"Countries’ economies and companies’ bottom lines can grow by doing right by workers and, in particular, by finding sustainable solutions to end child and forced labor," said Thomas E. Perez, U.S. secretary of Labor under President Barack Obama.
Modern slavery is a global business that generates some $150 billion in annual profits through the exploitation, forced labor and victimization of millions of men, women and children around the world, according to the International Labour Organization. War and geopolitical disruption compound the severity of this societal ill, making refugees prime targets for oppression.
David Craig, president of Thomson Reuters Financial and Risk business, rightly points out how “it is astonishing that more than two centuries after the United Kingdom outlawed slavery, this practice can endure across the world. It is reported that the ‘cost’ of a slave is lower now than it has been for three centuries – a genuinely chilling thought.”
These points underscore the pervasive yet silent nature of modern slavery; a reality that poses sizable risk to modern-day businesses.
Modern slavery supply chain risk
Interconnected, multi-tiered supply chains are hallmarks of 21st century globalization. Nevertheless, many countries still lack regulations against child and forced labor.
As an example, today’s international business environment makes it very difficult for an automotive manufacturer in western Europe to keep track of all the organizations contributing parts to the vehicles that are ultimately driven off a showroom floor.
Industries with high instances of child labor include gold, bricks, cotton, sugarcane, coffee and tobacco, to name a few, as reported by the U.S. Bureau of International Labor Affairs. These are common items in many households, yet their path from inception to consumption is oftentimes tainted.
Turning a corporate blind eye on modern slavery, including in an organization’s extended supply chain, is inexcusable. In addition to that being a violation of moral conscience, it can be a source of significant reputational damage. The latter, in addition to increased regulations, are the main reasons business leaders look to change.
A number of initiatives and regulations have been penned to raise awareness for human slavery and implement clear supply-chain requirements.
Some examples include the U.S. Trafficking Victims Protection Act of 2000, U.S. California Transparency in Supply Chains Act of 2010, UK Modern Slavery Act of 2015 and the Trade Facilitation and Trade Enforcement Act of 2016, to name a few. These are a start, but do not yet cover every country and jurisdiction.
Reducing the risk of modern slavery
There are steps a corporation can take to minimize its supply-chain risk related to modern slavery. These include actions such as:
1. Verifying the legal standing of the suppliers with which an organization works. This includes reviewing registration documents, audited financial statements, shareholder and director lists and former trading names.
2. Conducting a media audit on the company to find any news coverage that indicates a negative third-party track record.
3. Reviewing regulatory, litigation and bankruptcy databases in the jurisdictions where the supplier is registered and operates.
These are just some of the actions a company can take to know its suppliers and reduce third-party risk. For the full list of actions and solutions to combat modern slavery, download the report at tr.com/endslavery.
Download the report – Answers on modern slavery in business supply chains.