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Business trends

Human rights in Southeast Asia suppliers become priority in Japan

Ajinomoto and ANA work with NGOs to identify ethics issues of business partners

A worker at a palm oil plantation in Malaysia: Japanese companies are stepping up their scrutiny of human rights abuses at overseas and domestic contractors.   © Getty Images

TOKYO -- Japanese companies are paying more attention to human rights abuses in their supply chains, spurred in part by the United Nations and other international organizations.

Food maker Ajinomoto is one of them. Since it is difficult to collect information on how workers are treated at its overseas suppliers -- many in developing countries -- the company has turned to nongovernmental organizations for help.

As they heed appeals from the UN and the Organization for Economic Cooperation and Development to implement sustainable corporate practices, Ajinomoto and others are realizing that good ethics are good for business. This is especially true when trying to attract consumers of Generation Z -- people born in the mid-1990s and the first decade of the 2000s. This generation is coming of age and is more sensitive about corporate ethics than former generations.

Companies in Japan still lag their Western counterparts in terms of environmentally and socially conscious behavior. A study by Nikkei in August that ranked large companies in terms of return on equity and environmental, social and governance scores revealed no Japanese within the top 50 spots.

Ajinomoto recognizes the problem and has established human rights guidelines for not only its own operations, but for those of its business partners as well. To ensure compliance, it conducts due diligence on multiple levels.

The company starts by identifying locales at risk for human rights abuses. In Thailand, for example, it worked with NGOs and a local industry group to investigate working conditions of immigrants from Cambodia and Myanmar at a chicken processing plant with which it partners. It discovered that the plant was using an online service provided by an NGO that allowed immigrant workers to seek advice on living in Thailand.

Inspired by this, Ajinomoto is now exploring ways to monitor compliance elsewhere in its supply chains. "We're going to use what we've learned from this to introduce a system to collect opinions directly from workers," a company spokesperson said.

Fuji Oil Holdings, Japan's leading oils and fats maker, is already doing this. The company, which sources palm oil mainly from Southeast Asia, has a division at its Osaka headquarters dedicated to fielding complaints from workers at overseas suppliers.

The company could not rely on its partners to provide information on actual working conditions, so it asked workers -- as well as NGOs -- to communicate any complaints directly to headquarters via email, phone or regular mail.

ANA Holdings has also become more human rights focused, stepping up scrutiny of its in-flight catering providers. It has teamed up with Bluenumber Foundation, a U.S. nonprofit organization, for assistance in tracking producers, individuals and other entities connected directly or indirectly with its catering services.

ANA also interviewed employees involved in other overseas operations, including personnel at outsourced cleaning and cargo transport services, to find out about their working conditions.

These newfound concerns over ethics are rooted in the bottom line. If human rights or other ethics issues are not speedily addressed, a company could overnight wake up to a storm of criticism on social media leading to boycotts.

In 2017, a fashion brand in Japan faced boycotts after reports surfaced that Chinese employees at a subcontractor's sewing plants were working under illegal conditions. Ironically, the staff were in the country as part of the government's Technical Intern Training Program, which is rife with labor abuses.

Concerned attorneys and Global Compact Network Japan, which promotes the UN's sustainable development goals in the country, unveiled a draft manual with instructions on how businesses can gather human rights-related information inside and outside the company and resolve issues.

"It's difficult to completely eliminate risks, but if businesses are equipped with a structure to resolve them at an early stage, it can boost corporate value," attorney Daisuke Takahashi said.

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