For companies there is no quick route to ensuring a slavery-free supply chain
Slavery is not some 19th century abomination but a living, breathing part of our modern capitalist markets, hidden in plain sight at the edges of multinational supply chains. A survey last year from the Chartered Institute of Purchasing and Supply found that 80% of supply chain professionals would be unable to say their chains were slavery free.
Experts would even argue that no industry can boast supply chains that are 100% slavery free. That’s because slavery lurks at the margins of our society and is complex, with multiple definitions – encompassing forced labour, bonded labour, child labour, domestic servitude, and sex trafficking – and no easy fixes.
Slavery is also an emotionally charged problem, too, one that can cause big and painful brand and reputational damage for companies, as well as one that requires new and perhaps uncomfortable levels of transparency. After an article in the UK’s Guardian newspaper last year showed that most purveyors and consumers of supermarket shrimp are connected to a horrible and pervasive pattern of slavery in the Thai seafood industry, the idea that we are all complicit in modern slavery was laid bare.
More than 20 million people are estimated as being exploited by private individuals or companies; around 15 million are victims of forced labour; together that’s about 36 million people or 0.5% of the world’s population. Forced labour is thought to generate $150bn in illegal profits annually.
Source: International Labour Organization.
Yet Professor Kevin Bales, founder and former president of Free the Slaves, says bringing slavery to a fairly quick end is a distinct possibility for today’s society, if we are willing to spend about $15bn to bring enslaved people out of servitude and start them on financially independent paths. “While the problem is big and serious,” he says, “36 million slaves is the smallest proportion of the global population ever to be in slavery and $150bn is the tiniest fraction of the global economy ever represented by slave-based enterprises.”
Modern slavery has some connection to modern globalism and the markets. Large companies that have outsourced endlessly, chasing cheap-labour markets, didn’t necessarily keep close tabs on the labour practices of distant supply chains. By the late 1990s, though, companies such as Nike began to be hammered for human rights abuses and sweatshop problems in their global supply chains. That started a process in which many companies looked at and began to set standards for first tier suppliers.
Over the past decade or so, the levels of transparency expected of companies combined with the undeniable connection between almost every industry’s second and sub-tier supply chains and modern slavery makes it an issue corporations cannot continue to ignore.
“Corporations play a huge role in the fight against slavery,” says Banu Demirep, consultant at Anka Rising, a consulting firm based in Virginia. “They are expected to be the good citizens of the world and now, in addition to this legislative push from governments, we are seeing a new generation of millennials that are ready for the companies they work for to take this on.”
A movement for slavery-free products, services, or supply chains, Demiralp says, is behind some other social movements such as cruelty-free products. Achieving the goal is difficult, but a company’s first step must be to create a solid anti-slavery policy, a step that Anka specialises in helping with. While it is difficult for companies to have eyes everywhere policing the tiers and sub-tiers of far-flung supply chains, the new era of regulation means there is an opportunity for leading companies to gather reputational goodwill from the efforts they make.
“For companies that want to take a leadership position, for those who regard sustainability as core to their business model, this is clearly an opportunity to speak up and show how well they are managing human rights generally in their company and in their supply chains,” says Fran van Dijk, principal at OneStone Advisors in Edinburgh, UK. Van Dijk has closely been following the development of the UK’s Modern Slavery Act and sees it as a chance for leaders to take a goal and start working. “However,” van Dijk adds, “I have not come across companies sticking their necks out and going down this route yet.”
In the UK, the Modern Slavery Act and its Transparency in Supply Chains clause came into effect in October 2015. Around 12,000 companies with turnover of £36m or more must publish an annual slavery and human trafficking statement. Businesses affected must describe steps they are taking, or disclose that they are not working on steps to ensure trafficking and slavery are not taking place in their own operations or in their supply chain.
In the US, two distinct pieces of law affect companies. In March 2015 federal contractors’ anti-human trafficking compliance obligations kicked in, based on Executive Order 13627 and new provisions in Federal Acquisition Regulations. In addition, in California companies conducting business in the state must comply with the California Transparency in Supply Chains Act that came into effect in 2012, requiring disclosing the measures use to track slavery and trafficking in supply chains.
Instead, many large companies seem to mostly be taking a work-behind-the-scenes approach, joining groups like the Oxfam-led Shrimp Sustainable Supply Chain Task Force (as Tesco, Costco and others have done) and the International Cocoa Initiative (as Nestlé has been involved with) to help them work with suppliers and sub-suppliers to find and root out abuses in advance of necessary reporting and also develop some standardised approaches.
Verité, a non-profit NGO that works with many companies, including Patagonia, glasses frame maker Warby Parker, Disney and Hewlett-Packard, to improve labour conditions in supply chains, acknowledges that the complexity and “infinite fragmentation” of today’s markets make the task thorny. For Nestlé, for example, it is easier to take on one specific condition – child labour – in one specific commodity at a time.
Tainted shrimp, slave-free phones
Nobody wants implications of slave labour on their dinner table. Yet that’s exactly what the 2014 series of articles in the Guardian brought home to suppliers and consumers. Thai commercial fishing boats are accused of keeping workers in horrendous slave-like conditions. Fallout has included a lawsuit against US supermarket warehouse chain Costco and its supplier Charoen Pokphand, with a second suit pending. Simultaneously, class-action suits against Nestlé, Mars and Procter & Gamble over pet foods allegedly produced in slave labour supply chains also implicated supplier Thai Union.
For now, big companies are saying little. In a recent webinar held in advance of a sustainable seafood sourcing conference in November, human rights activist Andy Hall said buyers in the US and Europe have simply been out of touch, with debates just starting to happen in boardrooms.
But in that same webinar, held by Innovation Forum, Darian McBain, sustainable development director of Thai Union, said good actions are happening that aren’t yet trickling through to the media. McBain says there is also a pervasive element of fear on the part of companies that have come under the public spotlight.
Outdoor clothing company Patagonia has shown the benefits of overcoming that fear, even when disclosure might be uncomfortable. While Patagonia, headquartered in Ventura, California, has embraced “radical transparency” for some time, in getting ready to comply with the disclosure reporting regulated by the California Transparency and Supply Chains Act, Patagonia discovered through audits what it deemed “egregious” employment practices at seven suppliers. Debt bondage, in which a worker must work, often with undefined terms and timeframes, to pay off a debt, was going on with migrant workers at Taiwanese factories. Workers were paying as much as $7,000 to secure a job placement, and then labouring to pay back the fee.
While the news was “startling”, Patagonia had already worked with its Tier 1 factories on labour issues, and quickly formulated a remediation strategy including a migrant worker standard and a revised Supplier Code of Conduct. “Our greatest hope with going public,” says Thuy Nguyen, Patagonia’s manager of supply chain responsibility and special programmes, “was to demystify the process and give other brands and suppliers a jump start to take steps to eradicate the issue from their own supply chains.”
Back in 2013 when Patagonia first reached out on an informal basis to industry peers to collaborate on migrant worker issues, Nguyen said the response was “lukewarm – most brands weren’t ready to confront these issues”. But after going public with its process and after the media and activist spotlight has been turned on human trafficking, Nguyen sees a change. “We have found that being publicly open about these issues has given us room to think outside the box on ways to approach the problem,” he says. “Since our announcement we have been contacted by several companies who are now considering how to deal with Tier 2 and/or migrant worker issues in their own supply chains – asking us to share experiences, challenges, policies, recommendations.”
Companies can take immediate action for long-term success by:
mapping their supply chains to multiple tiers
identifying the part of a chain where risks are most severe
conducting audits to evaluate compliance with legal and company standards
remediating and managing non-compliance
raising awareness of trafficking and forced labour throughout the chains. (Source: Sedex)
Fairphone, based in Amsterdam, is another smaller company that has worked on slavery issues through its sustainable smart phone supply chain. “Our focus has been sourcing conflict-free minerals from conflict-affected regions. Slavery has been occurring in conflict mines in cases where militias occupy mines and force miners to work for them,” says Daria Koreniushkina, head of public engagement at Fairphone. “By sourcing tin and tantalum from conflict-free mines – and we’ve made a serious effort to incorporate conflict-free tungsten and fairer gold into our latest phone – our end goal is to ensure that our whole supply chain is slavery free.”
Both traceability and navigating the complexity of these mineral supply chains has added cost and work for Fairphone’s sourcing team. Koreniushkina says there are still challenges to overcome, though Fairphone is clear that it’s not letting the idea of perfection become the enemy of continual good improvement. “As the supply chain of a smartphone is complex and includes hundreds of actors all over the world, we are working towards the goal step by step,” she says.
Help from big data
Justin Dillon was a songwriter and performer who more than a decade ago read a New York Times article about modern slavery and was inspired to tackle the issue. Dillon’s non-profit group Made In A Free World (MIAFW), not only created a tool to show anyone their “slavery footprint” but also devised a software application, FRDM (Forced Labour Risk Determination & Mitigation), that uses UN Standard Products and Services Code data and data on slavery from multiple sources to visually represent risks companies have in their supply chains.
FRDM is a powerful tool, says Ben Hafner, MIAFW’s director of product development. “We are leveraging historical and real time data to help companies find out where their exposures are,” Hafner says. FRDM provides stacks of data and detailed visuals as well as recommendations with how to engage with suppliers that have high slavery risks. “This issue can seem so heavy, we don’t want to overburden users [of the software] with scary language and boring graphics,” Hafner says.
MIAFW has also partnered with software firm Ariba to connect the Ariba network of Fortune 2000 companies to the data they can leverage for pushing suppliers and sub-suppliers to find and mitigate risks. Sedex has a competing platform with its Supplier Ethical Data Exchange. Dillon has said that these big data tools allow businesses to be the heroes in putting a real dent in slavery practices globally. Ultimately, Hafner says, these tools let companies know “exactly where to apply their due diligence dollars, where to set up appropriate training and where to put in place precautionary procedures”.
Public Bikes, a San Francisco bicycle and gear company, was one of the first of a handful of companies to use FRDM. Chief operating officer Dan Nguyen-Tan says the sources and materials for all the parts that go into a bike are very diverse. “I don’t think we can claim we’re ‘100% slavery-free’ because we’re still working with dozens of sub-vendors involved in making parts for our products. What I can say is that MIAFW has been very helpful in identifying our highest supply chain risks.”
If a company is part of the MIAFW-Ariba network – a cloud-based service that carries fees – they can also tap into a vast amount of supplier relationship data in order to make better decisions. “By combining best-in-class forced labour risk analysis software with the world’s largest business network we can empower millions of decision makers to drive demand for products and services sourced from suppliers who share a commitment to freedom,” Dillon says.
Free the Slaves’ Bales cautions that helping people to obtain the economic freedom that will permit them to stay free is ultimately a boots-on-the-ground activity. “The combination of legislation/business ideas about risk and public opinion, that is powerful, basically assigning responsibility all along the supply chain including to consumers,” he says. “But almost none of the supply chain works to actually get people out of slavery. That’s an intervention done by human rights workers on the ground.”slavery slave labour modern slavery fair wages slavery briefing supply chain