Modern-Day Slavery and Human Trafficking: Is Business Ready to Face Up to It?

Submitted by Joanne Bauer

By Joanne Bauer

For far too long businesses have ignored the risk of forced labor in corporate supply chains -- a situation that reflects the failure not just of business, but of society at large to confront the inconvenient truth of modern day slavery. But at last we may be beginning to see a change.

The facts are knowable: courageous groups like Anti-Slavery International have sounded the alarm since the organization’s founding nearly 175 years ago, its history of activities punctuated by the campaign to lay bare the atrocities of slavery in Belgium King Leopold’s brutal regime in the “Congo Free State.” 

Modern Corporations Implicated in Slavery

In the late 20^th century, truth seekers began pulling back the curtain on the involvement of some of today’s most highly respected auto makers – Volkswagen [XETRA: VOW.DE], Ford [NYSE: F] and GM [NYSE: GM]- in the Third Reich’s enslavement of millions of Jews and Polish people forced to produce in its munitions factories.  

The first corporate-defended lawsuit under the US Alien Tort Statute, Doe v Unocal, ended in a settlement for the victims: among the alleged crimes was forced labor of villagers in the construction of the Yadana gas pipeline by the Burmese military junta in providing security for the oil giants, Unocal and Total.  

In 2006 it was discovered that slave labor in Brazil was being used to make the pig iron that ends up in Ford, Nissan [NYSE: NISSAN.NS], GM and Toyota [NYSE: TM] cars as well as Whirlpool [NYSE: WHR] and Kohler products.  Most recently, Ikea made a public apology after it was discovered that in the mid-1980s, the Swedish furniture maker relied upon East German prison labor to “keep its prices low.”

The ILO Sets The Standard

The International Labor Organization officially recognized the problem back in 1930 with the enactment of the Forced Labor Convention (No 29) and again in 1957 with the Abolition of Forced Labor Convention (No. 105). Despite the gravity of the issue, the ILO remained alone among international institutions in calling attention to it. 

In 1998, with the passage of the ILO Declaration of Fundamental Principles and Rights at Work, the prohibition on forced labor was made one of the four core labor standards. In 2001, the ILO issued its first Global Report [PDF] on the problem, drawing attention to not only its extent, but a newly understood dimension: the crime of human trafficking. 

Forced labor is defined as any work or service that a person is forced to do against his or her will under threat of punishment.  The ILO estimates that today as many as 21 million people are victims of forced labor. 

The Risk of Forced Labor To Business

U.K. risk analysis firm Maplecroft, now highlights the risk to business in its annual reports: in 2011 countries “vital” to the supply chains of multinationals – China, India, Mexico, Indonesia, Malaysia, Viet Nam, Bangladesh, and the Philippines --  were named  “extreme risks” to  business for their high incidence of forced labor. 

Then why has business paid so little attention?

One answer is that supply chain audits rarely turn up the problem: auditors tend to identify and address specific violations – delayed payment of wages, long hours, etc. – without seeing forced labor. Moreover, audits – merely a snapshot of the situation at a point of time -- and standard geographic risk management tools are inadequate to address the global, cross-border nature of human trafficking that accompanies modern day slavery. And then there’s the hidden nature of forced labor, which often takes place several steps down the value chain.

Forced Labor: Government Initiatives

These problems could be addressed with better monitoring tools. Yet, better monitoring brings increased chances of finding forced labor, a finding possibly too repugnant for the public to forgive.  The delay in creating and using those tools is no doubt in part linked with business fears of reputational damage stemming from what better monitoring might turn up.  

Recent government actions in the United States on the issue appear to be finally changing the climate for business action. Exactly a year ago the California Transparency in Supply Chains Act went into effect, mandating that companies that do business in California post on their websites what policies and practices they have in place to address human trafficking in their supply chains. Following on the heels of the passage of the Dodd-Frank provisions for reporting on conflict minerals, the Act represented a rare victory for human rights group in gaining a means to hold companies accountable.

And last September President Obama announced steps the government would take to “redouble” its efforts to combat forced labor and human trafficking, including an executive order that strengthens prohibitions against human-trafficking related activities in federal contracts. Notably, the speech, in which Obama referred to human trafficking as “an outrage” and nothing more than “modern slavery,” was made before business executives attending the Clinton Global Initiative Summit. 

While neither initiative goes far enough, each demonstrates the critical importance of government action in not only setting out mandatory requirements for socially responsible business, but in shining a spotlight on morally repugnant issues like forced labor and defining them as a problem to be reckoned with.  

Investor, NGO and Business Initiatives Against Forced Labor

According to the Institute for Human Rights and Business, combating forced labor and human trafficking is one of top ten business and human rights issues for 2013. And we’ve seen it coming. In 2010, feature film The Whistleblower debuted about sex trafficking during the Bosnia peacekeeping mission, a devastating portrayal of institutionalized atrocities within the very body that is supposed to protect human rights. (It is said that this film was the spark that ignited the Obama Administration’s resolve to eradicate forced labor in connection with government contracts.)  

For the past several years faith-based investors Christian Brothers Investment Services (CBIS)  and Interfaith Center on Corporate Responsibility, have used the opportunities of the World Cup and other large sporting events to encourage the hotel sector to take steps to prevent human trafficking, including pledging to follow a code of conduct developed by the anti-trafficking group, ECPAT.

In 2011 the organization, Verite, which has made forced labor and human trafficking a key focus of its work with companies, launched its  “fair hiring” website and toolkit, “to help direct the many stakeholder groups with the questions needed to ask and steps needed to take in order to eradicate forced labor and slavery in supply chains.” 

CNN launched its Freedom Project to shed light on the problem. That same year the International Labor Rights Forum launched its Free2Work app, which helps consumers evaluate the efforts of brands to address forced labor and child labor. That complemented the work of another newly launched initiative, the Slavery Footprint. 

And this past November, the newly elected president of the American Bar Association, Laurel Bellows, announced that human trafficking will be a major focus. She has created a task force on human trafficking, which among other activities will develop best practices for companies to eradicate human trafficking. 

Now we’re beginning to see the evidence in the business sector. 

Alongside his executive order, Obama announced four business initiatives: the Global Business Coalition Against Trafficking; the US Travel Association’s anti-trafficking toolkit; the Goldman Sachs Foundation-sponsored research partnership with Johns Hopkins University Bloomberg School of Public Health and the Advisory Council on Child Trafficking, focused on prevention of child sex trafficking and treatment of survivors; and the Made in a Free World initiative, to help buyers and suppliers eliminate human trafficking in their supply chains.  

And just before the close of 2012, Virgin Group’s Richard Branson and Australia-based Fortescue Metals’ Andrew Forrest launched a campaign in Yangon, Burma to urge leading global companies to join a voluntary initiative to eradicate forced labor.  

At last, business – and society – appears ready to face the issue. Let’s hope for the sake of vulnerable workers around the world that 2013 brings results.