Dive Brief:

• As a consequence of an expose revealing economic abuses toward drivers, Costco has dropped California's Pacific 9 trucking company, USA Today reported Tuesday.
• Lawsuits regarding unfair working practices have caused Pacific 9 to undertake bankruptcy protection and drop its illegalities, making loss of business particularly problematic as it works to recover. Drivers who once struggled under its terms are now hoping the reformed transport company can survive.
• Along with Costco, Goodyear has also dropped Pacific 9. Hewlett-Packard has sent an independent auditor to assess the situation before taking action.

Dive Insight:

The best way to recover from a bad reputation is not to earn one at all.

Worker abuses are fairly common within the supply chain, unfortunately, such as those occurring at Nestle, which suffered a class-action lawsuit in 2015 brought by consumers who alleged the company willingly employed a seafood supplier known for relying on slave labor and human trafficking. Though efforts are made in various subsets of the supply chain, even proactive anti-slavery brands like Adidas do not provide easily accessible information regarding suppliers' treatment of employees and the worker compensation.

At the other end of the spectrum, Ross Dress for Less, Forever 21 and T.J. Maxx have been exposed as being closely linked to suppliers engaged in human trafficking and wage violations, with nearly $1.1 million in unpaid wages owed to workers employed in their overseas factories.

In the court of public opinion, suppliers who tolerate ongoing human rights abuses are judged harshly by consumers. While the interim between the instigation of abusive practices and their discovery may be profitable, later boycotts or even whisper campaigns can cause tremendous damage to a vendor, from which recovery is difficult if not impossible. Even when a company turns itself around, its fresh resolve may fall on deaf ears.

This is unfortunate, but the effort to reverse malpractices must not only be thorough and provable, but also widely promoted so that the damage can begin to be undone. This is a timely and expensive effort, for which few companies are prepared.