One of the largest retailers in the US. The company is actively working to eliminate prison labor from its supply chain.
Costco Wholesale Corporation owns and operates hundreds of retail warehouses in 12 countries. Beyond its storefronts, the company owns the Kirkland Signature brand and operates multiple processing, packaging, and manufacturing facilities.
As a result of shareholder engagement by NorthStar Asset Management, Costco is one of few major U.S. companies to seriously address the issue of prison labor in its supply chain. While it still formally allows the use of legal prison labor, Costco engaged its suppliers that have sourced goods from prison labor programs and reported that they have all committed to stop doing so by the end of 2022. As of March 2023, Costco has yet to publicly confirm if that process was complete.
Allegations of prison labor in Costco's supply chain date back to the mid-1990s. The company started surveying its suppliers on their use of prison labor in 2017, citing "changes in U.S. law and an awareness of greater concerns among some U.S. consumers." The following year, it released a new global policy on prison labor, which established minimum standards, including that wages for work in prison must be comparable to similar work outside of prison and that the work be completely voluntary, with workers freely consenting to the wages and working conditions. Costco also became the first major U.S. corporation to commit to public reporting on prison labor in its supply chain.
In its first such report, in 2019, Costco revealed that its 2017 investigation found 11 facilities in its supply chain with a prison labor program, all in the agricultural sector, and most within the U.S. The company found nine of them to be compliant with its policy, and dropped the other two from its supply chain. Costco noted that it cannot confirm that all of its suppliers are in compliance with all of its policies. However, the company stated that, because of steps it took regarding prison labor, the risk of significant noncompliance with its prison labor policy was "extremely low."
The company reversed its stance a year later, announcing that it would transition away from its use of prison labor altogether. In its 2020 report, Costco admitted that it could not verify compliance with its prison labor standards, specifically that wages are fair and that the work is truly voluntary. Costco stated that it could not reliably monitor labor conditions because of "the reduced transparency of prison systems in general."
In 2022, Costco reported that prison labor was used by 14 facilities in its supply chain and that all of its suppliers that source from these facilities have committed to stop sourcing from prison labor programs by the end of 2022. Costco has yet to publicly confirm if that process was complete.
Separately, Costco has also been implicated in cases of forced labor outside of the U.S. In 2019, for example, the company was found to have sourced pajamas from a manufacturer that uses forced labor of Uyghur Muslims in Chinese internment camps. It was revealed in 2015 that, in a separate case, Costco knew of forced labor and human trafficking in its prawn supply chain in Thailand.