Executive Briefings

Time for Corporates to Wake Up to Realities of Human Slavery

It is the human rights abuse that everybody likes to maintain is not happening. But within corporate supply chains across the developing world – from the cocoa-growing lands of the Ivory Coast to the seafood sector of Thailand – human trafficking and modern day slavery is still commonplace, with people being made to work and live in appalling conditions with little or no pay.

Time for Corporates to Wake Up to Realities of Human Slavery

According to the charity Free the Slaves, up to 36 million people are enslaved every year, generating revenues of $150bn through their labor. Most modern-day slaves (78 percent) are in forced, bonded or other types of obligatory labor, while around a fifth find themselves in sex slavery. More than half of slavery victims are female and around one in four (26 percent) are children. India has the highest number of slaves, estimated at around 14 million, with the majority working in agriculture, construction and manufacturing.

The New York Times exposé of human trafficking in the Thai shrimp industry in 2014 has forced the country’s industry to re-think how and where it processes seafood. Just this month, fast-fashion giants Next and H&M admitted to identifying child labor in a number of their supplier factories in Turkey, including refugee children which have fled war-torn Syria.

The corporate world is slowly waking up to the fact there is a big problem and is starting to react. The risk to brand reputation damage is huge and, understandably, there are few issues CEOs would like their company to be associated with less.

Increasing global regulation

However, it is the emergence of new legislation which has really taken the issue from ethics and sustainability teams and into the boardroom. California's Transparency in Supply Chains Act, demands explicit information from manufacturers and retailers doing business in the state, while the proposed Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 could see similar legislation applied to all U.S. firms with revenues of over $100m. The U.S. Government has also just announced new measures aimed at tackling slavery in the supply chain, including an online resource aimed at helping companies strengthen their protections against forced labor.

The UK Modern Slavery Act, which came into force last October, obliges all companies with a turnover greater than £36m ($52m) to produce an annual statement that sets out how they are dealing with eradicating modern day slavery from their supply chains. Crucially, the public statement must describe the parts of the supply chain where the risk of slavery and human trafficking exists, and the steps taken to manage those risks. Firms also have to measure how well they are preventing slavery and detail any training or development programs being given to staff to help address the issue.

These new laws on both sides of the Atlantic have been widely heralded as the answer to dealing with modern slavery once and for all. The Ethical Trading Initiative, which represents 88 companies with a combined turnover of more than £166bn ($240bn), describes the UK law as a “game-changer”.

But as with any control on social and environmental ills – from deforestation, to the procurement of so-called conflict minerals – regulation is not always a guarantee of improvement.

For example, clothing companies are understandably cautious about making claims about their goods not containing cotton that comes from Uzbekistan, a country with a terrible track record on forced labor. The complexity of the cotton supply chain means that the raw material is often mixed, coming from different source spinning mills.

Auditing and certification has its limits too, according to the University of Sheffield. In a new study into human rights abuses in corporate supply chains, senior lecturer Genevieve LeBaron points to the fact that companies have “designed a system of self-regulation that allows their suppliers to cover up abuses and easily cheat a weak inspection system.”

The need for transparency

However, some organizations are making good progress, particularly in sectors most at risk. HP has made a series of policy changes on labor practices throughout its global supply chains. Most notably, it has become the first U.S. ICT firm to stop the common use of recruitment agencies to hire foreign migrant workers among its suppliers. The practices of recruitment agencies, which often hire poor workers in one country for employment in another, are being more heavily scrutinized over their role in facilitating forced labor and slavery, consciously or otherwise. Dan Viederman, the head of Verité, the NGO that has been working with HP to develop the new recruitment policies, says that the company’s new Foreign Migrant Standard “sets a new bar” and is likely to result in “substantial financial benefit” to the foreign migrant workers along the company’s supply chain.

Similarly, Nestlé – the confectionery business which last year admitted that it had found forced labor in its supply chains in Thailand – has initiated a monitoring and remediation system to address child labor in its cocoa supply chain. By recruiting and training local agents to work in the field, it can identify children it feels might be at risk and intervene. This could be something as simple as helping a family to get a copy of their child’s birth certificate so he or she can attend school, or providing them with school equipment and uniforms.

At the heart of these efforts is a focus on transparency and data analysis. More and more companies are making use of supply chain assessment software to assess where the biggest risks are and to develop plans to prioritize supplier engagement efforts that will help to eradicate the problem at source – via improved training, updates to supplier code-of-conduct policies and ensuring minimum labor standards are a part of all contracts.

The fact that slavery is still very much a part of our social fabric in the 21st Century is shocking enough, and the damage it can cause to brand reputation is enormous. However, given the complexity of today’s supply chains, legislation alone is not enough, and companies will need to invest in technology that can help them pinpoint risks and take action quickly if they want to ensure they eradicate slavery from their supply chains.

Source: cr360

According to the charity Free the Slaves, up to 36 million people are enslaved every year, generating revenues of $150bn through their labor. Most modern-day slaves (78 percent) are in forced, bonded or other types of obligatory labor, while around a fifth find themselves in sex slavery. More than half of slavery victims are female and around one in four (26 percent) are children. India has the highest number of slaves, estimated at around 14 million, with the majority working in agriculture, construction and manufacturing.

The New York Times exposé of human trafficking in the Thai shrimp industry in 2014 has forced the country’s industry to re-think how and where it processes seafood. Just this month, fast-fashion giants Next and H&M admitted to identifying child labor in a number of their supplier factories in Turkey, including refugee children which have fled war-torn Syria.

The corporate world is slowly waking up to the fact there is a big problem and is starting to react. The risk to brand reputation damage is huge and, understandably, there are few issues CEOs would like their company to be associated with less.

Increasing global regulation

However, it is the emergence of new legislation which has really taken the issue from ethics and sustainability teams and into the boardroom. California's Transparency in Supply Chains Act, demands explicit information from manufacturers and retailers doing business in the state, while the proposed Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 could see similar legislation applied to all U.S. firms with revenues of over $100m. The U.S. Government has also just announced new measures aimed at tackling slavery in the supply chain, including an online resource aimed at helping companies strengthen their protections against forced labor.

The UK Modern Slavery Act, which came into force last October, obliges all companies with a turnover greater than £36m ($52m) to produce an annual statement that sets out how they are dealing with eradicating modern day slavery from their supply chains. Crucially, the public statement must describe the parts of the supply chain where the risk of slavery and human trafficking exists, and the steps taken to manage those risks. Firms also have to measure how well they are preventing slavery and detail any training or development programs being given to staff to help address the issue.

These new laws on both sides of the Atlantic have been widely heralded as the answer to dealing with modern slavery once and for all. The Ethical Trading Initiative, which represents 88 companies with a combined turnover of more than £166bn ($240bn), describes the UK law as a “game-changer”.

But as with any control on social and environmental ills – from deforestation, to the procurement of so-called conflict minerals – regulation is not always a guarantee of improvement.

For example, clothing companies are understandably cautious about making claims about their goods not containing cotton that comes from Uzbekistan, a country with a terrible track record on forced labor. The complexity of the cotton supply chain means that the raw material is often mixed, coming from different source spinning mills.

Auditing and certification has its limits too, according to the University of Sheffield. In a new study into human rights abuses in corporate supply chains, senior lecturer Genevieve LeBaron points to the fact that companies have “designed a system of self-regulation that allows their suppliers to cover up abuses and easily cheat a weak inspection system.”

The need for transparency

However, some organizations are making good progress, particularly in sectors most at risk. HP has made a series of policy changes on labor practices throughout its global supply chains. Most notably, it has become the first U.S. ICT firm to stop the common use of recruitment agencies to hire foreign migrant workers among its suppliers. The practices of recruitment agencies, which often hire poor workers in one country for employment in another, are being more heavily scrutinized over their role in facilitating forced labor and slavery, consciously or otherwise. Dan Viederman, the head of Verité, the NGO that has been working with HP to develop the new recruitment policies, says that the company’s new Foreign Migrant Standard “sets a new bar” and is likely to result in “substantial financial benefit” to the foreign migrant workers along the company’s supply chain.

Similarly, Nestlé – the confectionery business which last year admitted that it had found forced labor in its supply chains in Thailand – has initiated a monitoring and remediation system to address child labor in its cocoa supply chain. By recruiting and training local agents to work in the field, it can identify children it feels might be at risk and intervene. This could be something as simple as helping a family to get a copy of their child’s birth certificate so he or she can attend school, or providing them with school equipment and uniforms.

At the heart of these efforts is a focus on transparency and data analysis. More and more companies are making use of supply chain assessment software to assess where the biggest risks are and to develop plans to prioritize supplier engagement efforts that will help to eradicate the problem at source – via improved training, updates to supplier code-of-conduct policies and ensuring minimum labor standards are a part of all contracts.

The fact that slavery is still very much a part of our social fabric in the 21st Century is shocking enough, and the damage it can cause to brand reputation is enormous. However, given the complexity of today’s supply chains, legislation alone is not enough, and companies will need to invest in technology that can help them pinpoint risks and take action quickly if they want to ensure they eradicate slavery from their supply chains.

Source: cr360

Time for Corporates to Wake Up to Realities of Human Slavery