baseline is set then you can enforce that children are in school and not laboring on the farm or in a mine at the mercy of an AK-47. The most important action to combat child labor is that these children attend school. Period. Children belong in school. How does then one ensure that kids are in school and not in forced child labor? Here is where technologies like blockchain (without the crypto-currency piece) can make a world of difference and change the future of these children.

Below are 6 concrete, practical and scalable steps that global brands can take to combat child labor in their supply chains:

  1. Start small and map the flow of product/ raw materials and surrounding ecosystem in the last mile.
  2. Connect the tiers in the supply chain to blockchain track & trace applications that can deliver data via simple SMS phones to the last-mile farmer/ miner.
  3. Ensure that the household has equal rights in these supply chain transactions and they can leverage this right for improving livelihood.
  4. Connect school attendance to the daily flow of products/ raw materials being captured on blockchain.
  5. Correlate school attendance to harvest/ mining cycles and income so households are incented to keep kids in school.
  6. Take actions based on real-time data and enforce compliance across the supply chain especially at the middleman level.

Here are the concrete impact outcomes of such a solution:

  1. A holistic and real-world approach to addressing child labor.
  2. Enabling household level economic data ownership and data driven decision-making ensures sustainability of your supply chain.
  3. Long-term economic resilience as kids in school ultimately benefit the entire ecosystem.
  4. Incentives tied to actions and not anecdotes or hollow CSR initiatives
  5. A scale-able and replicable solution

Real-world Example:

Global brands like Japan Tobacco are taking this challenge seriously and addressing child labor issues the right way. They are using BanQu’s blockchain platform for their Child Labor Monitoring System http://ariseprogram.org/en/about-arise/resources/arise-annual-review-2019/ (Page 18 – 21)

In conclusion, if really want to end child labor in supply chains then it has to start with CEOs of global brands taking their responsibility seriously and getting to know the farmer/ miner in the last mile.

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