Modern slavery: The hidden in plain sight

In this article Boglarka Radi discusses modern slavery and it's importance within an ESG framework

Modern slavery in business supply chains often conflicts with running an ethical business that represent dignity, respect, responsibility, and fairness. I have highlighted the growing importance of ESG and modern slavery in previous articles and posts, including: ESG – does the ‘S’ include slavery?, Brexit’s impact on UK modern slavery governance and Modern slavery – what corporate governance can do. It is essential to raise awareness between governance professionals about modern slavery, human trafficking and its consequences for businesses.

Modern slavery is an underweighted element within the ESG framework.

The period of uncertainty and increasing level of crisis across the globe due to COVID-19 definitely had a substantial impact on corporate governance policies, the management of business supply chains, and the level of exploitation of forced labour. The COVID-19 pandemic finally forced companies and entire industries to rethink and transform their supply chain models. The pandemic exposed many companies' vulnerability, specifically those who had a very high dependence on supplies from developing countries.

Many sectors will have extremely high demand on the workforce, with many sectors experiencing drastically low or no demand for workers. The risk of forced labour exploitation can also be intensified as auditors during the past year could not visit companies in person as frequently as they needed to or could not do it at all. Therefore, standards were not investigated as accurately, and there is already proof of counterfeiting goods that are reportedly organised by gangs associated with human trafficking. Most government agencies had lower resources during the pandemic, which may have made it easier for criminals to set up networks to provide extra labour during the crisis. Human traffickers often mask their worker’s situation by using a recruitment agency to no raise suspicion, which is why we may have not seen such activity yet. This is why it does not raise suspicion with third parties.

Unfortunately, the overall impact of the COVID-19 outbreak remains uncertain, but it is clear that many companies faced operational disruption, and sadly, some of them went into administration. Many businesses also encountered reduced supply, disruption in their contractual obligations and many of them are still unable to adapt to the change that the pandemic brought. Various media outlets such as the Financial Times, BBC and The Guardian reported this issue. This pandemic showed most businesses that building a strong and long-term operation system and investing in supply chains is vital. It is also important to note that investment in technology, strong digital infrastructure and better business communication will be the key from now on for further supply chain innovation. Those businesses looking to create a more positive impact by changing their supply chains will need to integrate elements of ESG such as labour and human rights, environmental protection, sustainability and ethical solid business practices.

Each year more and more individuals, businesses, charities and local authorities take action to mark Anti-Slavery Day.

Anti-Slavery Day is celebrated on 18 October, provides an opportunity to raise awareness of human trafficking and modern slavery, and encourage companies, charities, government, local authorities, and individuals to do what they can to address the problem.

It was created by the Anti-Slavery Day Act 2010 to raise awareness of the need to eradicate all forms of slavery.  In this Act, ’’slavery’ includes trafficking for sexual exploitation, child trafficking, trafficking for forced labour and domestic servitude. The Act was created by Anthony Steen CBE, who is the chair of the Human Trafficking Foundation.

The Anti-Slavery day creates an opportunity to shine the light on this crime committed globally today.

Ethical approach

Businesses have a role to play in negating the tolerance of slavery. Supply chains are complex; therefore they can allow forced labour to thrive. Many companies in the UK, whether knowingly or not, rely on overseas labour which might be working in slavery to produce the products these businesses sell or have supply chains that encourage traffickers. As slavery by its nature is a covert practice, it can be challenging to uncover in formal audits.

Businesses should work with their suppliers and should not only focus on compliance and auditing. Taking a genuine and ethical approach would help to make it clear to suppliers that discovering modern slavery would not necessarily mean that their contract will be terminated, and companies could work with their suppliers to address the potential issues.

Different jurisdictions mean higher risk, and various industries indicate various risks with varying systems of governance. Additional and regular training is recommended to those professionals who work on supply chain management, potential slavery and risk management as regulations can also vary in jurisdictions where the supply chain ends. Modern slavery-related issues should be escalated to board room level, and the topic should be a compulsory board room agenda on a regular basis to all business. It is recommended to be part of the corporate strategy.

Businesses need to extend their diligence depending on their resources and act firmly in high-risk sectors where labour exploitation is well-known, such as construction, agriculture, hospitality, retail, and food industries. Governance professionals can help guide boards and companies to endeavour for a supply chain free of modern slavery.

Boglarka Radi

Boglarka is an Associate member of The Chartered Governance Institute UK & Ireland and a fellow of the Institute of Corporate Responsibility & Sustainability.

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