The dark reality of modern slavery in global supply chains

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The disparity of working lives between those fortunate enough to be reading this blog and victims of human trafficking is incomprehensively vast, yet the product of modern slavery permeates much of our consumption and the supply chains we depend upon.

A recent, but marked, shift towards sustainability has encouraged investors to face up to the realities of climate change, but the murkiness of supply chains means the globalised extent of impoverished workers’ suffering is often hidden from us as consumers.

Yet we see the demand for informed change is growing thanks to pressure from investors, employees and customers. Our purpose, “to impact business today, for a sustainable tomorrow”, must not only focus on what is directly in front of us, but must consider the globalised economy in which we live.

A global issue

Child labour, forced labour and human trafficking in global supply networks have given modern-day slavery a new face. According to the latest global estimates, there are 152 million children in child labour, and 25 million children and adults in forced labour in the world today – but the complexities of monitoring human trafficking make painting a clear picture difficult. 

The reality is that corruption surrounds every point of the supply network, even before landing a job itself. Millions of people pay a large sum of money to job recruiters all around the world, believing that this job will help them to get out of poverty. These are low-wage employees with few or no benefits, little job security, often expected to work in unsanitary and dangerous conditions. They borrow this money at exorbitant interest rates and, because of shady labour contracts, often end up in debt, leaving them impoverished to the point of destitution.

As of June 2021, it is estimated that the goods produced by child labour or forced labour comprises more than 150 products, like coal, cocoa, corn, cotton and garments from 77 countries – all of which end up within the supply chains of large businesses and eventually with consumers across the globe.

Sector by sector

Across sectors, workers are exploited by trafficking enterprises, resulting in $150 billion in annual profits for criminal groups, but relatively few prosecutions.

In agriculture, for example, child and forced labour is rife. And while attention is often paid to undocumented economic migrants, many of those who are driven to desperation by limited job prospects are legal citizens of a country. People in densely populated nations such as China and India often have severely limited employment opportunities, allowing perpetrators to take advantage of desperation and poverty, often employing children as young as five years old. 

An estimated 7% of the global workforce is employed in the construction sector, 10 million of whom work in the Gulf, primarily on large, well-funded construction projects. Both domestic and migrant workers are forced to work 16 hours a day, seven days a week in hazardous conditions. When they refuse to work, they are often threatened or verbally and physically abused. Human rights abuses can also occur in tandem with almost no prospect of returning home before the end of their contract. The reason for this could be that their recruiters have taken away their passports and visas, they have loans hanging over their heads, or their families and themselves have been threatened if they try to flee. 

The textile industry, by way of another example, has long been known to utilise ‘sweatshop’ style manufacturing, driven by the competitive need to use the cheapest suppliers. Razor-thin margins and the demand for cheap goods means that competition is fierce. However, that low price comes at a high cost for the labourers – something made invisible to high-street consumers.

Local action, Global change

On a global scale, the private sector plays a critical role in combating child labour, forced labour and human trafficking. Corporations must not only pay their employees fairly, protect their rights, and work diligently to root out any violations, but they must also ensure that their suppliers and production lines are free of slave labour. 

Companies are fundamental to developing a culture of respect for human rights by implementing best practices such as monitoring and auditing suppliers, not charging workers recruitment fees, and enforcing high labour rights and safety standards throughout their value chains. 

The Electronic Industry Citizenship Coalition (EICC) is one example of this type of initiative. The process of transforming supply chains is most effective when companies from a particular industry work together to establish industry standards – something the EICC has been doing within the electronics sector since it was founded in 2004.

EICC members are subjected to rigorous auditing which establishes standards for company policies and practices relating to ethics, labour, the environment, and health and safety. Members are held accountable for the actions of their next-tier suppliers, and the EICC provides concrete tools to help them improve their supply chains. 

But combating modern slavery will require more than regulation and is dependent on a seismic shift in how we value transparency in supply chains. As intelligent data becomes more integral to purpose-driven investing, disclosures around supply chain labour practices are set to become increasingly important.

Our ESG Ratings and Advisory service is rooted to the three pillars of environmental, social and governance (ESG) factors and driven by intelligent data. Our independent and rigorous process collates and verifies information to ensure integrity and accuracy, consolidating your understanding of the ESG world.

With a client-central and contextualised approach, our tailored solutions can be sculpted to meet objectives and provide insights at every step of the ESG journey. Get in touch with our expert team today to find out more.

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