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). Vol 33 Article 4- Image 1.png

 

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.

 

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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?

 

 

Learn More


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.