Nucor is the largest buyer of Brazilian pig iron, a key ingredient in the manufacture of steel. In a 2006 cover story, Bloomberg Markets magazine opened a window into the small camps that produce the charcoal used to make pig iron, exposing a world of slavery, inhuman working conditions and illegal deforestation.
The Brazilian pig-iron industry is not the worst offender and many — perhaps most — manufacturers do not use slaves. In addition, the problem suppliers are generally unknown to Nucor, lying several tiers down their supply chain. But Nucor’s general counsel set the right tone when he said, “Any amount [of pig iron] that is sold with the use of slave labor is too much.” Nucor announced it would monitor the government’s “dirty list” of employers found to use slaves, and require its direct suppliers to certify that slaves were not used.
For three years, Domini worked to keep this issue in front of Nucor management, pressing the company for a more comprehensive and transparent system. In response, Nucor adopted a policy prohibiting forced labor in its supply chain, and published details for the first time about its response to slavery. Domini continued to believe that this system could be strengthened, however, and evidently other investors agreed — their shareholder proposal last year received a 27% vote.
In 2010, Domini and Nucor entered into a written agreement in exchange for the withdrawal of the shareholder proposal. Nucor will require its top-tier Brazilian pig-iron suppliers to either join the Citizens Charcoal Institute (ICC), or sign and adhere to the National Pact for the Eradication of Slave Labor.
The ICC is an association of Brazilian companies formed to combat slavery in their supply chains. Each ICC member has agreed to subject its entire supply chain to monitoring to ensure legal and decent working conditions. Nucor has agreed to become a financial patron of ICC, and ICC has agreed to open itself to new members for the first time. Hopefully, this will help to bring the project to scale.
Suppliers that do not choose to become ICC members will be required to sign and adhere to the National Pact for the Eradication of Slave Labor, a multi-stakeholder effort involving the International Labor Organization and several Brazilian organizations representing civil society and business, including Reporter Brasil, a local human rights group with whom Domini has been in close contact. Signatories agree not to purchase from suppliers on the government “dirty list,” and to allow independent monitoring of that commitment.
Nucor has agreed to publish annual progress reports on implementation of these policies. Domini is hopeful that the agreement will produce real change in Brazil and commends Nucor for listening to, and addressing, those concerns. Nucor’s new policies set an example we hope others will follow.
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