Business must end modern slavery

24 May May 2016 1425 24 May 2016

Contemporary bondage is often hidden in supply chains in numerous industries and sectors, however 71 per cent of companies believes that the complexity of supply chains makes it difficult to identify and address.

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Contemporary bondage is often hidden in supply chains in numerous industries and sectors, however 71 per cent of companies believes that the complexity of supply chains makes it difficult to identify and address.

The eradication of slavery has long been sought on moral and philosophical grounds. But the effect of slavery on wider economic development is also important. A 2013 research demonstrates that economies which used slavery may, in the long run, have been at a disadvantage. Simply put, greater levels of slavery are associated with a decline in economic growth and human development. The findings imply that beyond the morality of the issue, slavery is objectively harmful for total economic output and social development.

However, today slavery takes different form. It can range from commonly highlighted abuses such as forced labour, human trafficking and sexual exploitation to less well-recognised forms such as withholding of passports, debt bondage and excessive charges around housing. Modern slavery is a global business worth US$150 billion, more than the annual profits of the entire US banking industry or Google. And while certain countries are more at risk to slavery than others no country is immune to the problem.

Although, contemporary slavery is particularly difficult to detect because the chains used to deprive people of their freedom are sophisticated: no longer locks and rope. In June 2014, a Guardian investigation broke a story connecting the use of forced labour to the Thai seafood farmers were doing business with suppliers that manned their boats with slave workers who regularly suffered beatings and torture while working 20-hour shifts with no pay.

The International Labour Organization (ILO) estimates that globally there are 21 million victims of forced labour, which it defines as all work or service that is extracted from any person under the menace of any penalty and for which said person has not offered him/herself voluntarily.
Modern slavery is often hidden in supply chains in numerous industries and sectors, however electronics and high-tech, steel and automobiles, agriculture and seafood, mining and minerals, garments and textiles, and shipping and transportation are all especially vulnerable.

According to Special Rapporteur on contemporary forms of slavery released from the Office of the High Commissioner for Human Rights, global brands and other transnational corporations operating complex supply chains that span multiple jurisdictions have increasingly adopted an ethical code of conduct and due diligence process to address contemporary forms of slavery in their operations, as well as those of their suppliers, prompted mainly by reputational risk. However voluntary codes of conduct are often bald statements without any independent monitoring mechanisms and leave numerous gaps in protection if they do not apply to all level in businesses’ supply chains. Multi-national companies have the power over their supply chains. Some corporations, like Nestle, have formally committed to eradicating slavery in their supply chain.

In this context, States have adopted diverse approaches to addressing this issue, which include ensuring criminal, civil and tort liability for business-related human rights violations. The UK is leading the way in the fight against modern slavery through the Modern Slavery Act 2015 showing a growing recognition of the links between forced labour and the regulation of supply chains. From 31 March 2016, all companies with global annual revenues of £36m or more will have to prepare an annual statement describing steps that they have taken to ensure that slavery and human trafficking are not present in their operations or in any of their supply chains, and to share related information on their websites.

The UK legislation was modelled on the California Transparency in Supply Chains Act and the European Union Directives on Human Trafficking, Human Rights and Non-Financial Reporting. It is thought that by increasing transparency and ensuring the public, consumers, employers and investors know what steps an organisation is taking to tackle modern slavery there will be a reputational incentive on companies to provide such statements. In this regard, the Human Rights Outlook 2016 has identified the recruitment of migrants and refugees into forced labour, a lack of information on labour practices deep within the supply chain and inadequate oversight of suppliers among the biggest threats to the brand reputation of global companies over the next year.

In short, many multinational businesses are taking the reputational risk that comes from modern slavery found in their supply chains extremely seriously. A recent study by Ashridge Business School and the Ethical Trading Initiative found that 71 per cent of companies feel that the complexity of supply chains together with the often hidden nature of the issues makes it difficult to identify and address.
Even for companies that have well-established labour standards programmes, there is a general lack of understanding of the issues widely across the business. Just two of the largest companies that have put out statements, Ford and Intel had some of the most detailed assessments, the researchers found.

It has also been pointed out that neither of regulatory framework impose companies that cannot prove they are slavery-free to lose business. In fact, the Business & Human Rights Resource Centre and CORE Coalition has revealed that the majority of company statements collected so far do not comply with UK anti-slavery requirements: only 22 of the 75 statements collected so far appear not to be meeting the Act’s requirements, and lack adequate information.

It is clear that most countries are on the verge of pushing through legislation aimed at ensuring business accountability for ending slave labor in their supply chains, but the race to the top will take time.

Cover Photo: Getty / Daniel Berehulak

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