Sometimes, the threat of financial consequences is enough to spur organizations to action. For example, in 2020, the threat of restricted access to the U.S. market spurred a company to make changes to address potential forced labor risk within its supply chain. The rubber glove manufacturer quickly undertook remediation to resolve the human rights issues associated with two subsidiaries.
Mitigating forced labor risk from a sector perspective
The Bingham Modern Slavery and Human Rights Policy and Evidence Centre suggests that “Import bans may also have positive consequences beyond their direct scope. For example, businesses in a sector or geography that is affected by an import ban may attempt to improve their labor standards to avoid being subject to a ban themselves.”
Some sector-based organizations have already embraced initiatives to remove forced labor from their supply chains. The Consumer Goods Forum, for instance, has created a Human Rights Coalition (HRC) to work with member companies to address unfair labor practices wherever they take place. HRC members are committed to applying three principles to global supply chains and business operations
Every worker should have freedom of movement.
Practices like retention of passports or possessions of workers is a common contributor to forced labor.
No worker should pay for a job.
Too often, situations that lead to forced labor occur because workers have indebted themselves through unscrupulous recruitment practices that charge workers fees for job placement.
No worker should be indebted or coerced to work.
Unfortunately, many workers find themselves pressured to work under unsafe conditions or excessive hours or risk losing pay
Similar collaborations have been undertaken in other areas of elevated risk.SAFE Seas (Safeguarding Against and Addressing Fishers’ Exploitation at Sea)works in partnership with government agencies and the private sector alike to address forced labor in the fishing industry. The Netherland’s-based Clean Clothes Campaign began its mission to eradicate forced labor from the fashion supply chain network in 1989. It has expanded to become a worldwide network with hundreds of affiliated organizations and trade unions joining the effort.
Raising risk management stakes in high-risk regions or sectors
There’s certainly work ahead. KnowTheChain (KTC) notes that voluntary disclosures or regulator-led reporting requirements have not been as effective as hoped. In a recent assessment of reporting data, KTC found:
- 25% of companies assessed do not include human rights risk assessment of their supply chains
- 55% of companies do not report on any forced labor risks they have identified in their assessments
- Only 1 in 5 companies disclose evidence of responsible purchasing practices
The questionable effectiveness of voluntary programs is one reason that governments are moving toward mandatory supply chain due diligence.
Already, detaining shipments can be a deterrent because of the financial stakes. The US Customs and Border Protection (CPB) has the authority to seize shipments if it suspects that forced labor is involved at any point in the supply chain, from raw materials to finished goods. On numerous occasions, the US has established region-based rules that require the US Customs and Border Protection (CBP) to presume goods originating from a specific region involve forced labor when deciding to deny or permit entry. And enforcement is definitely on the rise.
According to Washington D.C. legal firm Miller & Chevalier, the 280 percent increase in detained shipments from 2020 to 2021 proves that the CBP is making full use of its authority. And with mandatory supply chain due diligence on the horizon, the cost for non-compliance will only grow. “Taken together,” states Miller & Chevalier, “these lessons underscore the need for companies to focus on human rights due diligence fundamentals, including risk and impact assessment, prevention, mitigation, detection, monitoring, and communication with stakeholders.”
Learn how powerful technology platforms and data from Nexis Solutions can help organizations establish proactive supply chain due diligence.