Brands face increasing exposure to declining labor rights worldwide, but especially in popular Asian manufacturing hubs, according to a report released Thursday from global risk and strategic consulting firm Verisk Maplecroft. The firm’s research, summarized in its Human Rights Outlook 2021 report, points to a sustained trend where the rights of workers are under increasing threat worldwide from multiple directions.
Across the board, the company’s risk indices show that child labor, decent wages, discrimination, forced labor, health and safety, and the exploitation of migrants in the workplace have worsened globally over the past five years. And nowhere is this happening more than within the world’s manufacturing hubs. This decline, taking place during a pandemic, presents a set of dilemmas for ethical procurement for which the risk intelligence firm says there are no easy answers.
The study shows that examining sub-national areas reveals alarming levels of abuse. The company’s data reveals that pockets of "extreme" modern slavery risks exist within 20 countries that otherwise score as "high" risk on a national level. Many key Asian manufacturing hubs – China, India, Vietnam, Indonesia, Cambodia and Bangladesh – are home to the riskiest subregions. The data finds that approximately 2.2 billion people live in areas that record the worst possible score for violations.
Poorer locations exhibit higher risk of modern slavery, and regions of China are among the most publicly recognized. With no possibility of a resolution in sight, the analysis indicates companies will face an increasingly hostile political environment should they be seen by Beijing as divesting from Xinjiang. As the world ratchets up pressure on China, companies must also anticipate potential bans on additional products produced in the region, such as footwear, mobile phones and other agricultural and food items.
Even without explicit bans, the reputational risks of being linked to Xinjiang are likely now too great for companies to bear. Additionally, as investors increasingly incorporate ESG strategies into their investment formulas, any dealings in Xinjiang are also likely to create material risks. To avoid increasing scrutiny, many companies are now seeking alternative suppliers.
But that strategy presents its own risks, according to the report, with Myanmar, Bangladesh, Vietnam, Cambodia all downgraded to “extreme” risk for modern slavery.
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