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Sponsor Content

Rooting out slaves

How companies are eliminating modern slavery from supply chains

Muhammed Ariful Islam was a Dhaka painter before being held captive as a slave aboard a Thai ship.
(Athit Perawongmetha/Reuters)

In November 2014, Hewlett Packard Enterprise unveiled a sweeping new standard for its suppliers. In addition to other environmental and social requirements, HPE’s suppliers would not charge employment fees directly to their workers, nor would they employ workers through third party brokers — two factors that have historically indicated the use of modern-day slaves.

“We’re doing specialized forced labour audits of supplier sites in high-risk locations,” says Cimarron Nix, HPE’s program manager for human rights and supply chain responsibility. “We also … look at some of the key risks for forced labour, and then request some key performance indicators to understand where the risk populations might exist.”

According to Nix, HPE’s suppliers are already well-prepared: the company has been training its suppliers across 15 countries on its code of conduct since 2011, with the aim of helping teams to recognize and evaluate how their practices measure up to HPE’s standards.

The company also requires its standard be applied further down the supply chain, where, disconnected from scrutiny and accountability, slavery is more likely to occur. Modern slavery exists in various forms, running the spectrum from bonded and forced labour to child slavery, and though it hides in the shadows it occurs on a vast scale. According to estimates from the International Labour Organization and the Global Slavery Index, there are between 21 and 36 million men, women and children worldwide experiencing some form of slavery.

Unlike HPE, most corporations lack a general understanding of their lower-tier suppliers, and risk becoming accidental supporters of slavery when suppliers employing forced labourers slip into their supply chains.

Just this month, a new report commissioned by Nestlé and released by U.S. anti-slavery organization Verité revealed that slavery was responsible for much of the international food company’s seafood catch in Thailand.

“Nestlé is committed to eliminating forced labour in our seafood supply chain in Thailand, working alongside other stakeholders to tackle this serious and complex issue,” said Nestlé’s Executive Vice President of Operations Magdi Batato in a written statement.

“This will be neither a quick nor an easy endeavour, but we look forward to making significant progress in the months ahead.”

The Nestlé example is just one example of why many companies are beginning to consider supply chain audits increasingly important, and are making sure they know the backgrounds of more than just their tier-one suppliers.

“In cases where a distant supplier uses a third party to source manpower it is easy for some very important things to slip through the cracks,” says John Solomon, the director of threat research at Thomson Reuters World-Check. “Having more due diligence on this link in the supply chain would make a positive difference.”

(iStockphoto)

Rooting out slavery

Inside Thailand's fishing industry

How does slave-caught fish end up on your dinner plate?

Because slave labour often occurs among lower-tier suppliers within the chain, it can be difficult to track. In Thailand’s notorious fishing industry, for example, labour brokers or crewing agencies will recruit what Solomon calls “vulnerable, destitute and desperate” people and keep them in line by withholding a significant portion of their pay until an undetermined date, restricting their movements, taking away important identification documents, or some combination of the three.

Enslaved workers, sent out on boats for months or years at a time, catch fish that are then transferred to another vessel and become part of a much larger shipment. Refrigerated cargo ships, Solomon adds, can hold fish from hundreds of separate boats, so it would be difficult to track the origins of any given shipment. The trans-shipped catch is then taken to market, where corporations or their suppliers purchase the fish they need, and then sell it worldwide. Slave-caught fish can find its way to Canadian grocery stores and restaurants, and can also show up as fishmeal in pet food.

“A pattern is emerging where the crewing agencies are the ones driving the forced labour in the supply chain. So I would certainly say companies need to find information about who is supplying the manpower,” says Solomon. “If there is any history of it then it is likely it is still going on, and is a company to avoid.”

But as Solomon points out, the path fish take from a slave’s fishing rod or catch net to the worldwide market is hard to track “without eyes on the ground and eyes in the sky.”

To determine if fish purchased by a company or its suppliers was slave-caught, the company would have to verify the men are enslaved and watch them catch the fish; see the catch loaded onto a transfer ship; track the ship to market, and then follow the supply trucks leaving the market. The difficulty of connecting a shipment of fish to the slaves who caught it is emblematic of the same tracking challenges in other industries employing forced labour.

In India, the practice of bonded labour in brick kilns has seen workers trapped in perpetual bondage. (Danish Siddiqui / Reuters)

Rooting out slavery

Auditing the chain

Though tracking slave labour can be difficult, experts say there are tell-tale signs companies can look for when conducting their own audits. According to Dan Viederman, the CEO of Verité, a U.S. anti-slavery organization that consults companies — including HPE — on risks in their supply chains, one reliably accurate sign is if a supplier employs migrant workers recruited through third party labour brokers. “Wherever we find foreign migrant workers, we find a heightened risk of modern day slavery,” Viederman says.

Solomon also says that an unclear, opaque company ownership structure, workers from “vulnerable populations,” and bosses who are of different nationalities or ethnicities from their labourers are considered “red flags.” He says that goods offered well below market value should also be a tip-off. “If it seems like too good of a deal to be true, it probably is,” he says.

Human rights groups say thousands of children and illegal Myanmar migrants are working in Thailand's $2 billion-a-year shrimp export industry. (Chaiwat Subprasom/Reuters)


While companies in Western countries have started to conduct audits on their supply chains to identify potential risks like enslaved workers employed by third-party suppliers — in some cases in order to disclose such links to comply with new legislation — some experts say the ethical audits are being done to protect reputations, and are not designed to be thorough.

“There’s been a growth over the past 10 or 15 years in this industry of ethical auditing,” says Aidan McQuade, the director of Anti-Slavery International, a UK-based charitable organization that works to eliminate slavery worldwide, “which is principally there in order to find nothing, in order to provide plausible deniability for companies.”

Viederman agrees with that assessment. “The due diligence that is undertaken by companies is inadequate even to finding slavery at the top tier of their suppliers, much less at a lower tier of manufacturers and in commodity production,” he says. “Even when they're only looking at first-tier manufacturing they're generally doing so with fairly superficial approaches that don't give them information that would highlight the risk of slavery.”

Viederman says that, based on Verite’s knowledge and his “educated opinion,” under 10 companies are using due diligence programs that would give them a chance of finding serious problems.

Better due diligence is needed, both agree — not just on a company’s immediate suppliers but all throughout its supply chain.

A boy shows his hands after preparing soil to make bricks in a brick field on the outskirts of Dhaka, India. (Andrew Biraj / Reuters)

Rooting out slavery

Enforcing codes of conduct

Both Viederman and McQuade encourage companies that have learned through auditing that their supply chain contains slave labour to be transparent about it, even if there are no laws requiring transparency in the country in which they operate. McQuade also suggests reaching out to anti-slavery organizations for guidance about next steps.

McQuade notes that there is a challenging ethical issue to navigate when it comes to companies choosing to disassociate with suppliers that use slavery or use a third party organization that employs slaves. “There’s that tension between poverty reduction and the fact that some of the...industrial development is basically human rights abuses,” he says, speaking of the Thai fishing industry specifically. “It’s a very difficult ethical issue.”

About 78 per cent of enslaved workers are in manual labour industries like farming, ranching, mining, fishing and brick-making, and service industries working as dish washers, gardeners, janitors and maids.

Verité, Viederman says, advocates for companies to get directly involved with their suppliers using forced or bonded labour, and begin apply their own codes of conduct to those factories — much the same way HPE has. “These companies already have a code of conduct in place, which obligates them to eliminate forced labor where it may exist in their supply base,” Viederman says. “What we're suggesting to them is the ways in which they can do that.” He suggests companies help the labourers repay any recruitment debt they have outstanding, help them to retain their jobs, and institute a grievance system to protect workers going forward.

There are best practice examples out there for companies to emulate, Viederman says. He points to the electronics industry where companies like Apple have stepped up. Apple has, for a long time, had a no-fee requirement in place, and has reimbursed around $21 million to workers who had been charged employment fees. HPE is focusing on the implementation of their new standard this year, and conducting in-person training in high-risk countries like Malaysia, where a Verité report found that 28 per cent of all workers in the country’s electronics industry were forced labourers. Viederman also points to the clothing company Patagonia, which has worked with Verité to engage their fabric suppliers in Taiwan.

At a balloon factory on the outskirts of Dhaka, about 20 children are employed at the factory and most of them work for 12 hours a day. The weekly wage is 150 taka ($2.14) for the children. (Andrew Biraj/Reuters)

Rooting out slavery

Speaking with a ‘common voice’

McQuade also says companies should reach out to local civil societies and governments in the countries where slavery is occurring, to enlist their help. But he acknowledges that in many of these countries, there is widespread corruption and lethargy in governments, police forces and courts which stymies change. “Businesses get a lot of abuse from people like me over their failures in their supply chain. I think much of that criticism is very very well deserved,” McQuade says. “But it’s also important to bear in mind that it’s happening in a context, which is that governments aren’t doing their jobs as well.”

In order to be effective in pushing for widespread reforms in those countries, where there is often corruption and strong resistance to make changes that would protect workers, McQuade contends that companies need to work together in an industry-wide effort rather than advocate individually.

“The attainment of that basic human rights standard should be a pre-competitive issue, and therefore should be something which businesses can work together on in terms of trying to establish that,” he says, citing the example of the outcome of the 2013 Rana Plaza factory collapse in Bangladesh as an example of industry “speaking with a common voice” to affect change.

Immediately following the collapse of the Rana Plaza building in Bangladesh, relatives gathered with pictures of those believed to be trapped under the rubble. (Andrew Biraj/Reuters)


Businesses have been using that common voice in the countries in which they operate to push for another kind of change, McQuade says: legislative reforms requiring corporations be more transparent about slavery in their supply chains.

The U.K. Modern Slavery Act, which came into effect in late 2015, now requires that any company doing business in the United Kingdom must publicly disclose the steps it is taking to ensure slavery or human trafficking is not occurring in its business and supply chain.

“The reason there is a transparency in supply chain clause at all within the U.K. law is because business went to government and said, ‘we need this law in place,’” McQuade says, “because they were recognizing...that other less scrupulous competitors were undercutting them again and again and again, so they needed something to level the playing field.”

Thomson Reuters Know 360 App – Your mobile thought leadership library. Published by professionals for professionals, Thomson Reuters publications provide exclusive insights, ideas and information for the financial, risk, legal and scientific markets. Thomson Reuters Know 360 invites you to learn more and download the app for free to your tablet device or iPhone at thomsonreuters.com/know360app.


This content was produced by The Globe and Mail's advertising department, in consultation with Thomson Reuters. The Globe's editorial department was not involved in its creation.

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