Forced labour and human trafficking are bad news for
both workers and companies, so how can employers
keep them out of the supply chain? GC investigates.
F O R C E D L A B O U R
Vanani began work in an Indian cotton mill at age 16. This is her story:
“Initially I was told I would be working eight hours a day but in the end it was more than ten hours a day. I worked in the spinning mill for six months but my fingers got damaged and so I moved to the combing section, where I spent a year and a half. My skin began turning black slowly and the nurse in the hospital said it was nothing and that I should continue to work. The masks were too poor quality and so I used my own handkerchief. I got chicken pox. I had to work even when I had a fever and chicken pox and would be shouted at if I did not. When I couldn’t work and went to hospital, they deducted my pay and deducted the cost of the hospital, the deductions showed on my pay slip. I lost a month’s salary. I couldn’t make phone calls or reach my family. If my family visited I wasn’t told until my shift was over. There was no chance of going out as there was a small shop inside the factory. My movements were restricted and I was only allowed to leave after I persuaded them I couldn’t work because I was ill."
This shocking narrative might seem a million miles away from most of us in the developed world – but is it? The cotton mills in southern India where Vanani was working were at the time being used by some very well-known global brands.
Ethics and social governance are increasingly front of mind for many global companies. The increase in direct action by consumers and customers via social media and online petition platforms also meant that the PR fallout from unethical business practices is becoming more immediate and wide-ranging.
There are direct financial implications, not just from customers, but from investors as well. Recently the Swedish state pension fund AP7 pulled all funding from Swedish-Finnish paper and packaging group Stora Enso due to concerns around the use of child labour in its 35%-owned joint venture Bulleh Shah Packaging.
A shift in thinking
To get an overview of the issues facing businesses and the approaches that they and their legal teams might take, GC spoke to Aidan McQuade, director of Anti-Slavery International, the world’s oldest international human rights organisation, which is leading efforts against forced labour, human trafficking and slavery globally. Aidan argues that companies need to think very carefully about all aspects of their business practices and their potential to lead to unfair labour practices or slavery – even if there does not seem to be a direct or causal link. “A shift in thinking is needed. It’s really not just about waiting for proof of forced labour and then reacting; companies need to look at this the other way round and proactively ensure there is no forced labour in the supply chain.” He also believes that those working within businesses - in management, legal and communications teams - need to consider the issue in terms of broader business decisions and strategy, and not just see it as an isolated matter or as someone else’s problem. One of the difficulties Anti-Slavery International has faced in attempting to end the practice of forced labour has been persuading major international brands that their corporate responsibility exists all the way along their supply chains and should include second and third parties.
The British government has just announced new measures in the Modern Slavery Bill currently going through Parliament, making it mandatory for companies with a certain turnover to make public what actions they are taking to tackle slavery in the supply chain. In the current draft of the Bill, the threshold for companies required to report is left to the discretion of the Home Secretary, but there is currently some debate about the value at which this should be set. The requirement in the US under an equivalent Californian law is over $100m. There is a school of thought that the UK should shadow this value at around £60m. Aidan is concerned about the efficacy of such reporting however, remarking that disclosure is not the same as actually doing something.
But he also concedes that it’s not an easy task to verify the ethics of one’s supply chain. “Going all the way down the supply chain is a very complicated journey, as it is often so complex these days. It’s very hard to check that a t-shirt is not made from Uzbek cotton picked via forced labour if it has gone through a number of stages before you see it.”
We asked Aidan what thoughts he would share with our in-house readers about the role they could play in the process. “The first stage is in basic legal terms – in contracts with suppliers and making them responsible for maintaining supply integrity. Audits of the supply chain have been popular with most companies for the last 10-15 years.” But, he adds, the auditing process has been woefully inadequate in identifying problems and, in fact, might be making matters worse. “Auditing has brought about no systemic change in the industries most rife with forced labour,” says Aidan, because it is “used to provide companies with plausible deniability.”
Aidan contends that what needs to happen is a shift towards clearer and more honest risk analysis of all areas within the supply chain. “Once it is identified as a risk, there needs to be more rigorous investigation of where it might occur,” he says, “rather than a simplistic audit.” Companies should ask themselves whether it is possible to engage directly with suppliers to enforce a change in practices and remove the potential for forced labour. What often prevents them from doing this is the risk of losing competitive advantage, if examination of labour practices leads to increased costs. But, Aidan counters, “eradication of forced labour is a precompetitive issue, and therefore companies can work with competitors to eradicate problems.”
Bigger than business?
It is true that sometimes there may be problems in the political economy in which the business is operating that are endemic to the societal or political culture, and are greater than any given company’s policy or practice. In such situations the engagement of businesses with governments to press for reform would be desirable. In those instances, Aidan recommends that companies work directly with the relevant governments about how unfair labour practices are impacting on how business is done, perhaps even raising a question over whether they do business in certain markets. Aidan tells us that one of the key areas Anti-Slavery International is currently focusing on is forced labour in the Thai fishing industry. “There are really medieval practices that need maritime inspection and government actions in order to be eradicated. If global businesses raise their voices on these issues there’s a much greater likelihood that governments like Thailand will listen.”
For GCs and their teams examining forced labour issues, trade unions can be useful allies because unionised workplaces are less likely to fall prey to forced labour issues. In the same vein, Aidan recommends making use of charities and non-governmental organisations which can also be helpful in terms of providing contacts and alliances with communities affected by forced labour, enabling companies to assess the impact and work directly with victims to wipe out the problem.
In March 2015, global workforce expert ManpowerGroup was chosen as one of the world’s most ethical companies by Ethisphere. Senior vice president, GC and secretary Richard Buchband and director of global strategic communications Ruth Harper tell GC about the company’s culture of ethics and zero tolerance approach to ending forced labour and human trafficking.
Richard Buchband (RB): At ManpowerGroup we take advantage of our prominence in the recruitment space and our position as a thought-leader around work-related issues to take a stand on this and incorporate it into how we do business.
Every day we’re interacting with more than 600,000 people across a wide range of industries – blue collar, white collar, professional. Over the course of a year we interview more than 10 million people, and serve over 400,000 clients, so to us, it’s important as a principle to set some standards to communicate how we do business.
The dignity of work is very important to us – the rights of employees to be treated and compensated fairly. So when we look at human trafficking, it’s not only about sexploitation and child labour, but it’s also things like: are workers being recruited in a fair and ethical manner, are people in our industry conducting their activities in a compliant fashion – observing visa laws, observing labour regulations and the like? To us, all of these are connected.
We have a code of business conduct and ethics. To us this is an important document and it drives behaviour across the organisation.
Ruth Harper (RH): The challenge that some countries have, like the UK and the US, is to actually make human trafficking into a credible, believable cause – because people can’t believe that modern day slavery does exist. So to begin to define it in a modern labour market is quite an important role. That’s a role that we see as ours: because we span the labour market, it is our responsibility to say: "Would you believe this goes on?" And: "It absolutely ought not to go on." That’s a role that strong brands like ManpowerGroup can play, in terms of gathering some momentum for a purpose, to say: ‘Have this on the agenda,’ and to then drive the messaging and standards through our supply chain.
RB: ManpowerGroup was the first global corporation to sign up to the Athens Ethical Principles [these grew out of a 2006 roundtable in Athens bringing global business leaders together to debate trafficking]. They were completely consistent with our ethical approach and our zero tolerance policy, and we felt for the industry and for the greater good that these were important to commit to and disseminate.
At its core, our zero tolerance policy means that we won’t knowingly do business with clients, suppliers or others who are engaged in or benefitting from human trafficking, or are abusing their workforce in any fashion.
RH: We strongly stand that workers looking for work should not be charged for the service of somebody finding them work. The client pays for that, not the candidate. That kind of bonded servitude is the same whether you’re talking about somebody who’s long-term unemployed in Detroit, or somebody in India who is being moved from country to country – the principle is the same. Somebody shouldn’t be charged for the dignity to find meaningful work.
RB: In terms of understanding what is happening along the supply chain, we rely on our contracts. We also rely on our business people on the ground to identify issues. This is one of the reasons why having a culture and code is important. We won’t knowingly allow this to take place, our supplier contracts have protective language for us, but ultimately we need to rely on our people to make sure inappropriate practices don’t occur, and if they become aware of something, to take the responsible and appropriate steps to ensure that management is aware of it.
In our company, ethics and compliance live within the legal department as a formal responsibility. Obviously as a behaviour, it lives everywhere in the organisation. And so that means my team and I have a particular responsibility to develop policies, to work with our colleagues to develop communications, and to inculcate among the lawyers who are day-to-day involved in contracts and business transactions how important this is in terms of gearing towards a zero tolerance policy.
Every company is different, but the general counsel as a member of the C-suite may be the best positioned person to bring together or communicate the overlap between compliance, legal regulations, codes of conduct, ethical behaviour and liability. We’re not doing this as a matter of enterprise risk management [ERM], we’re doing this as a matter of principle and values. But there is an ERM overlay to it: our view is that running an ethical and principled business is also an appropriate and effective way to understand and manage risk.
I’d encourage general counsels to use the access that comes with their position to think cross-departmentally, to make sure your company and all of its pieces and functions – business facing, the headquarters or enterprise function, the finance and regulatory people – are aligned and they are aware of these issues in how they do business.
We play an active leadership position on our global trade body Ciett, [the International Confederation of Private Employment Agencies]. ManpowerGroup executives have also been elected at a global and Eurociett basis to set high standards in our industry. We have strong relationships directly and through Ciett with trade unions, and also with the likes of the ILO [International Labour Organization], and with governments and the European Commission. All this means we are well-placed to keep promoting the need for meaningful work and high levels of conduct in offering it.