Costco Wholesale Corp

Stock Symbols
NASDAQ
:
COST
company headquarters
USA
ISSUES

One of the largest retailers in the US. Has prison labor in its supply chain.

Costco Wholesale Corporation is a U.S.-based company that operates hundreds of retail warehouses in twelve countries. These warehouses sell products in bulk, including food, household products, and gas, and require a paid membership to access. Costco operates various fulfillment, processing, packaging, and manufacturing facilities in addition to owning the Kirkland Signature brand. Costco’s revenue in 2019 was $152 billion, and it has 254,000 employees and 98.5 million membership holders.

Costco continuously and knowingly relies on prison labor. As of 2019, the company reported that nine facilities in its supply chain use prison labor, all of which are in the agricultural sector and most are in the U.S. Costco started surveying its suppliers and reporting on prison labor in 2017, citing its motivation as “changes in U.S. law and an awareness of greater concerns among some U.S. consumers.” However, allegations of prison labor in the company’s supply chain date back to the mid-1990s.

As a result of continuous shareholder engagement, in 2018 Costco released a new policy that established minimum standards for suppliers using prison labor. A year later, it became the first U.S. corporation to commit to annual public reporting on prison labor in its supply chain. According to Costco’s 2019 report, nine facilities in its supply chain still use prison labor, after the company stopped sourcing from two of the facilities it found in its 2017 investigation because they did not comply with its new prison labor policy. The company noted that it was taking corrective action to increase wages at one facility. However, Costco also admitted that it could not “confirm on an ongoing basis that all suppliers are in compliance” with its policies.

Aside from prison labor in the U.S., Costco has also been implicated in cases of forced labor abroad. For example, in 2019, the company was found to have sourced pajamas from Chinese manufacturer Hetian Taida Apparel, which uses forced labor of ethnic minorities, mainly Uigher Muslims, in Chinese internment camps. Costco started importing this supplier’s apparel in September 2019, despite the fact that information about its use of forced labor surfaced back in December 2018. In a different case, it was revealed in 2015 that Costco was knowingly importing frozen prawns that involved the human trafficking and forced labor of people in Thailand.

This profile was last updated on
9 September 2020