In today’s globalized economy, all companies need to monitor their supply chains at home and abroad to ensure that nobody is being exploited or otherwise subjected to modern forms of slavery. In addition to the humanitarian and corporate social responsibility aspects of slavery, there is a huge commercial risk for organizations too. This ranges from a failure to satisfy legislative requirements and consumers’ ethical expectations through to the associated fines, custodial sentences and boycotts.
Exploitative practices including slavery may be particularly prevalent in workplaces that rely upon migrant labor. These include farms needing seasonal help with picking and packing, garment factories and other production lines where cheap labor can help keep prices down, and even private households employing domestic workers.
According to the International Organization for Migration, approximately one in seven people today is a migrant and absolute numbers are increasing. Human migration is driven by factors including war, poverty, human rights abuses and climate change.
The Walk Free Foundation, which monitors across 167 countries for ‘all of the practices that trap people in modern servitude, including human trafficking, forced labor, and slavery’ estimates the number affected is 35.8 million worldwide, with the findings published in the Global Slavery Index (GSI).
Examples of modern slavery
Recently, two large textile retailers were exposed as employing Syrian refugee children in their clothing factories in Turkey. The not-for-profit Business and Human Rights Resource Center (BHRRC) claimed that ‘Only a few brands appear to have engaged with the extent and the complexity of these issues in their Turkish supply base.’ The organization also highlighted ineffective investigative practices, including pre-announced audit visits.
The US and EU censured the Thai fishing industry for some of its labor practices. The industry’s response must balance the need to preserve these key Western seafood markets against the risk of thousands of job losses posed by corrective action. EU representatives are currently re-evaluating the situation on unregulated, unreported and illegal (UUI) fishing in Thailand and a decision is expected soon.
In February 2016, a UK factory owner was sentenced to 27 months in prison under the country’s Modern Slavery Act 2015 (see below). The investigation found that Hungarian workers were trafficked, housed in squalid conditions and required to work up to 80 hours a week for negligible pay. These unscrupulous practices meant that the manufacturer was able to supply beds to large retailers, despite them having strong audit practices in place.
Introducing new laws
Kilian Moote, project director of KnowTheChain, has highlighted the increasing sensitivity of public opinion to unethical business practices and the fact that some companies are now pursuing good practice beyond legislative requirements. Such comments only make sense in the wake of legislation introduced in the US and UK in recent years:
The California Transparency in Supply Chains Act 2010
Effective from January 2012, the Act was designed to inform consumer choice by requiring companies with revenues of over $100 million to report on how they’re ridding their supply chains of slavery and trafficking. Early estimates suggested that the reporting requirement would affect about 3,200 companies based in California or trading there. However, reports have emerged that compliance has been patchy, leading to criticisms of the Act’s effectiveness. As a result, enforcement has been stepped up and new guidelines issued, with Kilian Moote saying: “Nearly five years after SB 657 [the California Act] was signed into law, there is a convergence of consumer behavior, public desire for transparency, and legislative engagement.”
The UK Modern Slavery Act 2015
This legislation consolidates UK law on both slavery and trafficking by both increasing penalties and extending the range of items covered. It requires companies with a turnover of over £36 million to issue an annual statement on action they’re taking to address slavery/trafficking practices in their supply chain (or to state that they’re taking no action). Practical guidance for businesses is available online.
How can SGS help?
SGS has been involved in social accountability since its inception and offering tailored audit services since 1996. We can support organizations by evaluating approaches to modern slavery and monitoring supply chains. This forms part of an overall due diligence approach to responsible sourcing.
With our global network of highly-trained auditors and extensive experience of reviewing operations, labor standards, environmental compliance and business integrity, we can support your responsible purchasing policies.
For further information, please contact:
Supply Chain Assessment & Solutions Manager
SGS United Kingdom Ltd
t: +44 203 008 7860
SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 85,000 employees, SGS operates a network of over 1,800 offices and laboratories around the world.