Illegal activity across global supply chains can violate human rights, harm the environment, disrupt businesses, and destabilize governments. No ecosystem, country, person, or product is immune.
WWF research suggests between 5% and 50% of globally traded food commodities, such as shrimp, beef, palm oil, and others, may be produced illegally, with financial costs ranging from $40 billion to $600 billion per year. Including non-food commodities like cotton and timber would increase those figures even more. This poses huge risks for the safety of people, the health of our planet, governments, companies, and others.
WWF is dedicated to engaging stakeholders to work collaboratively toward understanding and solving this critical issue. Through collaboration, research, and planning, we can eventually eliminate the social, environmental, and economic risks of illegality.
What is Illegality?
From a conservation standpoint, the same illegal practices that cause human rights abuses, business losses, and destabilized governments are also linked to deforestation, biodiversity loss, resource degradation and depletion, diminished water quality, and overfishing. And it occurs in every part of the supply chain.
WWF is focused on five categories of illegality:
- Resource rights – Producers not having the right to harvest, catch or produce in vulnerable areas.
- Labor rights – Producers using forced or child labor or otherwise violating employees’ rights.
- Fraud – Purposely altering, diluting, substituting, tampering, or misrepresenting products at any point in the supply chain.
- Corruption – Producers bribing or otherwise subverting the system to avoid enforcement against illegal products or trade flows.
- General noncompliance – Producers not meeting other legal requirements on operations and product quality, e.g. failure to comply with Brazil’s Forest Code or riparian area legislation, using illegal inputs or chemicals, transshipping to a prohibited country, not paying taxes, etc.
Scale of Illegality
Illegality in production is found in most globally traded commodities. The following examples give an idea of the scale of the problem:
- Estimates of the extent of illegal, unreported and unregulated (IUU) seafood by country/region reveal that 13%-31% of reported catches worldwide are IUU, and over 50% in some regions. This IUU catch is valued at between $10 billion and $23.5 billion per year.
- Eighty percent of all palm oil concessions in Indonesia are illegal.
- Almost half (49%) of total tropical deforestation between 2000 and 2012 was due to illegal conversion for commercial agriculture.
- Nearly half (49%) of all agricultural commodity products produced on illegally deforested lands were destined for export markets.
- In April 2012, The Guangdong Sugar Association estimated that illegal sugar smuggled into China totaled about 500,000 tons in the first quarter of the year.
- More than 70% of all hired US farm workers are foreign-born, mostly from Mexico, and about half are undocumented.
What WWF is Doing
To help companies make more informed choices and influence their supply chains and peers, we are working to:
(1) Clarify expectations from governments and NGO partners,
(2) Provide access to expertise and shared knowledge in building tools, and
(3) Level the playing field through transparent identification of choices companies are making.
We combine the best insight in traditional corporate functions of law, compliance, finance, procurement, employment, sales, and more, with scientific research to drive action in:
Policy and enforcement under US laws – Legislatures, regulators and enforcement personnel need knowledge of the issues, how they manifest in industry, how to provide clarity to industry and how to identify good and bad actors, including through protection of whistleblowers.
Policy and enforcement under international law – Work with other nations needs to happen directly just as with the US government, and international treaty negotiators and bodies like the UN need the expertise too.
Direct company engagement – Companies need to cover their own operations and supply chains (including multiple levels of production) to implement:
- Tools and capacity building
- Oversight/ongoing due diligence (nature to depend on substance of law – e.g., appropriate labor (worker voice, responsible recruitment, audits), extraction rights within permissible limits, corruption vetting, compliance with laws on fraud, consumer safety, etc.)
- Transparent evaluation
- Remediation – e.g. rescue/compensate workers, rebuilding environments
Engagement in industry platforms – When solutions require multiple levels of supply chain cooperation or need industry aligned to compel standards.
Collaboration with and learning from NGOs – Educating industry on issues, bringing credible independent evaluation to operations, also sharing learning on what is most productive for industry.
Private rights of action – Monitoring trends in plaintiffs challenging companies to disclose more about risks of illegality in supply chains, compliance with certifications or to prove effectiveness of codes.
Want to learn more or discuss?