Coffee farms in Nestlé’s and Starbucks’s Chinese supply chains are using child labor and employing workers who face excessive hours in conditions that fail to meet the companies’ own safety standards, according to nonprofit China Labor Watch.
In a report released this week, the New York-based activist organization said some coffee farms in Yunnan province—China’s largest coffee-producing region—are failing to meet the companies’ sustainability requirements because of “a lack of direct contractual relationships between coffee firms, certified estates and small farms.”
It said that major buyers including Starbucks and Nestlé source roasted coffee beans from large, certified farms. However, these estates accept beans from smaller, uncertified “ghost” farms, allowing unregulated coffee to enter the market as a seemingly ethically sourced product, the nonprofit said.
The report highlights problems faced by large companies with extensive supply chains in developing economies, including China’s. Last month, the Biden administration blocked imports from more than two dozen Chinese companies over their alleged links to forced labor in the country’s Xinjiang region, its largest-ever expansion of a ban list that took effect in 2022.
Also last month, the Council of the European Union approved a regulation that would forbid throughout the bloc’s 27 member states the sale of goods made with forced labor either within Europe or outside it. The measure takes the EU a step closer to completing a bloc-wide ban on the sale of products made with forced labor.
A Nestlé spokesperson said that the company has contacted its suppliers to investigate allegations in the report and, if necessary, take corrective action. “Our suppliers must comply fully with all local laws, international standards and applicable regulations,” the spokesperson said.
A spokesman for Starbucks said the company will review the full report and is committed to investigating specific allegations.
China Labor Watch said it has directly observed at least two instances of child labor and found that some workers on farms in Yunnan province didn’t have a labor contract and were paid by the weight that they picked, resulting in excessive work hours without paid leave or other compensation related to rest.
The report was based on three undercover investigations of farms in both companies’ supply chains. The documented infractions violate China’s laws and European rules, it said.
The reported abuses would violate the terms of both companies’ certification programs. Nestlé, the Swiss maker of KitKat chocolate bars and Nescafé coffee, uses the 4C certification and Starbucks adheres to Coffee and Farmer Equity (C.A.F.E.) Practices standards.
China’s Yunnan Coffee Association and Specialty Coffee Association didn’t respond to requests for comment.
