Could Your Business be Profiting From Slavery?

 In News

Globalization shapes the world as we know it today. Whether by the transfer of capital, goods, people, or ideas, our lives are impacted by its forces. It has made fresh shrimp available to people in the middle of the prairies, put cheap and fast fashion at our fingertips, and made smartphones, hearing aids and pacemakers possible through access to precious metals and minerals from around the world.

In the drive for competitiveness in a globalized economy, keeping prices low has led to a reliance on the availability of cheap or temporary labour around the world. Combined with increasingly long and complex supply chains and the shortcomings of audits in uncovering abuses; the exploitation of forced, abusive, or child labour has become one of the most important and complex challenges of our time.

Slavery in all its forms is globally condemned; however, the Global Slavery Index estimates that more than 45 million people around the world are in some form of slavery. UNICEF reports that the Convention on the Rights of the Child is the “most rapidly and widely ratified international human rights treaty in history,” yet an estimated 150 million children worldwide are engaged in child labour.

Slavery is a Threat to Globalization

We spoke with Phil Bloomer, Executive Director of the Business and Human Rights Resource Centre, who sees forced labour as one of the most vital contemporary issues requiring a coordinated international policy response. “There are countries starting to develop more nationalist and protectionist models because they are fearful of the competition that they face from countries that are using forced labour,” he explains, “Modern slavery is a serious threat to the success of a global economy.”

Governments are working to tackle this issue with various mandatory reporting and due diligence policies. The UK Modern Slavery Act, passed in 2015, set the standard and similar legislation is now being explored in Australia. The Netherlands recently adopted a Child Labour Law, and the US closed a loophole in its Trade Facilitation and Trade Enforcement Act to prohibit the import of any goods connected to the use of forced labour. This emerging patchwork of international policy has prompted the call for an international anti-slavery agreement.

Canadian Leadership

We pride ourselves as Canadians on our longstanding international commitment to human rights. The reality is that Canadian businesses are not immune to the challenges of international supply chains and risky operating environments abroad. A report by World Vision Canada estimates that “more than $34 billion in Canadian products each year may have child or forced labour in their supply chains,” and reveals that 52% of Canadian companies reviewed are not providing any public reporting on what they are doing to combat the problem.

The Canadian government recently made the decision to ratify the International Labour Organization (ILO) Minimum Age Convention, sending a message on its stance against child labour and exploitation. Although there are currently no mandatory non-financial reporting requirements in Canada, some believe that it is only a matter of time.

The Bottom Line

If your leadership and procurement managers are not frequently talking about forced and child labour in your supply chain, and if you don’t have a clear picture of every point along your supply chain, you should be concerned. Here’s why:

Cost

  • As international human rights norms and standards harden, Canadian courts have demonstrated a willingness to hear cases alleging human rights abuses in other jurisdictions, including claims of forced labour abroad.
  • A report by the Supply Chain Management Association suggests that implementing an ethical/sustainable supply chain can result in a cost reduction of 9-16%.
  • Another study in India revealed that the combined environmental and social costs of Fairtrade cotton farming are five times lower than that of conventional farming.

Risk Management

  • There is a link between human rights risk and political risk; excluding considerations such as forced labour provides an incomplete picture to investors who want to fully understand the risk landscape and know what companies are doing to address them.

Customer Demand

  • Research shows that most consumers are willing to make sacrifices to ensure the products they purchase are socially and environmentally responsible
  • Because customers care where their products come from, being able to demonstrate traceability in a supply chain can add as much as 5-25% to the price point of certain products

We see the impact of customer demand starting to play out in the Canadian mining sector. Ben Chalmers, Vice President- Sustainable Development for the Mining Association of Canada (MAC) highlights the example of the Electronics Industry Citizenship Coalition and its code of conduct, which includes reference to addressing forced and child labour in the industrial supply chain.

“Given the motivations of important customers such as Apple, we are beginning to explore how our Toward Sustainable Mining (TSM) initiative might be used to demonstrate responsible sourcing of minerals and metals beginning at the mine site.  This could include looking at how to incorporate key human rights issues such as child labour and forced labour in TSM.”

All responsible businesses strive to contribute to positive social outcomes through their business or social investments. Tackling the challenge of modern slavery can seem overwhelming and complex. Taking a rights-based approach can provide a useful framework for advancing this important work.

Make a Commitment – Put Human Rights First

It may seem like a no-brainer in this case, but simply prioritizing respect for human rights in your business will raise the awareness of your employees and suppliers, promote innovation and drive performance. Set bold targets: chocolatier Barry Callebeaut has set the goal of zero child labour in its supply chain by 2025. As the saying goes, what gets measured gets done.

Improve Engagement Through Transparency

Effective communication and transparent disclosure are some of the building blocks of strong relationships and improved social performance. Mandatory non-financial disclosure is quickly becoming the norm and Canadian companies have room to improve. If your company is not ready to produce a sustainability or human rights report, a first step could be to release a statement on the steps your company is taking to tackle modern slavery.

Know Your Risks – Build Capacity

Risk and impact assessments help companies better understand their material and salient issues, and identify where they may be causing or contributing to labour rights abuses. Being able to ‘see’ the entire supply chain is helpful to identify where those risks exist. One solution being explored is Blockchain technology, currently being tested by BHP Billiton and Walmart, among others, to track the path of materials in parts of their supply chain.

Canadian Companies Need to Step Up

Given Canada’s reputation for advocating for human rights, Mr. Bloomer suggests that the Canadian government has an opportunity to step out as a leader in ending modern slavery by acting as a broker in the global conversation. In terms of our own policy framework, he suggests, “Canada could combine the mandatory transparency regulations from the UK and due diligence from the US to send a strong message of leadership.”

However, the government is only one stakeholder in this important work. Canadian businesses will play a critical role in determining the national response to the international threat posed by forced and child labour.

Be the person in your company to start the conversation by asking “what are we doing to combat modern slavery?”

This article originally appeared on INLE Social Performance’s website. The article has been published with permission from the original author. 

Recent Posts