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V.  THE COMPLICITY OF SUGAR MILLS AND THE RESPONSIBILITY OF MULTINATIONAL CORPORATIONS

As this report documents, the use of child labor is rampant in planting and harvesting sugarcane, meaning that child labor is an important part of El Salvador’s sugar production.  The sugar refined by El Salvador’s mills and purchased or used by other businesses is in part the product of hazardous child labor.

One such business is The Coca-Cola Company, whose local bottler purchases sugar from El Salvador’s largest mill, Central Izalco, located in the Department of Sonsonate.²²⁸  Coca-Cola uses Salvadoran sugar in its bottled beverages for domestic consumption in El Salvador and in its canned beverages sold throughout Central America.  At least nine of the twelve children Human Rights Watch interviewed in the Department of Sonsonate worked on four plantations that supply sugarcane to Central Izalco.  These children ranged in age from twelve to sixteen.  Their testimonies and the accounts of adult workers on those plantations confirmed that those plantations regularly use child labor.²²⁹

Coca-Cola is by no means the only multinational corporation that purchases or uses sugar produced in part by hazardous child labor in El Salvador.  For example, Central Izalco sells sugar and molasses to Amerop Sugar Corp.; Cargill, Inc., Glencore International AG; Louis Dreyfous Corp.; and Marubeni Corp., among other foreign enterprises.²³⁰  El Salvador produces over 222,000 metric tons of sugar each year, accounting for 2.28 percent of the country’s gross domestic product.²³¹  Five percent of El Salvador’s sugar production is exported to the United States.  Forty-five percent is exported to other countries.²³²  This report examines the connection to Coca-Cola because sugar is a principal ingredient in Coca-Cola’s products, because a representative of Central Izalco specifically highlighted it as a customer and told us that the mill had undertaken extensive renovations in order to become an authorized supplier to Coca-Cola,²³³ and because it is the only one of the companies listed that we know to use Central Izalco’s sugar in its product (we could not determine the final use of the product by the others and some may be commodity traders).

The connection between the sugar mills and the endemic child labor on sugar plantations is sometimes more than an exercise in tracing the links in the supply chain.  At least three mills—La Cabaña, Central Izalco, and San Francisco—either  facilitate the use of child labor by their suppliers or exercise greater control over their suppliers’ operations than is apparent at first glance.  San Francisco routinely provides transportation for sugarcane workers, including children, to and from the cane fields.  Plantation foremen and prospective workers, again including children, customarily gather in front of La Cabaña to arrange employment.  Central Izalco, the mill that supplies sugar to Coca-Cola, directly administers some of its supplier plantations and provides technical assistance to those it does not administer directly.  Because of these ties, these three mills in particular know or should know of the use of child labor on their supplier plantations.

Representatives of the Salvadoran Sugar Association responded to our questions about the use of child labor by telling us that it was a matter of poverty and “culture.”  If the use of child labor in planting and harvesting sugarcane was the responsibility of anybody other than the workers themselves, the sugar industry representatives told us, the cooperatives that own the sugarcane plantations were to blame.  In El Salvador, most of the lands on which sugarcane is grown are owned by local cooperatives, of which there are approximately five hundred.²³⁴  “With the large families here in the countryside, many children go to the fields to accompany their parents,” said Mario Ernesto Salaverría, president of the Agro-Fisheries and Agro-Industrial Chamber of El Salvador (Cámara Agropecuaria y Agroindustrial de El Salvador, Camagro).  Referring to the cooperatives, he continued, “The land is theirs.  It’s a very difficult question, with cultural origins.”²³⁵

Another argument that we heard suggested that laws enacted for the benefit of agricultural workers draw children into hazardous labor.  For example, Salvadoran law provides that agricultural workers must receive meals each day or a sum of money in lieu of food.²³⁶   “The fact that food is provided attracts more kids” to the fields, said Julio César Arroyo, international negotiations coordinator for the Salvadoran Sugar Association.²³⁷

Alternatively, and often in the same conversation, representatives of the sugar industry minimized the role of child labor in planting and harvesting sugarcane or denied that it existed.  “Often the children who accompany their parents are only bringing food,” said Ricardo Esmahan d’Aubuisson, executive director of Camagro.²³⁸  When we mentioned that the IPEC study found that children were working in the fields and getting paid directly, Mario Ernesto Salaverría expressed skepticism that that was possible:  “I would call that completely into doubt,” he said.²³⁹

Nevertheless, our interviews with working children left us with no doubt that they were in the fields to work in order to contribute to their household income, not to bring food to their parents or to receive free meals themselves.  It is true that the meals workers receive are part of their wages, but the numerous and consistent accounts of children and adult cane workers, corroborated by the IPEC study and by experts Human Rights Watch interviewed, belie these facile explanations offered by the sugar industry representatives.

International law establishes rights and standards that states are required to uphold.  If states fulfilled their obligations completely, they would demand that corporations also respect these rights and standards.  But corporations are not themselves directly regulated by international law.  Even so, there is an international consensus that corporations have a duty to support workers’ human rights in their facilities, including the rights of children to protection from hazardous labor.²⁴⁰  There is also an emerging consensus, as demonstrated by various corporate codes of conduct, that corporations have a responsibility to take steps to ensure that human rights are respected in their supply chains as well as their directly owned corporate facilities.²⁴¹

Coca-Cola has such a corporate code of conduct, its Guiding Principles for Suppliers to The Coca-Cola Company.  The guiding principles provide that Coca-Cola’s suppliers “will not use child labor as defined by local law.”²⁴²  But the guiding principles apply only to direct suppliers.  They do not address the possibility that Coca-Cola may use products made with child labor further down the supply chain.

The Role of the Sugar Mills

We found no evidence that child labor was used in the mills themselves, and representatives of the mills and the Salvadoran Sugar Association repeatedly disavowed any connection between the mills and the supplier plantations.  Nevertheless, we found that at least one mill, the Ingenio San Francisco, routinely provides transport to sugarcane workers, including children.  Plantation foremen and prospective workers, again including children, customarily gather in front of a second mill, La Cabaña, owned by Ingenio La Cabaña, S.A. de C.V., to arrange employment.  El Salvador’s largest mill, Central Izalco, owned by the Compañía Azucarera Salvadoreña, S.A. de C.V., directly administers some of its supplier plantations and provides technical assistance to those it does not administer directly.  Human Rights Watch wrote to all three companies between October 2003 and March 2004 to ask about their labor policies and practices in general and to inquire specifically about the use of child labor on their supplier plantations.  As of this writing, only the Compañía Azucarera Salvadoreña has responded.²⁴³

Providing Transport:  Ingenio San Francisco

In Cuscatlán, we heard that the San Francisco mill provides transport for workers, including children under the age of eighteen, to and from the cane fields.  “The San Francisco mill pays for the truck,” one adult worker told us.  “There are children also” on the truck, another said, telling us, “Here all the minors cut cane, from fourteen years old and up.”  “The truck from the mill takes everybody,” a woman from the same community told us.²⁴⁴

Recruitment:  Ingenio La Cabaña, S.A. de C.V.

In Aguilares, San Salvador, prospective workers reportedly line up outside of La Cabaña, the local mill, where representatives of plantations go to offer them employment.  “The agent will go looking for them at the mill and put them down on the rolls,” a teacher told us.²⁴⁵

“The owners of the cane fields tell us if they want workers.  We go to La Cabaña, in front of the mill, and the owners of the cane fieldsare there.  We form a line, and they take us,” Nelson R. said.  He told Human Rights Watch that children under the age of fourteen lined up with the other workers.  “If they can cut a tarea, they can work.  If they can’t cut a tarea, the owners don’t give them work,” he said, telling us that he knows two thirteen-year-olds who were part of his cuadrilla.²⁴⁶

The smaller youths are regarded as helpers, but youths are listed as workers and paid directly “if they’re bigger—twelve, thirteen, or fourteen—when they can cut a tarea,” the teacher told Human Rights Watch.²⁴⁷  Fourteen-year-old Manny C., fifteen-year-old Alex Q., and seventeen-year-old Moises B. each told Human Rights Watch that they had been hired in front of the mill for a day’s or week’s work.²⁴⁸

The La Cabaña mill, owned by Ingenio La Cabaña, S.A. de C.V., produced 1.2 million quintales of sugar and 4.9 million quintales of molasses in the 2001-2002 harvest, making it the fourth-largest in production of the seven mills for which data are available.²⁴⁹

Administration of and Technical Assistance to Sugar Plantations:  Compañía Azucarera Salvadoreña, S.A. de C.V.

At least one mill, Central Izalco, directly administers some of its supplier plantations and provides technical assistance to those it does not administer directly.  Owned by the Compañía Azucarera Salvadoreña, S.A. de C.V., Central Izalco is the largest mill in the country and is responsible for 25 percent of El Salvador’s sugar production.  Fifty percent of its production is for local consumption.  Five percent is exported to the United States, and 45 percent is exported to other countries, including the European Union.²⁵⁰

Thirty-five percent of the plantations that supply sugarcane to Central Izalco “are under our control,” Italo Escrich told Human Rights Watch.  “We’re responsible for the administration of these lands. . . .  We pay rent for these lands, and we are the ones who exercise control” over the day-to-day operations.  “So for that 35 percent, all workers on the land are employees of the mill just like me.”²⁵¹  The remaining 65 percent of the plantations that supply Central Izalco are owned and managed by third parties, although they receive technical assistance from the mill, Escrich told us.  He clarified that although the mill did not own or rent those plantations, it does “control the harvest and provide supervision” for those plantations.²⁵²

In response to our written inquiry about practices on supplier plantations,²⁵³ the company produced policies prohibiting the employment of children under age eighteen and the admission of family members onto the fields of its supplier plantations.²⁵⁴  According to Juan Eduardo Interiano, general manager of the Compañía Azucarera Salvadoreña:

[F]ield supervisors are named, and with a list in hand make sure that no minors follow hired personnel to the sugar cane fields.  This methodology is applied in the harvesting of company owned sugar cane fields as well as other sugar cane suppliers.²⁵⁵

In a subsequent letter, Interiano added:

CASSA [Compañía Azucarera Salvadoreña] supervisors respond to a geographic zone distribution work program, assigned by administered haciendas or fields, and sugar fields owned by other suppliers.  This is a continued activity during the year, in the crop season and off season developing the cane. . . .  We assign supervisors to all the cane fields that we provide services to.²⁵⁶

He clarified that the company’s policy prohibiting the employment of children under age eighteen, adopted in 2002, did not apply to all supplier plantations:

[The policy] applies to the fields administered by us, but we are making efforts to apply them for the sugarcane fields owned by other suppliers where our services are not provided.

Also, as part of the efforts on preventing child labor on the sugar cane fields, sugar producers have agreed to include a provision in our Supply Contracts stating that it is strictly forbidden to use child labor in the fields and that we reserve the right to reject any sugar cane if that is proven.²⁵⁷

Interiano did not say whether the company’s contracts currently include a provision prohibiting child labor or when the prohibition would be added to future contracts.²⁵⁸

Human Rights Watch took testimonies from children and adults who told us that sugarcane cut by children went to Central Izalco for refining.  Ignacio S., a fourteen-year-old, cuts cane on a plantation operated by a local cooperative.  “There are thirty in the cuadrilla,” he said.  “Some of the others are kids who come to help their fathers.  Generally, there are minors there.”  The caporal (foreman) knows who is working on the field, Ignacio told us.  “He comes around to make sure we aren’t making mistakes.”  Ignacio told us that the cane he cut went to Central Izalco.²⁵⁹

We heard the same from other workers from the same plantation.  “The cane we cut here goes to El Paraisal,” said an adult worker who works on the same plantation as Ignacio S., using the popular name for Central Izalco.²⁶⁰  “El Paraisal is the same as Central Izalco,” the representative of a local community-based organization told us, explaining that workers often referred to the mill by the name of the nearby community.²⁶¹

Workers on other plantations also told us that the sugar they cut went to Central Izalco.   Gilbert C., thirteen, told us that the cane he cuts goes to Central Izalco.²⁶²  “Everything goes to Central Izalco here,” his mother added.²⁶³  Pedro M., a twelve-year-old who harvested cane during the 2001-2002 season, named a few of the plantations where he worked.  When we asked him if he knew where the sugar went after it was harvested, he replied, “To Central, according to what they tell me,” referring to Central Izalco.²⁶⁴  Adult workers and the community-based organization’s representative confirmed this information.²⁶⁵  Similarly, the plantation where fourteen-year-old Ronaldo L. works sends its sugarcane to Central Izalco, the community-based organization’s representative told us.²⁶⁶

We attempted to verify whether these four plantations were among those administered directly by Central Izalco, but the mill did not provide this information.²⁶⁷  Nevertheless, the officials we interviewed are aware or should be aware that some of their supplier mills—those which receive technical assistance from the mill but are not administered directly by the mill—routinely use child labor.  When we asked if the company monitors labor rights conditions on its supplier plantations, Interiano wrote in reply, “Each of the Haciendas has been assigned with a supervisor who is in direct charge of validating all the rules and standards previously determined,” including its policy prohibiting the employment of children under the age of eighteen.²⁶⁸

In fact, the officials we interviewed all but conceded that a portion of the sugar they process is cut by child labor, notwithstanding Central Izalco’s official policies and the assurances of its general manager.  “By law, a worker has to be above sixteen years old to be in agricultural work . . . .  But there’s a cultural issue,” Italo Escrich told us.  “We’re not responsible for the cooperatives.”²⁶⁹

Following the Supply Chain:  The Link Between Child Labor and The Coca-Cola Company

The Coca-Cola Company buys sugar refined at the Central Izalco mill, a representative of the mill told us.  “We sell directly to Coca-Cola,” the representative said, telling us that Coca-Cola used Central Izalco’s sugar in its bottled product sold in El Salvador and in the cans sold throughout Central America. “We have a centrifuge that Coca-Cola requires for quality control,” said the representative, showing it to us.  We also visited a loading area in which very large sacks of sugar were being filled.  When we asked about the sacks, which were much larger than any other sacks we had seen in the loading areas, the representative told us that the sacks held 2,000 kilograms of sugar and were only used for sugar supplied to Coca-Cola.  Central Izalco is the sole Salvadoran supplier of sugar to Coca-Cola, according to the representative.²⁷⁰ 

Human Rights Watch sought confirmation of this information from Coca-Cola.²⁷¹  Coca-Cola verified that it purchases sugar that is refined at Central Izalco.  “Our local bottler in El Salvador buys its sugar from a large distributor, which purchases its supply from CASSA [Companía Azucarera Salvadoreña, S.A. de C.V., the parent company of Central Izalco],” Coca-Cola’s director of public affairs wrote to Human Rights Watch.  “CASSA is an authorized supplier of sugar for our business and, as such, is required to comply with the requirements set forth in the Company’s Supplier Guiding Principles Program (‘SGP’).  The SGP strictly prohibits the use of child labor.”²⁷²

With respect to child labor, Coca-Cola’s Guiding Principles for Suppliers to The Coca-Cola Company, which outline Coca-Cola’s requirements for participation in its SGP, state:  “We expect our suppliers not to employ anyone under the legal working age nor to condone physical or other unlawful abuse or harassment, or the use of forced or other compulsory labor in any of their operations.”²⁷³  These guiding principles also provide:

At a minimum, suppliers to The Coca-Cola Company and suppliers authorized by The Coca-Cola Company will be required to meet the following standards with respect to their operations as a whole:

. . . .

Child Labor.   Supplier will not use child labor as defined by local law.²⁷⁴

Coca-Cola’s guiding principles apply only to its direct suppliers,²⁷⁵ who must not “employ” or “use” child labor.  The guiding principles do not address the possibility that Coca-Cola may use ingredients that are in part the product of human rights abuses further back in the supply chain. In particular, they do not address its suppliers’ responsibility to ensure that their own suppliers do not use hazardous child labor.

This omission is significant because it means that a supplier such as Central Izalco can comply with Coca-Cola’s guiding principles even though it is aware or should be aware that it benefits indirectly from hazardous child labor.  It also means that Coca-Cola can itself turn a blind eye to evidence of human rights abuses in its supply chain as long as its direct suppliers do not themselves use child labor.  In this case, we found no evidence that Central Izalco employs children at its refining plant, but as the previous section documents, we were able to confirm that at least four of Central Izalco’s supplier plantations routinely use child labor.  When Human Rights Watch brought this information to Coca-Cola’s attention, Coca-Cola asked Central Izalco’s parent company to conduct its own investigation into the use of child labor on plantations that supply the mill.²⁷⁶  Coca-Cola’s written response to the information provided by Human Rights Watch did not deny the likelihood that children harvested the raw sugarcane used in producing the refined sugar that went into its beverages bottled in El Salvador.  Instead, Coca-Cola’s extensive response addressed only its direct suppliers:  “Our review has revealed that none of the four cooperatives identified in the letter supplied any products directly to The Coca-Cola Company, and neither TCCC [The Coca-Cola Company] nor the Salvadoran bottler have any commercial contracts with these farm cooperatives,” Coca-Cola’s director of public affairs wrote to Human Rights Watch.²⁷⁷

In its response, Coca-Cola also objected to our statement that El Salvador’s sugar mills and the businesses that purchase refined sugar for use in their products, Coca-Cola among them, indirectly receive the benefit of hazardous work by children.  It stated:

[I]n response to the serious allegations in your letter that the Company “may have benefitted” from the alleged behavior, we reiterate that The Coca-Cola Company does not condone child labor in El Salvador or anywhere else.  We reconfirm that the information from HRW visits in El Salvador as well as our own review, show that no child labor is used either in the mill, or in the refinery plant of the entity CASSA [Compañía Azucarera Salvadoreña], which is an authorized supplier and subject to TCCC’s supplier guiding principles program.  As acknowledged by HRW in your April 7th letter, HRW is aware of the Company’s requirements through this supplier program prohibiting such behavior by direct suppliers.

Moreover, there is no economic basis upon which it may be asserted that the TCCC or the Salvadoran bottler benefits from, condones or encourages child labor in El Salvador.  The bottler in El Salvador purchases locally-harvested sugar produced by an authorized refiner from a large distributor.  As we have confirmed and HRW has acknowledged, the minimum wage of every worker in the agricultural sector in El Salvador, including the sugarcane harvest, is set by the government.  Thus, there would be no economic benefit to a purchaser of sugar (cane or refined) from the use of child labor.²⁷⁸

But the existence of an economic or other motive is irrelevant to the inquiry of whether Coca-Cola indirectly receives the benefit of child labor.  Our research establishes—and Coca-Cola does not contradict these findings—that the sugar refined by the mills and purchased or used by other businesses, including Coca-Cola, is in part the product of child labor.  In Coca-Cola’s case, child labor helped produce a key ingredient in its beverages bottled in El Salvador.  In that sense, Coca-Cola indirectly benefits from child labor.

The Responsibility of Multinational Corporations

States have the primary responsibility to promote and protect human rights, “including ensuring that transnational corporations and other business enterprises respect human rights.”²⁷⁹  But there is an emerging international consensus that corporations have a duty to promote and secure human rights, as reflected in the U.N. Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights (the U.N. Norms), the U.N. Global Compact, and the Organisation for Economic Development and Co-operation’s Guidelines for Multinational Enterprises.²⁸⁰

The U.N. Global Compact calls upon businesses to uphold “the effective abolition of child labour.”²⁸¹  Similarly, the Guidelines for Multinational Enterprises of the Organisation on Economic Co-operation and Development (OECD Guidelines) calls on enterprises to “[c]ontribute to the effective abolition of child labour,” among other standards.²⁸²  The comments to the OECD Guidelines note, “Through their management practices, their creation of high quality, well paid jobs and their contribution to economic growth, multinational enterprises can play a positive role in helping to address the root causes of poverty in general and child labour in particular.”²⁸³

The responsibility of multinational corporations extends beyond direct violations of child labor protections and other human rights.  It includes “the responsibility to use due diligence in ensuring that their activities do not contribute directly or indirectly to human rights abuses, and that they do not directly or indirectly benefit from abuses of which they were aware or ought to have been aware,”²⁸⁴ as the Commentary on the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights (the Commentary on the U.N. Norms) notes.

In particular, there is an emerging consensus, as shown by various corporate codes of conduct and instruments such as the OECD Guidelines and the U.N. Norms, that corporations have a responsibility to take meaningful steps to ensure that human rights are respected not only in the facilities they own directly but also throughout their supply chains.  For example, the OECD Guidelines state that enterprises should “[e]ncourage, where practicable, business partners, including suppliers and sub-contractors, to apply principles of corporate conduct compatible with the Guidelines.”²⁸⁵  The U.N. Norms call upon “[e]ach transnational corporation or other business enterprise” to “apply and incorporate these Norms in their contracts or other arrangements and dealings with contractors, subcontractors, suppliers, licensees, distributors, or natural or other legal persons that enter into any agreement with the transnational corporation or business enterprise in order to ensure respect for and implementation of the Norms.”²⁸⁶  The Commentary on the U.N. Norms explains that the norm calls on “[t]ransnational corporations and other business enterprises [to] ensure that they only do business with (including purchasing from and selling to) contractors, subcontractors, suppliers, licensees, distributors, and natural or other legal persons that follow these or substantially similar Norms.”²⁸⁷

Both Central Izalco and Coca-Cola know or should know of the use of hazardous child labor by the plantations that supply the raw sugar that is refined by Central Izalco and ultimately used in Coca-Cola products.  Central Izalco, which supplies technical assistance to all of its supplier plantations, is particularly well placed to know about the use of child labor by those plantations.  Under the norms set forth above, both companies have a responsibility to use due diligence to ensure respect for human rights, including the prohibition on the worst forms of child labor, throughout their supply chains.  In this case, neither has.  Central Izalco and Coca-Cola should adopt effective monitoring systems to verify that labor conditions on their supplier plantations comply with international standards and relevant national labor laws.  In cases where plantations fall short of such standards, Central Izalco and Coca-Cola should provide the economic and technical assistance necessary to bring plantations into compliance.  In particular, Central Izalco and Coca-Cola should support programs and services that offer children and their families alternatives to child labor.  The status of such efforts should be reported publicly at least on an annual basis.

Coca-Cola should also revise its guiding principles to reflect the U.N. Norms and the other standards set forth above.  In particular, it should incorporate the U.N. Norms in its contractual arrangements with suppliers and should require its suppliers to do the same throughout their supply chains.  Similarly, other multinational companies that receive sugar from El Salvador should review their policies, procedures, and contractors in El Salvador to ensure that they are in compliance with these standards.