Global businesses navigate a host of tricky social issues every day, where senior executives might not always know the right stance for the company to take. One social issue that doesn’t pose that problem is modern slavery. Everyone knows it’s a scourge that should be opposed and eradicated wherever we find it.
Sure, finding modern slavery and forced labor in the global supply chain can be difficult. That doesn’t mean companies should turn a blind eye to the problem—and with the proliferation of anti-trafficking laws around the world, companies increasingly can’t ignore the problem. Over the last decade, opposing modern slavery has become a regulatory compliance duty as much as has been a moral one.
Although recent global protests have focused on systemic racial inequalities, modern slavery is more about forced labor and human trafficking. Those impacted by slavery in the 21st century are generally vulnerable groups in emerging markets where race is a factor but age and gender also play a role.
So what is the scope of modern slavery today? Where does it exist, and what does it look like? Moreover, which laws obligate companies to address modern slavery, both in their own operations and in their supply chains? And what, exactly, are companies supposed to do to achieve compliance?
What is Modern Slavery?
Anti-Slavery International defines modern slavery as “the severe exploitation of other people for personal or commercial gain.” It’s an umbrella concept that covers a wide range of exploitation.
For example, some modern slavery still bears a striking resemblance to the old form, where one person toils as a personal slave to another. A person might be born into slavery or sold into it. A person can be enslaved in his or her home country, or shipped across national borders.
Human trafficking is the means by which people are sold into slavery and then moved around the world. It’s part and parcel of modern slavery and the laws that exist to fight trafficking (such as the U.S. Trafficking Victims Protection Act) are simply more weapons to use in the fight against slavery.
Forced labor happens when people are required to work against their will, under threat of punishment. People working as forced labor might get paid, but oftentimes that pay is below minimum wage, or goes to pay off debts to traffickers, or is held back for weeks or months.
In all cases, the paramount element of modern slavery is coercion: you either do the work or get punished if you don’t. The punishment could be beatings, lost wages, threats against loved ones, or some other measure. It’s still coercion.
Forms of Modern Slavery
Modern slavery can, from the outside, look like a person working a normal job. Some occupations where modern slavery might occur include:
- Construction work, especially on large projects with many work crews
- Agriculture work such as crop harvesting, or fishing
- Domestic work or personal services, such as nannies or manicurists
Another way to consider modern slavery is to look for vulnerable populations: immigrants, women, children, low-wage workers. In the worst cases, children have been impressed to work in mines in Central Africa; immigrants have been forced to live in dormitories and work at low-wage jobs as manicurists, bartenders, or construction workers; women have been forced into prostitution.
It is difficult to estimate the true scope of modern slavery and forced labor around the world. The International Labor Organization estimated in 2016 that nearly 25 million people worldwide were trapped in forced labor, and 16 million of them were working in the private sector. One-fourth of modern slavery victims are believed to be children.
These numbers are striking because forced labor can be designed to look like an ordinary business, so it can sneak into the global supply chain—especially in emerging markets, where enforcement of labor laws might be weak, and where local operations might be far removed from retail businesses and consumers who don’t know how the goods they buy are actually made.
Or at least, that was the case for many years, until a new wave of anti-slavery laws emerged in the 2010s.
What Significant Modern Slavery Laws Exist?
Several jurisdictions have adopted laws within the last decade to fight modern slavery, where they pressure companies to take more action to eradicate forced labor and other forms of slavery from the supply chain. The more prominent ones include:
- The California Transparency in Supply Chains Act, which went into effect in 2012. This law applies to all retailers and manufacturers that do business in California and have annual revenue above $100 million. It requires businesses to disclose annually how they are trying to verify the integrity of their supply chains, and how they audit their suppliers for slavery risks.
- The U.K. Modern Slavery Act, which went into effect in 2015. It applies to any business that conducts business in Great Britain and has global annual revenue above £36 million. The company must make an annual disclosure of how modern slavery might contaminate its supply chain, and what steps the company is taking to reduce that risk.
- The French Law on Due Diligence of Corporations and Main Contractors, which went into effect in 2017. This law covers businesses based in France that have 5,000 or more employees in-country, or more than 10,000 employees worldwide, and applies to overseas businesses that have more than 5,000 employees in France. It requires companies to implement a “vigilance plan” for slavery in the supply chain and threatens penalties for those that don’t.
- The Australia Modern Slavery Act, which went into effect at the start of 2020. It applies to any business working in Australia with more than AU$100 million in annual revenue. Like the other anti-slavery laws, Australia’s version requires companies to publish annual statements about their anti-slavery efforts, including the due diligence the company is taking to determine the risks from its suppliers.
Many other countries also have laws against child labor, human trafficking, or other forced labor abuses; where the statutes are criminal laws that law enforcement might use to pursue individual offenders. The above laws are examples of corporate governance laws to address the issue.
It’s important to note that for the California, U.K., and Australia laws, the anti-slavery steps a company takes are purely voluntary. That is, a company is free to declare it doesn’t take any measures to investigate and reduce the risks of modern slavery in its supply chain. That might foolish from the perspective of corporate reputation and publicity risk, but it’s not illegal.
Here in the real world, global businesses know that ignoring modern slavery sends a terrible message about corporate ethics, and they do try to monitor their supply chain to police against those abuses.
How Can Companies Prevent Modern Slavery?
The good news for compliance officers is that the actual steps a company should take to root out modern slavery are similar to what compliance officers have been doing for years around anti-corruption compliance.
Have a clear policy
The policy should state the company’s opposition to forced labor and other forms of modern slavery, both in its own operations and among suppliers. The policy should be part of the employee manual and translated into all languages you routinely use.
Define anti-slavery criteria for due diligence
Many groups, such as the International Labor Organization and the Organization for Economic Cooperation and Development, publish frameworks companies can use to develop risk assessment questionnaires for modern slavery. Find one that works well with your business and use it to develop criteria for modern slavery in your vendor due diligence.
Include anti-slavery clauses in contracts with suppliers
Contracts with your suppliers should include clauses that they will not engage in any form of modern slavery, that they will work to prevent it in their own supply chains, that they will report allegations of slavery involving your business relationship to you, and that your company has the right to audit the supplier’s anti-slavery efforts.
Perform due diligence
Much like due diligence for anti-corruption, cybersecurity, fraud, and other misconduct—the work has to be done. Find due diligence partners that can perform the appropriate background checks, adverse media reports, or even on-site visits.
Train employees on how to spot modern slavery
One of the most important tools to find slavery abuses in your supply chain are your own employees who work with suppliers. Give them training as necessary (depending on your industry, geographic locations, and so forth) about where they might see slavery, and what it actually looks like.
Respond to allegations that people submit
Reports might come from your own employees, employees of your suppliers, or other parties who witness abuses. Regardless, these allegations should be treated with the same attention as any other allegation of misconduct, and flow through your case management system for proper investigation and resolution like any other issue.