The Washington Post - USA (2020-12-02)

A16 EZ RE THE WASHINGTON POST.WEDNESDAY, DECEMBER 2 , 2020

Economy & Business

RETAIL

Sephora to take over

cosmetics at Kohl’s

Sephora will be replacing all
cosmetics areas at Kohl’s with
2,500-square-foot shops, starting
with 200 locations next fall.
It will expand to at least 850
stores by 2023, the companies
announced Tuesday.
Wall Street liked the idea,
sending shares of Kohl’s up
15 percent Tuesday to levels not
seen since the coronavirus began
to spread in the United States
early this year.
Sephora’s online beauty
experience will launch on
Kohls.com next fall. The deal
upends Sephora’s 14-year
exclusive relationship with J.C.
Penney, which filed for Chapter
11 bankruptcy protection in May.
The partnership will help
Kohl’s reach its goal of tripling
cosmetics and beauty sales, said
CEO Michelle Gass.
Gass said that both companies
will share in the operating profit
of the shops.
— Associated Press

ECONOMY

Oct.: Factories slowed,

home building rose

American factories grew at a

slower pace last month, and

there are concerns that surging

coronavirus infections will

endanger an economic recovery.

The Institute of Supply

Management, an association of

purchasing managers, reported

Tuesday that its manufacturing

index dipped to 57.5 in

November from 59.3 in October.

Any reading above 50 signals

that manufacturing is

expanding.

Meanwhile U.S. construction

spending jumped 1.3 percent in

October, again on the strength of

single-family home building.

The October gain follows a

downward revision in September

to a 0.5 percent decline from a

previous estimate of a

0.3 percent gain, the Commerce

Department reported Tuesday.

Single-family home

construction rose 5.6 percent in

October, helping to boost a

2.9 percent increase in total

private residential construction

for the month.

— Associated Press

HEALTH CARE

UnitedHealth ties its

forecast to pandemic

UnitedHealth has debuted a

lower-than-expected 2021

earnings forecast partly due to

the unknown extent of covid-19’s

impact on the health-care

system.

The nation’s largest health

insurance provider said Tuesday

that it expects to take a hit in the

new year from treatment and

testing costs tied to the

pandemic. It believes it may see

more claims for things such as

elective surgeries that people

deferred this year as the

pandemic spread.

The company also cited a

potential impact from rising

unemployment, which can

reduce employer-sponsored

health insurance enrollment.

The company said it expects

adjusted earnings to range from

$17.75 to $18.25 per share on

revenue of between $277 billion

and $280 billion.

— Associated Press

ALSO IN BUSINESS

Airbnb hopes to raise as

much as $2.6 billion in its initial

public stock offering this month,

betting investors will see its

home-sharing model as the

future of travel. In a government

filing Tuesday, the San Francisco

company said it expects to offer

51.9 million common shares

priced between $44 and $

each. The company is expected to

list its shares on the Nasdaq

stock exchange on Dec. 10. At the

midpoint of its proposed range,

Airbnb would command a

market value of $32.3 billion,

according to Renaissance

Capital, which tracks IPOs.

Walt Disney Co. named a new

executive to oversee

programming at ABC and

eliminated one of its three TV

studios as part of a push to

streamline and focus on online

video. Craig Erwich, who has

headed original productions at

Hulu, will also be given the title

of president of entertainment at

ABC, Disney said on Tuesday. In

his six years at Hulu, Erwich

helped create hits such as “The

Handmaid’s Tale” and “Little

Fires Everywhere.” The company

will now operate two TV studios,

20th Television and ABC

Signature. Touchstone, a unit

previously called Fox 21 that it

acquired last year, will be

disbanded.

From news reports

DIGEST

BY PETER WHORISKEY

The Supreme Court heard ar-
guments Tuesday about whether
U.S. chocolate companies should
be held responsible for child slav-
ery on the African farms from
which they buy most of their co-
coa.
Six African men are seeking
damages from Nestlé USA and
Cargill, alleging that as children
they were trafficked out of Mali,
forced to work long hours on Ivory
Coast cocoa farms and kept at
night in locked shacks.
Their attorneys argue that the
companies should have better
monitored their cocoa suppliers
in West Africa, where about two-
thirds of the world’s cocoa is
grown and child labor is wide-
spread.
These “are former child slaves
seeking compensation from two
U.S. corporations which maintain
a system of child slavery and
forced labor in their Ivory Coast
supply chain as a matter of corpo-
rate policy to gain a competitive
advantage in the U.S. market,” the
Malians’ attorney, Paul L. Hoff-
man, told the court. He asked the
justices to “allow these former
child slaves to have their day in
court.”
Nestlé USA and Cargill have
responded that they, too, deplore
child slavery and trafficking, and
that they have taken steps to erad-
icate such practices among their
suppliers.
Nestlé USA “firmly believes
that traffickers deserve punish-
ment,” the company said in court
filings. “This case is not about any
of that.”
The companies have asked the
Supreme Court to toss the lawsuit,
arguing that courts in the United
States are the wrong forum for the
Malians’ complaint and that the
applicable law permits such cases
against individuals but not corpo-
rations. In the view of the compa-
nies, such cases ought to be filed
not against the corporations but
against the traffickers and farm-
ers involved.
“This case is about a 15-year-old
lawsuit brought against the
wrong defendant, in the wrong
place, and under the wrong stat-
ute,” according to the brief on
behalf of Nestlé USA filed by Neal
K. Katyal and other attorneys.
“The true wrongdoers are the Ma-
lian and Ivorian traffickers, farm-
ers, and overseers.”
On Tuesday, both sides faced
skepticism from the justices.
“Mr. Katyal, many of your argu-
ments lead to results that are pret-
ty hard to take,” Justice Samuel A.
Alito Jr. said.
Suppose, Alito continued, a U.S.
corporation surreptitiously hired
agents in Africa to kidnap chil-
dren to enslave them on a planta-
tion so that the corporation can
buy cheap cocoa or coffee.
“You would say that the victims

... should be thrown out of court
in the United States, where this
corporation is headquartered and
does business?” Alito asked.
Katyal answered, among other
things, that the victims could sue
in African courts or that Congress
could pass a law specific to such
abuses.
Probing the arguments of the
other side, however, the justices
zeroed in on whether the compa-
nies’ practices really amounted to
“aiding and abetting” child slav-
ery. Is simply buying cocoa from
these farms enough?
“What counts as aiding and
abetting for purposes of this stat-

ute?” Justice Stephen G. Breyer

asked Hoffman. “When I read

through your complaint, it

seemed to me that all or virtually

all of your complaint amounts to

doing business with these people.

They help pay for the farm. And

that’s about it.”

Hoffman answered that the

companies had “crossed the line”

from merely buying cocoa to facil-

itating the system.

The proliferation of global sup-

ply chains in recent decades has

led to recurring debates over the

responsibility of multinational

companies to monitor the adher-

ence of their far-flung suppliers to

human rights and environmental

standards.

Business groups, including the

U.S. Chamber of Commerce and

the National Association of Manu-

facturers, have pushed back

against lawsuits such as the one

against Nestlé and Cargill, argu-

ing they are burdensome and

could discourage investment in

developing economies. U.S. and

foreign companies have been sued

150 times over the past 25 years

under a statute that permits for-

eign nationals to sue in the United

States for international law viola-

tions, the business groups said.

Allowing the cases imposes

“heavy legal and reputational bur-

dens on companies that are sued

on the basis that they conducted

business with foreign actors ac-

cused of committing torts

abroad,” their attorneys argued.

There is plenty of evidence,

however, that the world’s choco-

late supply depends heavily on

child labor and that despite two

decades of industry promises, it

remains widespread. While much

of it occurs on family farms, some

is also arranged by traffickers who

ferry in children from neighbor-

ing Mali and Burkina Faso. To

human rights advocates, the per-

sistence of child labor in the

world’s cocoa supply amounts to,

at best, tragic negligence.

A Washington Post investiga-

tion of the use of child labor in the

cocoa industry found representa-

tives of some of the biggest and

best-known brands could not

guarantee that any of their choco-

late was produced without child

labor. It featured children from

Burkina Faso working in appall-

ing conditions on Ivory Coast co-

coa farms.

More recently, a report spon-

sored by the U.S. Department of

Labor indicated that the West Af-

rican cocoa industry was exploit-

ing the aid of 1.6 million West

African child laborers. Most of

those laborers were involved in

tasks considered hazardous such

as wielding machetes, carrying

heavy loads or working with pesti-

cides, according to the report.

What makes the legal cases

against the companies particular-

ly complex is the difficulties inves-

tigators face in connecting any

child laborer with a specific com-

pany. But human rights advocates

say the companies should be held

responsible because child labor

arises in part because they refuse

to pay enough for cocoa and have

yet to fully institute systems for

tracing cocoa beans to specific

farms.

“The business practices of

these companies clearly have con-

tributed to the use of forced and

child labor in West Africa,” said

Charity Ryerson, an attorney for

the Corporate Accountability Lab

who has traveled to Africa to in-

vestigate cocoa practices.

She noted that some smaller

chocolate companies such as

Tony’s Chocolonely pay higher

prices and take extra care to elimi-

nate child labor from their cocoa

suppliers. Those added costs can

make it difficult for the producers

of “ethical chocolate” to compete

against the companies using co-

coa produced with child labor, she

said.

“As slave-free cocoa and choco-

late companies, [we] are at a com-

petitive disadvantage to compa-

nies that source cheap cocoa pro-

High court weighs child-slavery case

At its heart is whether U.S. chocolate companies should be held responsible for violations by suppliers

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$1= 104.33 Y EN, 0.83 EUROS

duced with forced child labor,”

some of the companies said in a

legal filing. “The higher produc-

tion costs associated with compli-

ance with international human

rights norms require [us] to sell

... chocolate at higher prices.”
Indeed, cocoa prices are critical
to the debate. As the Supreme
Court considers the case, a cocoa
price war appears to be breaking
out between the multinational
companies and the governments
of Ivory Coast and Ghana, which
regulate cocoa exports.
The West African governments
have added a $400 cost per ton in
an attempt to give farmers what
they call a “ living income,” a move
that has been met with some re-
luctance from the chocolate com-
panies.
“Unfortunately, industry steps
to lower the price are going in
precisely the wrong direction,”
said Antonie Fountain, managing
director of the Voice Network, a
group that pushes for environ-
mental and human rights reform
in the cocoa industry. “Prices need
to go up, not down.”
The Voice Network issued an
annual report on the industry on
Tuesday, citing the lack of prog-
ress despite promises by the com-
panies to eradicate child labor.
“Twenty years into rhetoric, the
challenges on the ground remain
as large as ever,” it said. “Poverty is
still the daily reality for virtually
all West African cocoa farmer
families, child labour remains
rife, and old growth forests con-
tinue to be cleared to make way for
cocoa production.”
[email protected]

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business

PHOTOS BY SALWAN GEORGES/THE WASHINGTON POST

Children rest on a cocoa farm near Niambly, Ivory Coast. Despite pledges from the chocolate industry to end child labor, it remains widespread on many such farms in Africa.

A worker cuts open a cocoa pod in Ivory Coast. Six men are seeking

damages from Nestlé USA and Cargill, alleging they were trafficked

from Mali as children and forced to toil on Ivory Coast cocoa farms.

GEORGES GOBET/AGENCE FRANCE-PRESSE/GETTY IMAGES

A connoisseur closes in on a truffle at the first market of the year

on Tuesday in Lalbenque in southwestern France. Because of the

pandemic, p roducers are separated from buyers by metal barriers to

avoid possible exposure to the virus.