One of the largest retailers in the US. It banned the use of all forms of prison labor in its supply chain in 2018 but continues to sell products made using such labor.
Costco Wholesale Corporation owns and operates hundreds of retail warehouses and gas stations in the U.S. and 13 other countries. The company also owns the Kirkland Signature brand and operates multiple processing, packaging, and manufacturing facilities. In 2013, it employed 316,000 people and generated over $237 billion in revenue.
As a result of shareholder engagement led 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. As of December 2023, Costco explicitly prohibits suppliers from using "prison or convict labor," including labor performed by those in work release or "rehabilitation" programs.
As of 2024, however, the company sells eggs produced by Hickman's Family Farms, a private, Arizona-based egg company that has used prison labor for decades. During the height of the COVID-19 pandemic, some 140 individuals in Arizona were moved from their prison to a Hickman's warehouse, where they worked for less than $3 an hour for 14 months. Hickman's has faced numerous lawsuits alleging that unsafe working conditions at its production facilities have led to incarcerated workers sustaining serious injuries.
In 2017, Costco began surveying its suppliers on their use of prison labor, citing "changes in U.S. law and 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 a stipulation that incarcerated workers be paid the same wage as non-incarcerated persons and that the work be completely voluntary, with incarcerated workers consenting to the compensation and conditions offered. Costco also became the first major corporation to commit to publicly reporting on prison labor in its supply chain.
In its first such report published in 2019, Costco revealed that its 2017 investigation found 11 facilities in its supply chain with prison labor programs, 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 could not confirm whether all of its suppliers were in compliance with its policies. However, the company stated that because of the steps it took regarding prison labor, the risk of significant noncompliance with its prison labor policy was "extremely low."
Costco reversed its stance a year later, announcing that it would transition away from its use of prison labor altogether. In its 2020 report, the company admitted that it could not verify compliance with its prison labor standards, namely whether wages were fair and that the work was truly voluntary. Costco stated that it could not reliably monitor prison 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 sourced from these facilities had committed to stop sourcing from prison labor programs by the end of 2022. Costco has not issued a public report about this issue since then.