Slaves in your supply chain?

Today, Dec. 10, is Human Rights Day, a day the United Nations has set apart to recognise the “fundamental rights and freedoms to which all of us are entitled.” It is also an opportunity for company executives to consider the basic rights of employees, how modern-day slavery can impact a business and think again that this abhorrent practice is not a thing of the past.

Here are some recent examples of how slaves are still hidden in plain sight in the supply chain:

• Authorities raided a Georgia farm in November 2021 and discovered workers from Mexico and Central America digging onions with their bare hands for 20 cents per bucket. The workers were threatened with guns and violence to stay in line.

• A Chinese company forced about 500 Vietnamese migrants to work in a plant in Serbia without adequate food, shelter and only two working toilets.

• Child slavery continues to be a problem with cocoa farming in West Africa. European companies force workers to stay on the farm for at least five years and try to get around anti-slavery laws by claiming the workers are contractors.

In most cities in the developed world with nail bars, food processing plants and hand car washes, government agencies are starting to focus on these sectors because many of the staff at these establishments are subject to forced labour.

From forced labour and human trafficking to the use of child workers, human rights violations have been a longstanding issue for global supply chains. The UN International Labor Organization (ILO) estimates today around 40.3 million people are engaged in some form of modern slavery, three times the figure during the transatlantic slave trade.

One in four victims of modern slavery is a child. Of the 24.9 million people trapped in forced labour, 16 million are exploited in the private sector with domestic work, construction or agriculture. Women and girls make up 99% of victims in the commercial sex industry and 58% in other sectors. This practice can be found in both developed and emerging economies.

 

Consequences

First, companies engaging in exploitative labour practices are violating laws and regulations. This can expose company executives to unwanted financial penalties, sanctions or even imprisonment. It should also be noted, the presence of people being forced to work may occur at different levels of the supply chain and in many cases can be found within suppliers who have no direct contract with the end user. Regardless, the buck stops with the main customer.

In some countries, human rights violations can result in serious legal action and strikes by workers. These lawsuits can be based on claims for unpaid compensation or more severe issues related to working conditions resulting in illness, death or injuries.

Global findings show 57% of businesses have poor visibility across their supply chains, and only 23% of companies have a credible framework of mapping supplier networks, which is the first step towards achieving supply chain resilience and visibility.

Research reveals that consumers are increasingly becoming aware of the relationship they share with brands. Now more than ever, consumers are paying attention to how organisations consider social and environmental causes. If the company values don’t line up with that of the consumer, the results can be severe. For example, a major high street fashion retailer was found to not be paying workers correctly, condoning unsafe working practices and in the space of six weeks lost more than a billion pounds from its share value simply as a result of consumer and stakeholder pressure. It’s noteworthy that 42% of customers will leave the brand, and another 21% will never return or give a second chance to these companies.

Human rights violations can result in the suspension or forced shutdown across worksites by government agencies. Such practices can also lead to serious worker retaliations like strikes and on-site protests, which can cause a slowdown in supply chain operations.

 

8 Warning Signs of Modern Slavery

 The situation with the Vietnamese immigrants is particularly difficult for companies to consider whether slaves are being used in their supply chains. This example was incredibly complex, it could be argued the issues were hidden in plain sight, with the plant located in Serbia, owned by a Chinese company and using exploited laborers taken from Vietnam.

Likewise, the raid at the Georgia farm is a reminder that human trafficking can happen in the U.S. and not just in developing countries. A further complexity for companies that source internationally requires executives to take into account whether their management programmes and procurement practices will need to factor in laws and regulations applied to prevent forced labour. This evaluation may be different country by country and executives may need to make an educated assessment of the potential risk of slavery when sourcing from each location.

What can a global company do to protect workers, contractors and suppliers from being part of human exploitation? The procurement programme must factor in specific controls and information gathering so purchasing decisions are made from an educated perspective. This can include gathering information from non-governmental organisations, sanction checking, independent audits and considering if suppliers entering company premises ensure all personnel are engaged and trained in how to recognise potential risks of slavery. For example, while conducting site inspections, the following signs can demonstrate potential signs of slavery:

1. 1. Workers appear to be under the control of someone else and are reluctant to interact with others.
   2. Workers don’t know their home or work address.
   3. Workers do not have personal identification on them.
   4. Workers have few personal belongings, wear the same clothes every day or wear unsuitable clothes for work. They may lack appropriate clothing or safety equipment for the work they are doing.
   5. Workers share items of PPE, e.g., safety footwear commonly called ‘hot-booting.’
   6. Workers don’t seem to be able to move around freely.
   7. Workers appear frightened, withdrawn or show signs of physical or psychological abuse.
   8. Workers are dropped off and collected for work the same way, especially at unusual times, i.e., very early or late at night.

These evaluations may take place during near miss/accident investigations.

 

Steps to Eliminate Slavery

So now you have done your due diligence to determine whether your supply chain has a problem, what do you do next? The “The Reputation Risk of Human Rights Abuses in Supply Chains” technical paper shares ways to avoid or eliminate that risk, including:

• Supplier prequalification and evaluation – A company should thoroughly examine each supply chain partner and evaluate recruiting and work practices to identify potential abuse or human rights violations. Ideally, this should be a mandatory pre-condition of any contractual relationship with suppliers.

• Train and educate supply chain partners – Companies must clearly communicate their worker policies and guidelines to employees and supply chain partners. This messaging can be enforced through training and awareness-building programs that facilitate how policies are applied in practice. Encourage your strategic suppliers to engage their suppliers with the same message.

• Safety inspection and audit programs – Compliance with a company’s labour policies and principles by supply chain partners should be regularly evaluated through audits conducted by qualified and independent third parties. These audits can identify whether suppliers follow suitable labor policies and procedures, implement the proper workplace controls and comply with government sanctions on workplace rights.

Companies should map their supply chains down to the level of product or raw material purchases. To ensure a robust supply chain, executives need to continually track each individual’s certifications, insurance and training.

The tasks above are nearly impossible with pen and paper. Companies need to have an extensive computerised system to keep current with suppliers’ working practices and identify any developing problems with key supply chain partners and their subcontractors.

Supply chain partners must make their working practices transparent and manage their programmes for engaging with subcontracting. This may even mean sub-subbing and the use of agents and non-appointed middlemen to confirm their stance around the prevention of forced labour. Executives must be cognisant that in some locations around the world, some working practices are deemed culturally acceptable by local standards but could import risk into their supply chain, especially when scrutinised by consumers and shareholders.

In the global economy, stopping modern slavery can be like the game of “whack-a-mole.” A company may identify one partner with a supply chain problem but suddenly have another issue show up unexpectedly a world away. Every company needs to have the best people with the right hammer to succeed in this game with such profound consequences.

 

Mike Ford is the Global Lead for Sustainability and EHS within Avetta. He is a Chartered Safety professional with more than 25 years’ cross-industry experience and a skilled specialist in ethical and social audits. He has developed ethical sourcing supplier programmes throughout the world and has a Master’s degree in Occupational Health and Safety and in Purchasing and Supply Chain Management.