Forced labor and modern-day slavery continue to be a problem in certain areas of the world, for the mining of raw materials and production of components that go into technology products. To track the problem, KnowTheChain recently released its second report on the performance of information and communications technology (ICT) manufacturers.
In the ICT sector, KnowTheChain surveyed and ranked 40 global companies, with total market capitalization of $4.7tr, on how they are addressing forced labor in their supply chains. (The report also contains sections on food and beverage, and apparel and footwear.)
The benchmarking effort examines seven themes covering the major areas that companies need to address to eradicate the practice of forced labor: commitment and corporate governance, traceability and risk assessment, purchasing practices, recruitment, worker voice, monitoring and remedy. Across those themes, KnowTheChain used 23 indicators to rate the progress of each company.
Taken as a whole, the results were not encouraging. The average benchmark store for the 40 companies was just 32 out of 100 points.
Collectively – and unsurprisingly – the ICT companies under review scored highest in the area of commitment, with an average of 55 points. (It’s easy to announce one’s desire to do good.) Purchasing practices, averaging 40 points, were also relatively strong – perhaps because they are highly visible within most organizations.
The lowest-scoring areas of performance were in worker voice and recruitment – “two areas that are a little bit more nascent for the sector,” according to KnowTheChain project director Kilian Moote. They registered average scores of 15 and 26, respectively.
KnowTheChain says companies need to do a much better job of engaging with workers, by ensuring effective grievance procedures, and implementing ethical recruitment practices that prevent the exploitation of migrant labor.
Among individual companies, Intel scored the highest, with 75 points out of 100. Other companies in the first quartile – with scores of 49 or higher – included Hewlett-Packard Co., Apple, Hewlett-Packard Enterprise Co., Microsoft and Cisco Systems Inc.
Even lower in the rankings were some of the world’s largest suppliers to ICT manufacturers, including Amphenol Corp., Keyence Corp., Microchip Technology Inc., Corning Inc., Broadcom Inc. and BOE Technology Group. They scored fewer than 10 points, “thus taking limited steps to address forced labor in their own supply chains,” KnowTheChain said. (Scraping the bottom was Largan Precision Co., Ltd., a maker of camera lenses modules, with zero points.) Their poor performance highlighted the problem of detecting and eliminating unethical practices deep within global supply chains.
Notwithstanding the low numbers on worker recruitment, KnowTheChain detects “some positive momentum” on recruitment, Moote says. “We’ve seen companies demonstrating that, not only do they have a policy to ensure that workers don’t pay recruitment fees, but they are reimbursing workers who were charged.” Still, 40 percent of ICT have no policy banning such fees.
Forced labor can be found the world over, but Malaysia and China are among the countries in which the practice has been especially noted, Moote says. Malaysia, which is experiencing high numbers of migrant workers entering the country, has been making progress in that area, at least in the form of “strong platitudes coming from the government itself.” In China, workers are often subjected to curbs on their freedom to associate, organize and voice complaints about working conditions.
When it comes to detecting inhumane labor practices, just getting reliable numbers can be tough. Turnover in China’s manufacturing sector, for example, is endemic, sometimes reaching 100 percent over the course of a single year. That makes it difficult to track progress toward better treatment of individual workers.
Examples of positive action reported by KnowTheChain include HP Enterprise’s willingness to provide a list of suppliers, smelters and refiners of tungsten and gold, metals that are frequently mined through the use of forced labor. Following passage of the conflict minerals reporting rule, part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, critics of the measure argued that companies would be unable to trace the provenance of conflict minerals back to the smelter, let alone the mines from where they originated. (The rule has since been weakened, with Republican lawmakers and the Trump Administration making several attempts to repeal it altogether.)
Moote sees major challenges for companies struggling to trace the origin of their products and the conditions under which they were made. Yet despite the low rakings of so many ICT manufacturers, he says the responses of companies to the latest report “skew positive.”
“There’s been a constructive conversation that we’ve had with companies,” Moote says. “Generally, speaking, we’ve heard that [the report] has been a useful tool to help them identify where the gaps are.”
Enactment of the U.K.’s Modern Slavery Act 2015 has been especially helpful in moving companies toward a more proactive policy on the elimination of forced labor. “Companies are not denying or being defensive,” he says.
Still, there’s a long way to go. As KnowTheChain project leader Felicitas Weber said: “Given the continued exploitation of workers in electronic supply chains, companies need to take much stronger action and use their means and leverage to ensure workers’ voices are heard, and that responsible recruitment practices are in place across their supply chains.”