Modern slavery and forced labor continue to exist in global supply chains, with recent examples uncovered in industries like shrimp fishing in Thailand and coffee plantations in Brazil. New legislation in countries like the UK and US requires large companies to increase transparency about their efforts to address risks of slavery in their supply chains. While some companies have made progress through initiatives like strengthened recruitment policies and local monitoring of high-risk areas, most agree that eradicating slavery from global supply chains remains a significant challenge that requires distinct policies, activities, and approaches.

1. PAGE 21
of slavery and forced labour practices being
adopted by the suppliers of many of the
products and foods loved in the developed
world continue to shock enlightened
consumers and highlight the true depth
of the problem.
Who’s been caught out?
The New York Times exposé of human
trafficking in the Thai shrimp industry in
2014 has forced the country’s industry to
re-think how and where it processes seafood.
In early 2016, fast-fashion giants Next and
It is the human rights abuse that everybody
likes to maintain is not happening. But
within corporate supply chains across the
developing world – from the cocoa-growing
areas of Ivory Coast, to the seafood sector of
Thailand, and beyond – human trafficking
and modern day slavery is still commonplace,
with people being made to work and live in
appalling conditions with little or no pay.
According to the charity Free the Slaves,
up to 36 million people are enslaved every
year, generating revenues of $150bn through
their labour. Most modern-day slaves (78%)
are in forced, bonded or other types of
obligatory labour, while around a fifth find
themselves in sex slavery. More than half of
slavery victims are female and around one
in four (26%) are children. India has the
highest number of slaves, estimated at around
14 million, with the majority working in
agriculture, construction and manufacturing.
The reasons why slavery still exists in the
21st century are numerous and complex; no
doubt, forced migration caused by civil unrest
is exacerbating the problem. And revelations
MODERN SLAVERY
Timetogivetraffickingtheredlight
More stringent legislation and a renewed focus by NGOs means that eradicating modern slavery and trafficking
should be the number one supply chain priority for business this year
Essential insight
• Modern slavery and forced labour risks
must be dealt with as an absolute priority,
from both a business ethics and supply
continuity perspective.
• NGOs are ramping up their efforts to
expose companies not taking the issue
seriously – there is no longer a hiding place
for corporate neglect on the issue.
• New legislation in the UK will enforce
public statements. But there is still wriggle
room for non-action that NGOs are likely to
jump on with force.
• Learn from the likes of HP and Nestlé who
have developed specific programmes to
reduce risk of slavery exposure.
• Take action now – a new ranking of human
rights performance is due later in 2016.
• Collaboration, increased transparency,
improved data analysis and true leadership
will all help to boost performance and
eradicate the issue.
SUPPLY CHAINS IN FOCUSSUPPLY CHAIN RISK & INNOVATION
71% of companies believe there
is a likelihood of modern slavery
occurring at some point within
their supply chains
Most modern-day slaves (78%)
are in forced, bonded or other
types of obligatory labour,
while around a fifth find
themselves in sex slavery

2. PAGE 22
H&M admitted to identifying child labour in
a number of their supplier factories in Turkey,
including refugee children who had fled
war-torn Syria.
Last month, Nestlé and Jacobs Douwe
Egberts admitted to the fact that beans
coming from Brazilian plantations that use
slave labour may well have made up part of
their coffee – mainly because they do not
know the names of all the plantations that
supply them. Both firms said that, while they
do not buy beans directly from “blacklisted”
farms where it is known human rights abuse
exists, it is impossible to completely rule out
that slavery-like conditions exist within their
supply chain.
According to DanWatch, people trafficked
to work for little or no pay, and forced to live
on rubbish heaps and drink water alongside
animals, may have worked on plantations that
supply the two companies.
The organisation, which spent seven
months investigating the industry, claims that
Brazilian coffee workers earn about $2 (£1.42)
to fill a 60-litre sack of coffee, with less than
2% of the retail price going to the worker.
With human rights abuse said to be
rampant across Brazil – the world’s biggest
exporter of coffee, accounting for a third
of the global market – Nestlé and Jacobs
Douwe Egberts are not likely to be the only
companies at risk.
The number of examples of NGOs
exposing companies and sectors in this
way is only likely to grow. Most companies
(71%) believe there is a likelihood of modern
slavery occurring at some point within their
supply chains, according to a new study
by the Ashridge Centre for Business and
Sustainability. The study’s co-author Quintin
Lake said that all of the companies he spoke
to had publicly committed to ethical trade and
are taking active steps to improve working
conditions in their supply chains. However,
they all agreed that the challenge of modern
slavery requires distinct policies, activities and
approaches. For example, many have realised
that social audits are simply not revealing the
hidden nature of modern slavery.
The corporate world is slowly waking
up to the fact there is a big problem and is
starting to react. The risk to brand reputation
damage is huge and, understandably, there are
few issues CEOs would like their company to
be associated with less.
New legislation
However, it is the emergence of new
legislation which has really taken the issue
from ethics and sustainability teams and into
the boardroom. The UK Modern Slavery
Act, which came into force in October 2015,
obliges all companies with a turnover greater
than £36m to produce an annual statement
that sets out how they are dealing with
eradicating modern day slavery from their
supply chains.
Crucially, the public statement must
describe the parts of the supply chain where
the risk of slavery and human trafficking
exists, and the steps taken to manage those
risks. Firms also have to measure how well
they are preventing slavery and detail any
training or development programmes being
given to staff to help address the issue.
The UK law follows hot on the heels of
California’s Transparency in Supply Chains
Act, which demands explicit information
from manufacturers and retailers doing
business in the US state. The proposed
Business Supply Chain Transparency on
Trafficking and Slavery Act of 2015 could see
similar legislation applied to all US firms with
revenues of over $100m.
The new laws have been widely heralded
as the answer to dealing with modern
slavery once and for all. The Ethical Trading
Initiative, which represents 88 companies with
a combined turnover of more than £166bn,
describes the UK law as a “game-changer”.
But as with any control on social and
environmental ills – from deforestation, to the
SUPPLY CHAIN RISK & INNOVATION SUPPLY CHAINS IN FOCUS
The UK Modern Slavery
Act obliges all companies
with a turnover greater
than £36m to produce an
annual statement that
sets out how they are
dealing with the issue
Nestlé and Jacobs Douwe
Egberts say they don’t
know the the names of
all the plantations that
supply them
BRAZILIAN
COFFEEWORKERS
EARN$2
to fill a 60-litre sack of
coffee – less than 2%
of the retail price

3. PAGE 23
procurement of so-called conflict minerals
– regulation is not always a guarantee of
improvement.
Clothing companies are understandably
cautious about making claims about their
goods not containing cotton that comes from
Uzbekistan, a country with a terrible track
record on forced labour. The complexity of
the cotton supply chain means that the raw
material is often mixed, coming from different
source spinning mills.
Auditing and certification has its limits
too, according to the University of Sheffield.
In a new study into human rights abuses
in corporate supply chains, senior lecturer
Dr Genevieve LeBaron points to the fact
that companies have “designed a system of
self-regulation that allows their suppliers
to cover-up abuses and easily cheat a weak
inspection system”.
Some progress
However, some companies are making good
progress, particularly in sectors most at
risk. The electronics manufacturer HP has
made a series of policy changes on labour
practices throughout its global supply
chains. Most notably, it has become the first
US ICT firm to stop the common use of
recruitment agencies to hire foreign migrant
workers among its suppliers. The practices of
recruitment agencies, which often hire poor
workers in one country for employment in
another, are being more heavily scrutinised
over their role in facilitating forced labour
and slavery, consciously or otherwise. Dan
Viederman, the head of Verité, the NGO that
has been working with HP to develop the new
recruitment policies, says that the company’s
new Foreign Migrant Standard “sets a new
bar” and is likely result in “substantial
financial benefit” to the foreign migrant
workers along the company’s supply chain.
Similarly, Nestlé – now under more
pressure than most – has initiated a
monitoring and remediation system to
address child labour in its cocoa supply chain.
By recruiting and training local agents to work
in the field, it can identify children it feels
might be at risk and intervene. This could be
something as simple as helping a family to get
a copy of their child’s birth certificate so he or
she can attend school, or providing them with
school equipment and uniforms.
Time to take action
The new UK legislation has not escaped
criticism with many claiming it does not go
far enough. For example, it is completely
lawful under the act for a company to issue a
statement saying it is taking no steps at all to
identify or combat slavery.
But the requirement to produce a public
statement is arguably the most innovative
and effective part of the new law. A ramped
up demand for greater knowledge and
transparency will force businesses to actively
tackle slavery, with the public statement
empowering the public, consumers and
investors – information they can use to start
scrutinising company practices further.
The new world-first Corporate Human
Rights Benchmark (CHRB), designed to rank
the human rights performance of the world’s
biggest listed companies, will add further
scrutiny. The CHRB says it has developed a
rigorous methodology which it will pilot with
the top 100 companies from the agricultural
products, apparel and extractives industries.
The first results are set to be published in
November 2016.
It won’t be good enough to see this as a
marketing exercise. Last summer, Costco was
sued by a consumer in California for making
false claims about the use of slave labour in its
seafood products, forcing them to pull stock
from supermarkets across the US at a huge cost.
SUPPLY CHAIN RISK & INNOVATION SUPPLY CHAINS IN FOCUS
The results of the world’s first
ranking of corporate human
rights will be published in
November 2016
Source: Corporate Human Rights Benchmark
A1 Policy commitments
B1 Human rights due diligence
A2 Board level accountability
B2
Embedding respect for human rights
in culture and management systems
F
Transparency
10%
C
Remedies
and grievance
mechanisms
15%
D
Performance:
company
human rights
practices
20%
E
Performance:
responses
to serious
allegations
20%
A
Governance
and policies
10%
5% 5%
A1 A2
B
Embedding
respect and
human rights
due diligence
25%
10% 15%
B1 B2

4. PAGE 24
And it shouldn’t be seen as purely a
box-ticking exercise either. It is wrong to
assume that certain industries, sectors or
locations have no exposure to slavery issues.
While a shrimp peeling factory might report
that it is paying and treating staff fairly, there
could still be issues associated with the vessels
in which it is buying the shrimp from.
Tactics
At the heart of current corporate efforts to
take action is a focus on transparency and
data analysis. More and more companies
are making use of supply chain assessment
software to better understand where the
biggest risks are and to develop plans to
prioritise supplier engagement efforts that will
help to eradicate the problem at source – via
improved training, updates to supplier code
of conduct policies and ensuring minimum
labour standards are a part of all contracts.
Companies will need to build on existing
corporate policy and risk-management systems,
such as health and safety, or policies to address
existing legislation such as the UK Bribery
Act – to see how these might be expanded to
incorporate the Modern Slavery Act.
Much of the data being uncovered by
auditing is identifying signs of forced labour
but perhaps not recognising it as such.
Non-payment of wages, withholding of
passports, excessive charges around housing
– all of these issues might well fall under the
banner of “slavery”. There is also a call for
SUPPLY CHAIN RISK & INNOVATION SUPPLY CHAINS IN FOCUS
greater collaboration between companies; to
put competition to one side for a moment and
to share knowledge, insights and best practice.
After all, many competing companies are
sourcing from the same parts of the world,
and often from the same suppliers.
One interesting finding of the Ashridge
Centre for Business and Sustainability study is
that addressing modern slavery is a leadership
issue. Where boards and chief executives
are demonstrating active engagement on
the issue, those companies are much further
ahead in their efforts to tackle it than those
where this leadership is not yet evident. In
this respect it is a simple question of good
management to get to grips with this critical
business risk properly. ★
Source: Free the Slaves
THE TOP 10 PER-CAPITA SLAVERY HOT SPOTS ARE:
INDIA
Indiahasthelargestnumber
ofslaveryvictimsat
14million
MAURITANIA
Mauritaniahasthe
highestpercentage
ofitspopulationin
slaveryat4%
Anestimated60,000victimsof
slaveryareenslavedintheUS
NEPAL
GABONGAMBIA IVORY COAST
BENIN
PAKISTANMOLDOVAHAITI
36 million are
enslaved every year
Slavery generates
$150bn for
traffickers each year
78% of slavery
victims are in labour
slavery
55% of slavery
victims are women
and girls
26% of slavery
victims are children
under 18