The human costs of Costco

EIG has been engaging Costco on the topic of forced labour in its supply chain since February 2016. Following reports in the media on the potential abuse of workers in Costco’s supply chain in Cambodia and Thailand, EIG sent a letter expressing concern to the Executive Vice President and Chief financial officer at Costco. Despite numerous attempts on the part of EIG to solicit a response to the letter, Costco remained silent.

In 2018, EIG noted that Costco received poor scores on several global company ratings related to human rights in general and forced labour in the supply chain. At the Costco annual meeting in January 2019, EIG voted in favour of a shareholder proposal to produce a report with information known to Costco regarding supplier compliance with the company’s Global Policy on Prison Labor. Although the proposal did not get the majority required for approval, it received a significant 28% of the vote, which puts pressure on the company to take note.

In light of these developments, EIG re-evaluated Costco’s fit with EIG’s mission, and concluded that while the concerns relating to human rights and labour rights were warranted, on the whole, Costco remained a good fit. EIG decided to attempt to re-engage with Costco. This time we were successful.

In May 2019, EIG contacted Costco again. Preston Witt, Human Rights Director, Global Sustainability and Compliance, confirmed Costco’s concerns for the conditions of the workers in its supply chain. He also clarified that when it came to these issues, Costco adopted a risk-based approach, auditing private-label and risky-origin suppliers rather than auditing every supplier or sub-supplier as it was not always necessary or practical.

At the same time, EIG enquired about the use of recycled content in Costco paper products, having signed, as a shareholder, the petition, Costco: protect the boreal forests and use recycled pulp in your toilet paper. Costco highlighted the importance to the company of certification, First Nations’ rights, and Woodland Caribou habitat, and shared its plans to increase recycled content. EIG encouraged Costco to move towards 100% recycled content.

Learn more about EIG's engagement with Costco, both before and after May 2019, on our website.