When you think about managing business risk, modern slavery is probably the last thing that comes to mind. Since slavery is illegal everywhere, it shouldn’t even be a concern, right?
Wrong. Nearly 36 million people, more than at any other time in history, are trapped in some form of slavery, according to the second annual Global Slavery Index. Produced by the Walk Free Foundation—a global organization with a mission to end modern slavery by mobilizing activism, generating high-quality research, enlisting business engagement, and raising capital to drive change—the Index is recognized as the seminal authority on modern slavery, which includes human trafficking, forced labor, and other slavery-like practices such as debt bondage and the exploitation of children (see sidebar).
What’s more, modern slavery is big business. Slave labor contributes to the production of at least 122 goods from 58 countries, and the International Labour Organization calculates that forced labor generates US$150 billion annually in illicit profits worldwide, with US$32 billion in the United States alone.i Walk Free warns that the majority of companies will be exposed to some risk of forced labor or slavery in their supply chains—and it’s not always obvious.
A Lurking Danger
Modern slavery can be difficult to detect, let alone measure; it’s a covert crime that occurs in an environment of deception, corruption, and lack of transparency. Its hidden nature is part of what makes modern slavery so insidious for businesses: how can you correct a problem you don’t see? Though the tide of awareness is beginning to turn, a variety of trends and conditions have contributed to the environment that allows slavery to proliferate.
For example, the complex, highly outsourced supply chains in today’s global economy make it difficult for companies to know their customers and suppliers as well as when business was more local. And even among those alert to the risk of slavery, poor supply chain visibility can impede their ability to root it out. According to a recent survey by the United Kingdom’s Chartered Institute of Procurement & Supply (CIPS), 72% of British supply chain professionals say they have zero visibility beyond their second tier, and 11% believe that modern slavery currently exists in their supply chains. Only 21% could guarantee no malpractice.
What Makes You Vulnerable?
As a seller, you not only form part of your customers’ supply chains, but also have one yourself—based on the items and services you purchase to support your own business. In either instance, having a connection with slavery can prove disruptive, damaging, or both. Common practices that make a company particularly vulnerable include:
- Doing business across borders and in countries with weak regulatory environments
- Relying on migrant workers recruited by labor agencies or brokers
- Having a multi-tiered supply chain, with layers outside your immediate control
- Purchasing raw materials from at-risk industries
- Using subcontractors or illegal immigrants for cleaning and other low-skilled tasks
If your largest customer suddenly required proof that your operations are above reproach and started asking questions like those in this self-assessment questionnaire, would your company pass the test? That day may come soon, and when big businesses start raising their standards, the trickle-down effect on smaller sellers can be enormous. Aside from the obvious moral implications, consequences can include lower sales, loss of market share, and potentially irreparable harm to your brand.
Protecting Your Business
The good news is, there are plenty of resources to help you identify and eliminate areas of risk. For example, Walk Free offers the self-assessment questionnaire as part of a free, comprehensive guide to help businesses and governments evaluate slavery risks in their supply chains, including corrective action plans if violations are found. Developed in conjunction with Verité and CIPS, “Tackling Modern Slavery in Supply Chains: A Guide 1.0” provides an opportunity to get ahead of the curve on this issue, enabling you to incorporate anti-slavery policies into your business by implementing practical tools such as:
- Tool 1—Consider adopting a company Code of Conduct.
- Tool 4—Understand industry risk—examine the list of red-flag products and countries.
- Tool 6—Take the self-assessment questionnaire.
- Tools 7 and 8—Review questions you may ask or be asked during audits and site visits.
With more than eight million people supporting its movement to eradicate modern slavery and 50,000 more joining every week, Walk Free views its role as a co-creator of change. “We want to act as a catalyst and lightning rod to coalesce people into action,” says Peter Nicholls, Walk Free’s CEO of Global Business Authentication. An international collaboration between large businesses, government organizations, and supply chain experts, the Global Business Authentication initiative is aimed at establishing a new certification for slavery-free businesses, akin to the Fair Trade standard. For example, the team recommends that companies use risk assessments to pre-qualify prospective suppliers, and conduct audits and site visits for their current suppliers. The transparency provided through global, open e-commerce platforms like the Ariba® Network can help you carefully vet companies you buy from, such as when you engage subcontractors or purchase raw materials. Proactive steps like the following can also help you nip potential problems in the bud:
- Know your customers as well as your supply chain. Even if you’re a small “mom and pop” business, you can ask your customers to fill out a questionnaire so you can learn more about their policies and operations. Take advantage of resources like standardsmap.org, and stay abreast of legal requirements in the regions where your customers do business (new regulations are currently under legislative review in the United Kingdom as well as the United States, where individual state laws may impose further requirements).
- Demonstrate leadership. While e-commerce has created new opportunities for companies to pursue lower prices and transact at a global level, it also confers new responsibilities—chief among them the need to make sure organizations you engage with have no connection with slavery. “If you don’t adhere to that responsibility, you can’t complain when a scandal arises and your brand is tarnished,” Peter notes. Until official anti-slavery certifications exist, consider sharing your values as part of your company profile, and publicize any steps you’ve taken towards upholding higher ethical standards.
- Consider the reputations of your customers and prospects. Could they potentially damage your brand due to a negative association, perhaps through another line of business or a subsidiary? Bad press often paints with a broad brush, especially in today’s hyper-connected world. If your customer base comprises relatively large, reputable corporations in the United States, your risk is probably low. On the other hand, “If you’re providing a niche product and your customers are in a country with a lot of slavery or in an industry that might be at risk, then you might have some concerns in terms of your own brand and the brand you want to project,” Peter says.
- Verify the integrity of your business relationships. “If you’re worried about the conduct of your customers, there’s no reason you can’t do some due diligence yourself,” Peter points out. Even as a small supplier you can arrange to visit a major customer; it’s just good business, and the extra effort will not only help build long-term relationships, but ensure the customers you engage with reflect the values you want to uphold.
A Growing Force For Change
While breaches in corporate social responsibility have garnered greater attention over the last decade, ranking as one of the top 10 business risks in The Ernst & Young Business Risk Report 2010, many nations still fail to effectively enforce anti-slavery laws.ii That’s why activist groups like Walk Free are harnessing the viral power of social media and pressuring big business to help address the problem.
Slowly but surely, progress is being made. For example, an increasing number of corporate buyers are developing preferred supplier programs to reward top sellers that demonstrate particularly strong social performance, giving them priority to receive new business. When potential sellers seem equal in terms of commercial measures like cost, quality, and delivery, social performance could become the deciding factor, especially as consumers continue to demand greater corporate responsibility from their favorite brands. As the spotlight of exposure grows brighter, more governments are undertaking similar measures.
Meanwhile, Walk Free plans to keep spreading the word and effecting change through a variety of actions and projects, such as the recent formation of its Global Freedom Network. Within this multi-faith coalition, the international Christian and Islamic leadership have pledged for the first time in history to work together towards ending modern slavery, and people of all faiths are invited to join them. Signatories to the agreement include the designated representatives of the Archbishop of Canterbury, the Grand Imam of Al-Azhar, and His Holiness the Pope, with three billion people between their combined faiths—nearly half the world’s population.
That’s a lot of potential scrutiny. Is your business up to the challenge?
For additional information, read the Guide and review the tools on the Walk Free business web page.
iProfits and Poverty: The Economics of Forced Labour, International Labour Organization, Geneva, Switzerland, 2014.
ii The 2013 US Department of State’s Trafficking in Persons Report notes that although 46,570 victims of human trafficking were officially identified in 2012, there were only 7,705 prosecutions globally, and just 4,750 convictions.