Best practice guide to improving transparency in global supply chains by addressing modern slavery

What is modern slavery?

Modern slavery is a complex crime taking many different forms. At its worst, it could mean the intentional trafficking of people for commercial gain or forcing people to work in degrading circumstances with no pay. However, there are many grey areas. Within global supply chains, modern slavery could extend to withholding workers’ passports, fining workers for quality issues or enforcing compulsory overtime.

There are some 29.8m slaves worldwide, according to the Global Slavery Index. Meanwhile, the ILO estimates that some 21m people are victims of forced labour, the majority of them women and girls. Their work generates illegal incomes of $150 in the private economy each year.

“No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.” — The Universal Declaration of Human Rights 1948

Modern slavery encompasses many issues, including:

• Passport retention

• Fines

• Restrictions on leaving company property

• Trafficking of workers

• Debt bondage

• Loans with high interest

• Contracts not provided before leaving home countries

• Contracts not provided in native language

• Recruitment fees and levies

• Compulsory overtime

• Child Labour

A growing cause for concern

Modern slavery issues, including forced labour, human trafficking and child labour are increasingly a cause for concern in global supply chains, particularly in industries such as agriculture, construction, hospitality and consumer goods. Some 71% of companies believe there is a likelihood of modern slavery occurring at some stage in their supply chains, according to research by Ashridge, particularly in high risk countries or sectors and within the ‘less visible’ tiers of the supply chain.

Additionally, companies are under more pressure to tackle and report on modern slavery. The UK’s Modern Slavery Act (2015), for example, requires businesses with an annual turnover of more than £36m with any commercial activities in the UK to report annually on the steps they are taking to prevent slavery and human trafficking across their operations and supply chains. Similarly, the California Transparency in Supply Chains Act (2011) requires retailers with a turnover of more than $100m and annual California sales exceeding $500,000 to disclose product verification, supplier auditing and HR efforts on their websites.

Neglecting to take action is simply not an option, and stands to create multiple operational, financial and reputational risks for brands, retailers and suppliers alike.

Modern slavery: Why is it so hard to detect?

Lack of visibility in multi-tier supply chains – Building a full understanding of smaller, ‘indirect’ suppliers’ practices further up the chain is challenging and resource-intensive, particularly where work is sub-contracted or informal labour is prevalent.

• Complex and differing laws and regulations – From a brand perspective, it can be a steep challenge to stay on top of evolving modern slavery laws that apply in each country and region.

• Weak law enforcement – In some sourcing countries, there is a lack of enforcement on regulations and laws relating to slavery. With weak prevention mechanisms, suppliers may find loopholes or adopt unethical practices, so that despite being illegal, they become the ‘norm’ and often go unchallenged. Suppliers may not even perceive their actions as falling into the ‘modern slavery’ category. For example, in the Middle East, retaining workers’ passports is illegal, but suppliers often keep them so that they are able to show them at inspections.

• Audit limitations – Audits do not always get to the heart of pressing ethical issues such as modern slavery, as they provide a ‘snapshot’ of the situation, rather than an ongoing view. In particular, factories sometimes remove evidence of slavery before auditors arrive by hiding any evidence, sending illegal workers or child labourers home, or coaching workers on what to tell auditors.

• Cultural differences – Suppliers in some countries, such as Myanmar (where it is legal for children aged 14-16 to work four hours a day) may feel that they are supporting the local community by employing children, and preventing them from worse possibilities.

• Vulnerability of migrant workers –The extent to which migrants are exploited may vary. For example, migrants may choose to be trafficked by criminals to escape their homeland, or those involved in the long and sometimes murky process of international migration can feel that they simply cannot turn back due to pride or the need to send money home. Equally, migrants with more freedom of movement may not have the relevant knowledge to obtain the right papers, and fall prey to unscrupulous factory managers. Migrant workers and indigenous people are particularly vulnerable to forced labour, according to the ILO.

• Worker perceptions – Workers may not necessarily identify themselves as victims of modern slavery. If they are working illegally, they may not speak up due to fear of being punished for their ‘illegal’ status. Unscrupulous employers may also scare them into silence by telling them that they are ‘illegal’. In this context, workers do not challenge the status quote, so as to retain their work and continue supporting their families.

• Worker voice – Little knowledge of how to speak out and no obvious avenues to raise the alarm, coupled with a sense of shame often prevent workers from making their voices heard. Fear of employer retaliation can also have a stifling effect.

“It’s vital to take a worker-centric approach to identifying modern slavery issues in global supply chains. By empowering workers with the knowledge and confidence to speak out and asking the right questions, more instances of modern slavery will come to light” — Dionne Harrison, Director, Impactt

Best practice: Capturing the worker’s perspective

Before you take action on addressing modern slavery, it is vital to build a comprehensive understanding of new and existing suppliers’ practices, and map your supply chain to establish a clear, realistic view of any challenges.

Building on these foundations, it is critical to seek workers’ perspectives on an ongoing basis. For example, brands and retailers can use mobile technology platforms to evaluate worker feedback in real time, leveraging the insights to better manage the risk of modern slavery.

Here, we explore how mobile technology can be used to gather worker intelligence:

• Brands and suppliers can gather data on key social compliance issues including wages, overtime, forced labour, abuse, building safety and sanitation.

• Mobile monitoring platforms go beyond static ‘snapshots in time’ (gathered via audits and hotlines) by creating an ongoing feedback loop among brands, suppliers, factory managers and workers.

• First, it is important to raise awareness of the platform among your key suppliers. Once they are engaged, conduct in-factory training to help workers understand what the platform is, how they can use it and how they stand to benefit, emphasising that all responses are anonymous and confidential. It is also important to help raise awareness in workers’ communities.

• Using a platform such as LaborVoices’ Symphony, workers dial a free number on their mobile phones at any time of day and respond, using their phone keypad, to a series of questions about their experiences at the factory. Importantly, the platform now includes a specific set of questions relating to modern slavery issues.

• Brands and suppliers can see the information appear in real time on an automated dashboard, gradually building a full picture of workers’ perspectives on key issues. Mobile monitoring platforms can also be configured to flag urgent issues, and users can compile monthly reports.

• Brands and retailers can develop product, country and sector benchmarks to help raise standards across the sector.

• Brands gain greater visibility of suppliers’ practices and how they affect workers, increasing their ability to monitor risk. The data captured can be used to inform decisions on the appropriate action to take (from crisis management or collaborative working with suppliers to engaging expert guidance from specialist ethical trade consultancies such as Impactt).

In the fight to identify, address and prevent instances of modern slavery, brands can leverage the information to improve due diligence processes, strengthen assurance mechanisms and develop an overview of risk ‘hot spots’. For example, the Symphony platform will allow companies to spot where high risk suppliers are located via a ‘heat map’. Each supplier on the map is allocated a ‘Modern Slavery Score’, enabling brands to assess the risk they pose and collaborate to drive improvements or adjust their purchasing decisions. It is also possible to compare the scores of factories that have participated in modern slavery training v those where no training has taken place.

• Factories (either independently or with brand support) can draw on the information to develop and monitor corrective action plans.

• Workers gain access to employer rankings in their area, allowing them to see which factories offer better working conditions and wage, as well as obtaining information about their rights.

“Mobile technology can play a critical role in amplifying workers’ voices, while building brands and retailers’ knowledge of social risks in their supply chains and informing decisive action on preventing modern slavery.” — Kohl Gill, Founder and CEO, LaborVoices

Best practice: Prevention and remediation

Once you have identified any modern slavery risks in your supply chain, it is important to understand the type and severity of the issues in question, which areas of your supply chain are most vulnerable and which key suppliers pose the most risk. You can then draw on these insights to take strategic action.

Impactt’s modern slavery training and engagement programmes help you build capacity among your suppliers in order to prevent, mitigate and remediate issues such as forced labour, child labour and human trafficking.

Here is how Impactt helps brands and retailers to prevent and remediate modern slavery in their supply chains:

• We help you analyse any data gathered through worker voice technologies to determine the severity of issues being suffered by workers. Distinguishing where workers sit on the ‘spectrum of grey’ will inform what needs to be done. In particular, we help you differentiate between criminals (and/or those working in collusion with them) and factories that may be oblivious to ‘slaves’ entering their doors.

• Impactt’s international teams can also undertake on-the-ground research to determine how slavery legislation is applied and how it is experienced by workers. With our extensive experience of seeking workers’ perspectives, we ask relevant questions without making workers feel disempowered.

• At a brand level, we help to raise awareness and build a sense of shared responsibility with suppliers. Within factories, we focus on shifting mindsets and changing any accepted yet unethical ‘norms’, helping factory managers and supervisors to see workers as human and realise their vulnerability. We identify what norms exist in terms of behaviour and attitudes, determine whether a systems or behaviour change is needed, and assess factories’ particular needs, before developing a tailored action plan and training programme.

• We deliver training to both recruitment agents and HR and welfare teams on ethical hiring practices and preventing modern slavery. In particular, we provide insights into where slaves are entering the supply chain and deliver training to help recruiters and employers identify the warning signs of modern slavery. We explore what checks to do when reviewing the backgrounds of job seekers and new recruits, and help factories understand how to build good relationships with workers, so that they are more likely to share relevant information.

Impactt has helped workers in Dubai to seek compensation and obtain visas so they could find legal employment when a factory was closed down. In the UK, we identified Romanian slaves through the course of worker interviews, and worked with the authorities to prosecute their ‘employers’ and help the workers gain permanent contracts and accommodation.

• When dealing with different types of modern slavery, we advise brands and suppliers on how to manage the issues in a way that protects workers and helps workers to improve their job security. This includes delivering training to managers and supervisors on the importance of giving workers a voice and listening to their views.

• Impactt helps to strengthen workers’ committees and joint manager-worker committees. We help build dialogue between workers and managers and strengthen workers’ ability to engage in social dialogue and collective bargaining. Importantly, we raise awareness among workers of modern slavery issues to help them identify when they have become victims, how they can seek help and what type of recourse they have to raise the alarm.

• We conduct follow-up visits to check on progress and monitor results, capturing feedback from workers and managers.

• Impactt records factory improvements and shares best practice with other suppliers, helping them to build the business case for factories to invest in relevant training, policies and procedures.