Human Rights

As a retailer with 288,000 employees worldwide and a merchandise supply chain spanning the globe, we recognize the impact we can have on human rights. We have adopted policies and procedures around key human rights topics, guided by our Code of Ethics, which are important to all levels of our organization. Our employee-related rights are overseen and managed by senior management for each business unit. Our work in supply chain-related human rights is overseen by the head of Global Sustainability & Compliance, who reports directly to Costco’s CEO.

In general, suppliers are contractually required to follow our Supplier Code of Conduct. That code and our Code of Ethics are routinely highlighted at various events for both employees and suppliers to clearly communicate Costco’s commitments to human rights. Additionally, members of Costco’s buying team who manage a supplier relationship continue to be provided with in-person and online training regarding the importance of the Supplier Code of Conduct and their specific role in supporting it within our supply chains.

OUR EMPLOYEES & COMMUNITIES

At Costco, we believe in the importance of respecting the rights of our workforce and treating our employees with dignity and respect. Most of our employees are hourly employees in warehouses and distribution centers. We believe in promoting from within our employee ranks and want to ensure all employees receive equal and competitive wages and benefits, and have opportunities to grow. We are also invested in attracting and retaining talent, and creating a safe and productive work environment.

Read more about our specific programs and commitments on our Employee page.

We aim to contribute to the health and well-being of the communities where we do business, and where our employees and members live and work. We conduct charitable donations focused on children, education, and health and human services, and provide financial assistance to underrepresented minorities. We also have community investment programs in place to support economic development in communities of color.

More information can be found on our Communities page.

OUR Supply Chain

We recognize the importance of respecting human rights throughout our supply chain and live by our Supplier Code of Conduct in how we approach our business. This Code is global in its scope, and applies to all suppliers and their facilities, as well as to Costco-owned manufacturing facilities. In order to align with international standards, it is derived from the policies, standards, and conventions of the United Nations and the International Labor Organization, as well as other leading independent standards such as the Responsible Business Alliance and Worldwide Responsible Accredited Production (WRAP).

We also have dedicated programs and initiatives, which vary by industry and geography, to support the livelihoods of smallholder farmers, mitigate the risks of child and forced labor, and strengthen our broader sustainability efforts. Examples of these programs can be found in the Merchandising section.

Our Supplier Code of Conduct

The Code was established to protect the human rights and safety of the people who produce, process and/or harvest the products we sell, while recognizing and respecting the cultural and legal differences found worldwide. To this end, Costco:

• Prohibits slave labor, human trafficking, illegal child labor, illegal prison labor, physical and sexual abuse, bribery or attempted bribery, and health and safety conditions posing immediate risk to life and limb
• Expects our suppliers to comply, at a minimum, with the applicable labor and environmental laws and regulations of the country where the merchandise is produced
• Encourages our suppliers to work to achieve “Above and Beyond Goals”
• Currently allows suppliers to use legal prison labor, to support rehabilitation and restitution, under specific conditions, which are outlined in our Global Policy on Prison Labor. We continue to transition away from our limited use as set forth in our 2020 Statement on Prison Labor.

Supply Chain Risk Assessment

Because of the number of suppliers Costco has and their geographic dispersion, it is simply not practical to audit on an ongoing basis to confirm that all suppliers and their supply chains are in compliance with all aspects of our Supplier Code of Conduct. Accordingly, we take a risk-based approach with respect to targeting audits and otherwise seeking to confirm compliance. The approach is based upon several factors, including the prior audit performance and the following risk indices: U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor, U.S. State Department Trafficking in Persons Report, and World Bank World Governance Indicators. We emphasize auditing suppliers of Kirkland Signature^™ merchandise and suppliers whose product or country of origin poses an increased risk.

To support our risk assessment, we partnered with Verisk Maplecroft to analyze our supply chain data with various political, human rights, economic and environmental risk indices. This will help us to direct limited resources to the areas of highest social and environmental risks.

We are beginning to expand the scope of our audits to include on-farm audits for produce and fabric mill audits for Kirkland Signature apparel.

Verification

In FY21, over 4,500 independent third-party audits were conducted. For facilities considered intermediate to high risk, audits are required annually at a minimum, and more frequently if corrective actions to Code violations require onsite verification. These audits are carried out on a partially announced basis, providing the facility with a two-week window of when the audit may take place. This limited amount of advanced notice is to take the facility’s security measures into consideration and to allow the supplier to collect records that are reviewed during the audit. Fully unannounced audits are carried out on occasion, typically in response to tips received by our confidential ethics hotline. All audits include both the workplace where production takes place, as well as any onsite worker housing.

All audits are required to be conducted by a member of the Association of Professional Social Compliance Auditors (APSCA). As an industry association whose members represent a substantial majority of the Social Compliance audit industry, APSCA exists to enhance the professionalism, consistency and credibility of the individuals and organizations performing independent social compliance audits.

• For suppliers that are in full compliance with our Code of Conduct, subsequent audits may be less frequent.
• We recognize there is room for continuous improvement and that some suppliers will need assistance with compliance. For suppliers with audits that reveal the need for improvement, Costco requires Corrective Action Plans, and often re-audits to determine progress. Costco also offers other capacity building services that improve management systems to address the causes of previous violations of the Code, including eLearning video courses (in the local language), which correlate to the violations cited. Ultimately, Costco prefers to work with suppliers and their facilities to correct Code violations rather than apply sanctions that may cause further hardship to workers and their families who depend upon the employment.
• Depending on the severity or lack of remediation of a Code violations, we reserve the right to terminate our relationship or purchase orders with a supplier and their facility and have done so.

COVID-19

We seek to mitigate the impacts of COVID-19 on workers in our supply chains. With regard to worker safety, in FY20 we incorporated a COVID-19 Preparedness Observations Checklist in each of our on-site audits, which continues to date. This has helped educate suppliers on best practices for protecting their workforce and assess suppliers’ alignment with that guidance. Where circumstances have restricted the ability to conduct independent on-site audits, we offer suppliers a self-assessment (including a remote review of documentation) and worker survey. This is to further the safety and security of our suppliers’ workers and that of the auditors.

Employee Engagement

In 2021, Costco continued programs to educate our employees with relevant responsibilities on the importance of our Code of Conduct, through updated virtual training and in-person presentations to review our Code of Conduct requirements.

Confidential Ethics Hotline

We have a global confidential ethics hotline to promote and monitor compliance with our Code of Ethics, our Supplier Code of Conduct, and other legal and ethical policies: www.costco.ethicspoint.com. When we receive inquiries, we investigate appropriately and depending upon the issue, may work with suppliers directly, conduct independent third-party audits, and may terminate our relationship with suppliers if appropriate remedial action is not taken.

Human Trafficking

We recognize that human trafficking is a serious global problem and are taking steps to bring awareness and improvement to the issue. We also understand that sex trafficking (including the commercial exploitation of children), occurs in the hospitality industry and as such work with our Costco Travel suppliers to bring awareness to this issue. We also work with Truckers Against Trafficking to educate our fleet drivers, as well as other trucking service suppliers.

More information can be found in these statements:

Australia Modern Slavery Act Statement
California Transparency in Supply Chain Act Disclosure
UK Modern Slavery Act Statement

Conflict Minerals

In response to human rights abuses in parts of Africa, Costco has adopted a Conflict Minerals Policy Statement. More information can be found in our Form SD and Conflict Minerals Report. In addition to our efforts to address minerals under Section 1502 of the Dodd-Frank Act (tantalum, tin, tungsten and gold), starting in FY21 we added cobalt as a mineral of focus. This is due to reported concerns over social and environmental impacts of cobalt extraction in the Democratic Republic of Congo (DRC). Additionally, beginning in FY22, our compliance program will broaden the conflict areas of concern beyond the DRC and adjoining countries to include all Conflict Affected and High-Risk Areas as defined by the Organisation for Economic Co-operation and Development.

Gold Jewelry Traceability

Since its inception in FY19, Costco has continued a category-specific traceability program with our U.S. gold jewelry suppliers to trace sourcing and further adherence to these sourcing standards: RJC Chain of Custody, RMI or LBMA. We have developed a third-party chain of custody review to support verification of the data identifying supply chain links back to the smelter/refinery level.

Responsible Minerals Initiative

Costco is a member of the Responsible Minerals Initiative (RMI), which is a resource to help companies address responsible sourcing of minerals. We utilize the RMI’s Conflict Minerals Reporting Template and Cobalt Reporting Template to trace the supply chain, and the RMI’s Responsible Minerals Assurance Process and database to monitor smelters and refiners in our supply chain that are likely to supply minerals of 3TG (tantalum, tin, tungsten and gold), and cobalt. Costco also leverages its membership to learn about emerging issues and best practices on responsible mineral sourcing, and to work on addressing shared challenges.

Strategic Collaboration

Costco recognizes that collaboration with multi-stakeholder coalitions is key to addressing many of the issues we face, as social compliance audits alone will not fully address the complex issues in global supply chains. Therefore, we have joined multiple efforts to help improve the working conditions of people within our supply chains. Some examples include:

Seafood

We helped organize and are an active member of the Seafood Task Force (STF), a collaboration tackling human rights and environmental issues in the Thai shrimp and canned tuna supply chains. The Task Force includes representatives from Thai shrimp feed manufacturers, shrimp and tuna processors, certain major retailers in the U.S. and Europe, and nongovernmental organizations. Learn how the Seafood Task Force is working to drive accountability, increase transparency and build confidence in seafood supply chains in its 10 Point Action Plan.

In November 2020, the STF implemented a new Monitoring and Evaluation Model focused on traceability, accountability and verification to demonstrate that farmed shrimp, wild caught tuna and marine ingredient supply chains are traceable and internally assessed for supply chain risk. STF works with Thai members in South East Asia to provide training for their supply chains – land-based and sea-based – helping them to understand and implement STF standards.

Recruitment

The unethical recruitment of workers – which may involve exorbitant fees paid by workers to labor recruiters, the retention of passports or other personal documents, and labor contracts not in a language understood by the worker – is a leading cause of forced labor and human trafficking. We are beginning to address this as follows:

Seafood
Costco continues to support the Responsible Recruitment Oversight working subgroup of the STF to explore responsible labor recruitment. The primary goal is to leverage the power of the membership to build demand for responsible ethical recruitment practices throughout member supply chains. Research and engagement activity since 2016 has provided valuable insights. As a result, over 65 companies and entities in their supply chains alongside their recruiting agencies are now actively participating with a new batch of agencies due to come on board by December 2021. Learn more about the STF’s work on Responsible Recruitment.

Agriculture
Costco and some of its suppliers have begun to partner with CIERTO, an independent third-party nonprofit that provides transparent, no worker-fee recruitment for farm workers in order to ethically and legally recruit farm labor for U.S. agricultural products.

Foreign Labor
Costco supports the work of the Responsible Labor Initiative (RLI) to address unethical recruitment in Southeast Asia.

Agricultural Produce

Equitable Food Initiative (EFI)
Costco is part of a fresh produce multi-stakeholder effort – that includes farmers, suppliers, and NGOs to improve labor practices, environmental stewardship, and food safety – for the benefit of workers, agricultural communities, businesses, and consumers. Costco has been the largest single investor/donor to EFI’s development, with over $2.5 million contributed since 2018.

Costco pays a premium for this EFI-certified produce, to directly compensate farmworkers for the extra effort they provide. Costco is also the largest payer of the EFI premiums, with 87% going directly to farm workers and totaling over $11.8 million since 2014. Ten percent of this premium is paid to EFI to fund expansion throughout the industry.

EFI provides:

• Workers and managers training on conflict-resolution and problem-solving strategies to promote continuous improvement and to comply with rigorous standards
• Workers training on pesticide safety and personal protective equipment free of charge. More information can be found in the Pollinator Health & Chemical Reduction section on our Environmental Impacts page.

Fair Trade

Costco and some of its produce suppliers continue to support a program with Fair Trade USA, which directly engages with farmworkers to promote sustainable incomes, safe working conditions, responsible labor recruitment and contracting, environmental stewardship, and strong, transparent supply chains. For every Fair Trade Certified™ product sold, producers earn an additional amount of money, empowering farmers and workers to improve their lives and fight poverty. Through our direct engagement, farmworkers are provided with:

• Training on food safety and quality, labor rights, workplace health and safety, and family financial planning.
• Improved communication and measurable impacts.
• Fair Trade Certified funds to improve lives and livelihoods for workers and their communities.

Ethical Charter on Responsible Labor Practices

In FY19, Costco began to support the efforts of the Produce Marketing Association and the United Fresh Produce Association to create an industry-wide framework on the responsible production and procurement of fresh fruit, vegetables, and flowers. This mission is captured by the Ethical Charter, of which Costco is one of many endorsers representing the fresh produce industry, including growers, labor agencies, packers, distributors, foodservice operators, marketers and retailers.

In FY20, Costco and others worked to develop a pilot aimed at educating and building the capacity of select produce suppliers to strengthen their alignment with the Values and Guiding Principles of the Ethical Charter. The pilot concluded in May 2021 and key findings showed the effectiveness of providing virtual training and advisory services focused on building management systems. Growers also validated the use of self-assessment questionnaires to measure compliance with the Ethical Charter. We will continue to work with various industry stakeholders to take the learnings from the innovative tools that were piloted and further develop scalable solutions for the fresh produce industry.

Cotton

Care for the treatment of workers throughout our global supply chains is a strong focus for Costco, and we recognize that the sourcing of cotton presents particular challenges with respect to forced labor around the world.

Costco remains a signatory to the multi-stakeholder pledge promoted by the Responsible Sourcing Network concerning forced child and adult labor in Uzbekistan. We work to keep cotton produced by child and adult forced labor in Uzbekistan and Turkmenistan out of our Kirkland Signature^™ items. We also collaborate with a multi-stakeholder coalition to raise awareness of this very serious concern and to press for its elimination.

More information can be found in our Pledge Concerning Cotton.

Costco has joined a Forced Labor Working Group, which consists of brands and trade associations, to share best practices and innovative approaches to mitigate forced labor risks with a specific focus on apparel and home textile supply chains.

Additionally, in 2019, we began a cotton supply-chain mapping program, which requires document verification, to further understand where the cotton in our apparel products originates. To date, the program now covers Kirkland Signature apparel and home textile products. Various screening processes are also applied to the manufacturing entities involved in these supply chains to promote compliance with trade-sanction laws.

Apparel from Bangladesh

With the Alliance for Bangladesh Worker Safety winding down, several former Alliance members and other brands committed to sustaining the culture of factory safety in Bangladesh by launching Nirapon, a U.S.-based organization tasked with monitoring the ongoing safety, training and helpline efforts of the factories from which Nirapon members source. Costco supports these efforts by requiring suppliers who source from Bangladesh to be active members of Nirapon and continuing the work of addressing building safety in the apparel industry of Bangladesh.

Multiple brands aligning behind one initiative should reduce the burden and help to maintain focus on workers’ rights to a safe workplace. We feel optimistic that this approach will help to maintain the significant safety enhancements made during the five-year commitment of the Alliance for Bangladesh Worker Safety.

Responsible Labor Initiative

Costco remains a member of the Responsible Labor Initiative (RLI), which promotes the rights of workers vulnerable to forced labor globally. This initiative represents another opportunity for Costco to join a diverse network of stakeholders focused on combating forced labor in our supply chains. Through our work with the RLI, we will continue to focus on leveraging industry-based efforts to reduce forced labor.