Case study: CP Foods

In June 2014, the British newspaper The Guardian reported that shrimp producer Charoen Pokphand Foods (CP Foods) buys some of its fishmeal from suppliers that own, operate or buy from fishing boats manned by slaves.

CP Foods and its supply chain

Thailand-based CP Foods is the world’s largest aquaculture producer of prawns. To feed its prawns, the company buys fishmeal, which comes from two sources: by-catch and by-product. The by-product is certified, but the bycatch travels from boat to boat, which makes it difficult to determine its origin. As The Guardian documented, due to labour shortages in Thailand and margin pressure from high gasoline costs, some commercial boat owners buy migrant workers from human traffickers for as little as £250 (US$350). Working conditions reported by migrants include abuse by employers, shifts of up to 20 hours, and little-to-no pay.

Investor coalition talks to CP Foods

The Dutch investment manager Robeco, together with other international investors collaborating in the PRI-coordinated engagement, contacted the company in July 2014, straight after The Guardian published its articles. Coming from a broad investor coalition, a letter, followed up by a series of in-depth conference calls, led to constructive dialogue with CP Foods. The dialogue was further informed by calls with content experts who helped educate the company.

Improved traceability, encouraging results

CP Foods has taken proactive measures by mapping its supply chain, and initiating dialogue with its most important customers, peer companies and the Thai government. It is a founding member of the Shrimp Sustainable Supply Chain Task Force, stressing the need for a supply chain-wide solution.

CP Foods has strongly improved its audit system regarding labour standards in the supply chain. It has developed a traceability protocol and supportive traceability tools: no fish catch can be landed before all ship crew members’ passport credentials are recorded. This, combined with a vessel monitoring system that the Thai government has established with support from European counterparts, shows good progress.

In 2015 the company developed a foreign labour hiring policy that resulted in suspending some of its suppliers. The company also developed a Sustainable Sourcing Policy. In 2015, 200 out of 600 direct suppliers signed up to this policy. Corrective actions continue and verifications will follow to check if all direct and sub-suppliers live up to the sourcing policy.

In addition to these improvements on the ground, CP Foods joined the UN Global Compact, responding to a specific request from the group of investors and further exemplifying the company’s commitment to live up to international labour standards.