back

Blog | 2 Aug 2018

Human Trafficking – does it apply to your business? If the answer is no, think again

This opinion piece forms part of our IMPACTxAsia blog series

Human Trafficking – does it apply to your business? If the answer is no, think again.

Human Trafficking – does it apply to your business? If the answer is no, think again

The men had come mostly from Hungary, where they had been promised good wages in the UK, food and a place to live. Instead, as many as 42 of them at a time found themselves crammed into a two-bedroom house in West Yorkshire. They were fed only scraps and forced to work up to 16 hours a day, seven days a week, for as little as £10, if they were paid at all. The bed-making business that employed them was not a small operation. It supplied companies including Next and John Lewis.

Extract from the Financial Times

This is the face of human trafficking, also referred to as modern slavery – abhorrent and unthinkable, yet widespread and beneath our very noses, taking place in countries and within supply chains of companies that you would least expect. As the above illustrates, no continent is exempt from human trafficking, however, we, unfortunately, see the problem most rampant across Asia, with an estimated two-thirds of slaves located in the region.

Indeed, slavery did not end with the abolition of the slave trade. Despite being universally condemned and criminalised in most jurisdictions under international law, it is reported that there are more slaves now than ever in history, with 40.3 million  people thought to be in slavery today according to the International Labour Organization’s latest estimates (including 24.9 million in forced labour and 15.4 million in forced marriage).

It is also a highly lucrative business, with illegal profits from forced labour worldwide estimated to be worth US$150.2 billion per year, making it one of the largest illicit money-making activities in the world.

Human trafficking for forced labour is defined as: 

  • “Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age” or
  • “The recruitment, harbouring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery".

While human trafficking can be a transnational process where victims are recruited abroad and transported into another country where they are exploited, it can also be a domestic phenomenon, where a victim need not be physically transported from one location to another for the crime to fall within this definition.

Although much of the public debate on modern slavery centres on the topic of sex trafficking, nearly two thirds of slaves in forced labour are exploited in the private sector, working in factories, on construction sites, on fishing boats, and in agricultural industries.

The Asia-Pacific region accounts for the largest number of forced labourers, accounting for 62% of the global total of victims.

Source: ILO, 2017

How is this allowed to happen, you might ask? Fuelled by growing global demand for cheap goods, together with long and multi-tiered supply chains, slavery thrives, unnoticed at the bottom of the production line of many products and services enjoyed by consumers today. It is hidden in many dark corners across the spectrum of industries, from supermarket chains, across clothing, technology, hospitality and even financial services, with potential investors unknowingly funding this activity. It, therefore, becomes difficult to say with absolute certainty, that any business is completely free from human trafficking either directly through operations or indirectly through supply chains.

Why Take Action?

The number of prosecutions and victims freed is alarmingly low. According to the 2017 Trafficking in Persons Report, only 66,520 victims were identified as receiving assistance globally in 2016, with only 9,071 global convictions that same year. With 40.3 million people estimated to be enslaved, this results in less than 0.2 percent of victims being identified and assisted each year. Given these frighteningly low statistics, the private sector can play a pivotal role by looking deep into their supply chains and making it clear to the market that exploitation will not be tolerated at any level.

Beyond the moral imperative, governments, the media, consumers, activists, and investors are becoming increasingly aware of human rights issues across their supply chains and are demanding that businesses implement ethical sourcing programmes. Businesses are at risk of severe reputational damage and loss of market share and consumer confidence if they are found to have slavery in their supply chains, no matter how far removed it may seem to the final product or service. According to a 2016 report from the Ethical Trade Initiative which interviewed companies following the implementation of the UK Modern Slavery Act, 71% believed that there is a likelihood of modern slavery occurring at some point within their supply chains and 97% cited reputational risk resulting from public exposure to worker abuse found in supply chains as the strongest driver for company action.

John Lewis and Next are not alone, far from it. Many examples have appeared across sectors globally where companies have been linked, knowingly or unknowingly, to modern slavery through procuring goods and services, which at some point within the value chain, have been delivered to them at the hands of exploitation.

To name but a few diverse examples:

  • Nestlé, the world’s largest food-maker and one of the most recognisable household brands, discovered workers being brutally treated in companies in its supply chains in Thailand’s seafood industry. Many of the workers were from Myanmar and Cambodia; some had been literally chained to fishing boats, enslaved up to 8 years and suffering horrendous abuse.
  • Patagonia, the clothing retailer, found debt bondage in its supply chain discovering that factory workers in Taiwan were being charged two years’ worth of wages by labour brokers just to get a job.

Importantly, however, these companies took it upon themselves to investigate and then self-disclose voluntarily to the public that customers were buying products potentially connected to unpaid and abused migrant workers, and crucially reported exactly what was is going to be done to put things right. In understanding how widespread the issue is and taking proactive action, rather than being vilified, these companies were rightly applauded for their bravery in confronting the issue head-on.

As legislation continues to mandate companies across the world to take action and be more transparent, particularly in the UK, France and in the US, the risk for businesses that ignore these issues increases. On the other hand, those that take a proactive stance can benefit from enhanced reputation and improved risk management.

Figuring out how modern slavery could relate to one’s industry can feel like a complex and daunting task. According to the Mekong Club, an organisation committed to mobilising the private sector to disrupt and end modern slavery, companies tend to go through the following phases when understanding and addressing this issue:

  • Understanding:  Many companies start out not knowing anything about the issue of modern slavery. Because of evolving factors that pose a potential business and reputational risk, a business begins by first seeking information. This could be through online research, attending conferences, receiving technical support from an NGO or consultant firm, or bringing in an outside speaker to create awareness.  
  • Commitment: Once this information has been collected and analysed, many companies decide to move forward to establish an internal governance system and assign responsibility. The personnel assigned to take action can come from a variety of departments such as legal & compliance, communications, CSR, procurement or risk management. Initial activities undertaken might include reviewing internal and external policies, adding stipulations and commitments to codes of conduct and procurement contracts with partners and suppliers to ensure the organisation is in line with prevailing trends and legal obligations. Many companies also develop an internal action plan to outline the steps that it will follow, along with the resources required.
  • Action: Having committed to this action plan, companies carry out internal risk assessments to identify any vulnerability within their business. For banks, this might include identifying suspicious transactions that could be linked to modern slavery to reduce the possibility of the bank being fined for money laundering. For manufacturers, this may mean auditing supply chains to ensure that there are no exploitative labour practices by reviewing international recruitment practices, working conditions, and existing contract schemes for example. Capacity building of employees and suppliers and regular monitoring of supply chains are also important elements of a viable action program. If any vulnerabilities are identified, an attempt is made to address them with whatever means are available.
  • Leadership:  After implementing the actions listed above, some companies go further to proactively address the issue. The most recent Stop Slavery Award organised by the Thompson Reuters Foundation commended the following companies for their dedication to tackling trafficking and slavery:
    • adidas, for the transparency of its audits, strength of responsible sourcing guidelines, as well as its robust tools to trace higher-risk supply chains;
    • Co-Op for having excelled in business partnership engagement and for demonstrating excellence in supplier engagement and capacity building. It was also praised for supporting victims of modern slavery through its “Bright Future” programme which provides employment opportunities to survivors of modern slavery;
    • C&A as being exemplary for the transparency used to address and resolve issues found in its supply chain; and
    • Intel was particularly commended for an initiative (among others) which leverages the company’s analytics and uses Artificial Intelligence to disrupt child sexual exploitation.

We are incredibly proud to have adidas as a member of our regional D&I in Asia Network (DIAN), and Intel as a member of our DIAN India Network.

The Power of Collaboration

Tackling an issue as grave and as large as this needs to be done in collaboration. Working groups such as the Responsible Business Alliance, Stop Slavery Hotel Industry Network, the Better Cotton Initiative help to drive industry-wide standards. Forums and safe spaces to discuss concerns are provided locally from the likes of the Mekong Club, Liberty Asia and the Ethical Trade Initiative. Many other organisations such as Verité and the Fair Labour Association help to provide accountability and transparency within supply chains.

At Community Business, our Responsible Business Network (RBN) facilitates learning and sharing on a number of CSR and responsible business issues, including those related to human trafficking and modern slavery and the impact on business. We regularly collaborate with industry experts and consultants to help equip our members to tackle head on any issues that may arise throughout their supply chains.

Modern slavery must truly be abolished as we thought it had been many years ago. To drive this, business can, and must, be the driver of change.

 

About the Author: Written on behalf of Community Business by Rebecca Donnellan, Director of Sustainability at MGM MACAU