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Companies must act to stop child labor in the US

To address the growing child labor challenge in the U.S., companies must grapple with what went wrong by taking a hard look at their supplier due diligence and management processes.

Children walking away

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[GreenBiz publishes a range of perspectives on the transition to a clean economy. The views expressed in this article do not necessarily reflect the position of GreenBiz.]

Some might be surprised to learn that child labor is an increasingly dire problem in the United States. While many companies think of this as something that potentially occurs in their supply chains in countries far from their headquarters, the data tells us otherwise. The number of children illegally employed by U.S. companies has increased by as much as 70 percent, according to the U.S. Department of Labor.

Many of these children come from Central America, forced to flee their home countries because of violence and economic insecurity. The financial impacts of the pandemic also led some parents to send children across the border to work and send home earnings. In 2022, around 130,000 minors entered the U.S. unaccompanied — a threefold increase from 2018 — and the U.S. immigration system has struggled to deal with this influx. With children moving off the Department of Health and Human Services’ radar, some ended up being trafficked or exploited by their adult sponsors. 

To address the growing child labor challenge in the U.S., companies must grapple with what went wrong by taking a hard look at their supplier due diligence and management processes.

Key drivers of child labor in the US

A key driver for the rise in child labor in the U.S. is the use of contracted and subcontracted laborers for low-wage work. This strategy diminishes the level of oversight and control large companies have over hiring practices in their supply chains.

Children have been found working in food factories, slaughterhouses, auto parts manufacturing, farms and at construction sites across the U.S., including in factories that make products for well-known brands. According to a New York Times investigation, serious limb injuries from operating heavy machinery, falls from five-story buildings and lung issues from inhaling spicy food dust particles are some hardships that an estimated hundreds of thousands of children have experienced. Some children have even died.

The private sector reaction to child labor allegations in the U.S. has varied. Some companies have denied the claims, while others are distancing themselves from the issue by claiming they don’t own or operate the facilities in question. Others are affirming commitments to zero tolerance of child labor, including in supplier codes of conduct, conducting independent, third-party investigations, terminating supplier contracts and engaging with suppliers on their staffing practices. The responses collected by the Business and Human Rights Resource Center say little about remediation for child labor victims and longer-term efforts to root out the problem. 

Finding a North Star for human rights

More than a decade ago, the United Nations published its Guiding Principles on Business and Human Rights, a set of guidelines for states and companies to prevent, address and remedy human rights abuses committed in business operations. They can and should be the North Star for companies that want to build a robust approach to human rights. But applying the principles is challenging work because companies must put the appropriate governance structures, processes, systems and programs in place to address human rights issues at scale. 

Tackling child labor requires companies to take a hard look at the root cause of the problem: poverty.

Companies must invest in initiatives with competitors and civil society organizations — and commit to action over the long term. Success means pooling resources for greater impact, transparency about the challenges in implementing solutions and sharing practical lessons along the way. In their 2022 report, the World Benchmarking Alliance found that, while companies expect their suppliers to respect human rights, only 11 percent of companies worked with suppliers on risks such as child labor.

Bringing more companies to the table 

Some companies may be forced to act on illegal child labor due to regulatory pressure. While some states in the U.S. are introducing less restrictive child labor bills, the U.S. Congress is considering a pair of bills — the Justice for Exploited Children Act and the Child Labor Prevention Act — to increase penalties for employers that exploit underaged workers. 

Many companies are addressing child labor as part of their ESG strategy for engaging raters and investors. The Investor Alliance for Human Rights — a coalition of 170 institutional investors with more than $4 trillion in assets under management in 19 countries — states that "investors should use their leverage to ensure that companies they invest in commit to respecting children’s rights in their own operations and through business relationships." S&P’s Corporate Sustainability Assessment asks companies about child labor in their human rights commitments, due diligence processes, supplier codes and screening. Going even further, the Corporate Human Rights Benchmark scores companies on a broad set of criteria. 

In 2020, an estimated 160 million children were in child labor worldwide — the first increase in two decades and a reversal of a previous downward trend. U.S. senators have called on companies to respond to the allegations of child labor. It is time for bold action from the private sector.

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