Even if Consumers Aren’t Aware of Human Trafficking, Companies Need to Be

Stephen DeAngelis

March 06, 2020

“It’s been 20 years since passage of the Victims of Trafficking and Violence Protection Act of 2000,” writes Robert J. Bowman, Managing Editor of SupplyChainBrain. “Yet public awareness of human trafficking in global supply chains remains shockingly deficient.”[1] Raising awareness could make a difference. Bowman reports a national survey by SAP Ariba and SAP Fieldglass found, “60% of consumers would stop using a product if they knew that human trafficking or forced labor was used to create it.” What dismays Bowman are the 40% of the population “who seemingly don’t care about this crucial issue of human rights, and how it impacts what they buy.” Bowman finds this lack of concern shocking considering the scope of the problem. He reports, “The International Labour Organization [estimates] that 40 million people are subjected to modern slavery, 25 million are in forced labor and 15 million are in forced marriage.”

Looking at those staggering numbers, Bowman is forced to ask, “Why this apparent apathy among a large percentage of consumers?” My initial reaction to Bowman’s question was the lack of concern could be the result of crisis overload or simply a reflection of the current political climate. Bowman believes lack of consumer information could be the answer. He explains, “In the SAP survey, 48% said they were unsure whether the products they currently buy are Fair Trade Certified. And 55% believe they lack the information they need to make an educated decision about purchasing fair-labor products. (In the glass-half-full department, 51% of surveyed consumers said it was the responsibility of brands to ensure that forced labor wasn’t used in the making of their products. And 53% expressed a willingness to pay more for a product if wasn’t thus tainted.)”

Human trafficking is pervasive in the supply chain

Dan Viederman (@DViederman), Managing Director at Working Capital Fund, reports, “The U.S. government’s official list of goods made with forced and child labor now captures 148 goods from 76 countries. These problems appear in unexpected places and touch nearly every consumer in the world.”[2] Patrick Burnson, Executive Editor of Supply Chain Management Review, reports, “While many supply chain stakeholders believe all forms of global slavery were abolished more than a hundred and fifty years ago, new research reveals that the world has more slaves today than any other time.”[3] He adds, “Slavery is happening in every country and irrelevant of their place in the supply chain, businesses can be caught in the same situation because of their supplier’s labor practices. Just because a company is based in a developed economy does not mean it is immune.”

Shanil Williams explains, “The modern economy relies on global supply chains moving materials, components and finished products around the globe. However, it is not always easy for companies to comply with social standards and human rights in their supply chain network while the consequences of failing to do so are increasingly severe: Human rights violations in supply chains can not only cause a blow to a company’s reputation or result in costly liability exposures, but could also bring potential lawsuits, shareholder class actions and even personal accountability for directors and officers.”[4] William Shepherd and Jeff Schacknow, lawyers with the firm Holland & Knight LLP, report companies reliant on government contracts are especially vulnerable if human trafficking is found in their supply chains. They explain, “While ‘modern slavery’ includes traditional notions of slavery like forced labor and human trafficking, it also can include the removal of laborer passports, exorbitant recruiting fees for third-party contractors, refusal to allow laborers to leave, lack of a written contract, and lack of labor documents in the employee’s native language. The prevalence of modern slavery in your supply chain is a matter of degree. Manufacturers in the U.S. government contracting space that permit these conditions in their supply chains risk losing their U.S. government contracts.”[5]

When it comes to human trafficking in the supply chain, ignorance is not bliss. Shepherd and Schacknow explain, “No longer can a company plead ignorance. No longer can a company attest that it has representations and warranties from its suppliers about the conditions of laborers all along the supply chain. Both [the 2016 Trade Facilitation and Trade Enforcement Act (TFTEA)] and [FAR 22.17] put the onus on companies to check on labor conditions and to make them better.”

What companies can do

Shepherd and Schacknow assert, “A modern slavery compliance plan should fit within any company’s existing commitment to corporate social responsibility. Manufacturers with large supply chains need to first identify where in their supply chains (either because of the geographic location or the nature of the type of work) they are most exposed to a risk of modern slavery. Then they should develop both a training curriculum to help employees spot modern slavery and a vetting process to help ensure third parties operating within the supply chain comply with international standards for labor conditions.” The editorial staff at Material Handling & Logistics (MH&L) suggest five steps companies can take to combat human trafficking.[6] They are:

1. Involve C-suite leadership in identifying risky business partners and locations. The MH&L staff writes, “When it comes to fighting trafficking effective leadership comes from the top.” Viederman notes, “Knowing where goods come from is complicated enough when dealing with manufacturing, but commodity products present another level of complexity. Companies like SupplyShift and SourceMap can assist in capturing data about the nodes of extended supply chains and provide a way for brands to facilitate information gathering at lower tiers.”

2. Measure and monitor problem and solutions. According to the MH&L staff, “Effective companies have developed clear policies explicitly prohibiting human trafficking, including incorporating a zero-tolerance policy for human trafficking in supplier selection procedures. These policies apply to both company operations and the supply chain, including business partners like private employment agencies. These policies have also been integrated into contracts with suppliers and business partners.”

3. Work with suppliers and their employees to ensure compliance. “Companies often require business partners to periodically certify that they have complied with the companies’ requirements on identifying and eradicating human trafficking from their operations,” MH&L staff members write. “These certification requirements are integrated into the companies’ contracts.” Viederman notes, “Where problems are found, companies have an obligation to remedy them.”

4. Examine production planning and recruitment practices. The MH&L staff reports, “Companies that rely on business partners to manufacture and fulfill orders have recognized that certain business conditions may create additional risks of involving entities that are susceptible to forced labor. As such, businesses have sought to manage their demand to ensure that products are produced by known and trusted partners. Recruiters function as a bridge between workers and employers and, at their best, can provide guidance and assist in matching workers with open positions. However, certain recruiters charge recruited workers fees they cannot reasonably be expected to repay.” Viederman notes, “The Cumulus Forced Labor Screen allows buyers in places like Malaysia to identify risky labor recruiters who are frequently a mechanism by which workers end up in debt bondage.”

5. Take action in the community. The MH&L staff reports, “Companies have increasingly launched global, national, or local campaigns in cooperation with the media to promote in the communities in which they operate. Companies have also worked with international organizations, nonprofits, and business or trade associations in establishing industry-wide or country-wide task forces on human trafficking dedicated to raising awareness.”

Viederman insists getting employees involved is also essential. He explains, “Employers frequently falsify records about wages, working hours and health and safety and don’t report systemic problems like gender-based violence. … So the workers’ voice is the most valuable testimony to working conditions.”

Concluding thoughts

Shepherd and Schacknow conclude, “There’s no going back. Governments, consumers, and your competitors are committed to eradicating modern slavery. NGOs, the plaintiffs trial bar, and government agencies are working hand in hand to bring suit and force change. The longer your manufacturing company waits to take initiative, the more likely your company is to face an enforcement action or negative news report that ties your company name to the word slavery. No one wants that.” Bowman adds, “That’s not to say that consumers bear no responsibility for educating themselves about what it took to make the products they buy. But before that can happen, producers, suppliers and marketers need to make the relevant information available in the first place.”

Footnotes
[1] Robert J. Bowman, “Why Don’t More Consumers Care About Human Trafficking in the Supply Chain?SupplyChainBrain, 3 February 2020.
[2] Dan Viederman, “Modern Slavery Is a Problem That Companies Cannot Ignore,” Brink News, 17 December 2019.
[3] Patrick Burnson, “Slavery in the Supply Chain is Still a Reality,” Supply Chain Management Review, 12 December 2019.
[4] Shanil Williams, “Slavery in Supply Chains is an Increasing Concern for Businesses,” Supply & Demand Chain Executive, 20 November 2019.
[5] William Shepherd and Jeff Schacknow, “No Slavery on Our Factory Floor – How Human Trafficking Laws Can Still Shut You Down,” IndustryWeek, 7 February 2018.
[6] Staff, “5 Ways to Get Human Trafficking Out of Supply Chain,” Material Handling & Logistics, 28 January 2019.