In July 2021, Ethical Consumer viewed Rakuten Kobo’s website for information on how the company managed workers' rights in its supply chain. A ‘Human Rights Policy’ document was found and a web page titled Human Rights.
Supply chain policy (Poor)
A strong policy would include the following commitments: no use of forced labour, permission of freedom of association, payment of a living wage, the restriction of working hours to 48 hours plus 12 overtime (without exception), no use of a child labour (under 15 or 14 if ILO exempt), no discrimination by race, sex or for any other reason.
Rakuten Kobo stated that it did not use child labour in its business operations and had a zero tolerance for use of child labour by any third party. The company referred to children under 16 years of age but stated "or the applicable minimum legal age, whicever is higher" so was considered to have an adequate policy.
Regarding forced labour, the company stated that it had a zero tolerance policy for use of forced labour by any third party that engages in business relations with the Rakuten Group.
The company had an adequate non-discrimination policy.
Regarding wages, the company stated that it strived to meet wage levels that satisfy basic needs of employees but did not mention a living wage.
Regarding working hours, the company failed to provide any policies which limited the working week to 48 hours and 12 hours overtime. It also did not mention any policy related to freedom of expression.
Overall, the company received a poor score for its supply chain policy.
Stakeholder engagement (poor)
Ethical Consumer deemed it necessary for companies to demonstrate stakeholder engagement, such as through membership of the Ethical Trade Initiative, Fair Labour Association or Social Accountability International. Companies were also expected to engage with Trade Unions, NGOs and/or not-for-profit organisations which could systematically verify the company's labour standards, and for workers to have access to an anonymous complaints system, free of charge and in their own language.
Although Rakuten Kobo did state that it was committed to promoting human rights through active multi-stakeholder engagement it did not provide adequate detail or policies on this.
The company stated that it had “confidential whistleblowing mechanisms” in place which relate to violations of human rights policy regulations. On its Human Rights webpage the company stated that there was a Supplier Hotline available for reporting violations but this appeared to be for suppliers of Rakuten Mobile only.
The company did not appear to have any systematic engagement around labour standards wiith Trade Unions, NGOs and/or non-for-profit organisations.
As Rakuten Kobo did not have an adequate policy on stakeholder engagement, it received a poor rating.
Auditing and Reporting (poor)
Ethical Consumer deemed it necessary for companies to have an auditing and reporting system. Results of audits should be publicly reported and quantitatively analysed. The company should have a scheduled and transparent audit plan that applies to their whole supply chain, including some second tier suppliers. The company should also have a staged policy for non-compliance. The costs of the audit should be borne by the company.
On its Human Rights webpage, Rakuten Kobo did state that it conducted human rights assessments in its supply chain, referring to its tier 1 suppliers. However, it did not provide sufficient details around this.
Due to its lack of policies related to auditing and reporting, Rakuten Kobo received a poor rating.
Difficult issues (poor)
Ethical Consumer also deemed it necessary for companies to address other difficult issues in their supply chains. This would include ongoing training for agents, or rewards for suppliers meeting labour standards, or preference for long term suppliers. It would also include acknowledgement of audit fraud and unannounced audits, and measures taken to address the issue of living wages, particularly among outworkers, and illegal freedom of association.
As Rakuten Kobo had none of these things, it received a poor rating for its approach to difficult issues.
The company did not have adequate publicly available information on any of the above, therefore it received Ethical Consumer's worst rating for Supply Chain Management and lost a whole mark in this category.
Human Rights Policy document Rakuten Kobo Inc (10 August 2021)