Ending human trafficking in supply chains is possible through business model changes and collaboration with governments. Holding suppliers accountable by changing price expectations and increasing transparency are just two strategies that do work.
According to the report, Ending Child Labour, Forced Labour and Human Trafficking in Global Supply Chains, child labor, forced labor and human trafficking are rampant in global supply chains. The United Nation’s Sustainable Development Goals (SDGs) including ending child labor by 2025, and human trafficking and forced labor by 2030. The estimates are that there are 152 million children in child labor and 25 million adults and children in forced labor, and human trafficking is the pathway.
There are three critical factors leading to human trafficking and forced labor: gaps in legislation (and lack of enforcement of the laws that do exist), social and economic pressures on people and workers, and business conduct and the business environment. When talking about businesses incorporating social justice in their Corporate Social Responsibility mission, one of the most important operational aspects to assess is supply chains. Local and global supply chains are where the humans rights violations exist, but it is challenging for businesses to end these atrocities, because supply chains have many supplier tiers. This is an issue that crosses continents too, including North America.
Social and Economic Pressures Promote Human Trafficking
The report mentioned is published by the Alliance 8.7 which consists of the ILO, OECD, IOM UN Migration, and UNICEF. The reasons for continued human trafficking and forced labor are complex. For example, social and economic pressures include poverty, presence of violence, social norms, and gender and other forms of discrimination that make it difficult to survive in society. People are pressured to put their children to work, migrate, or resort to coercive forms of credit. These people work in many of the upstream supply chains such as agriculture and raw material extraction. The implication of this, of course, is that businesses wanting to make a difference must consider upstream and downstream supply chain activities.
Although child labor is not common in the United States at present, there is human trafficking, so this is an issue of importance no matter where the business operates. Suppliers utilize forced labor because they face pressures from buyers to keep their prices as low as possible, and to produce as quickly as possible. Thus, businesses can play a major role in reducing, and hopefully eliminating, human trafficking.
Changing the Business Focus From Lowest Cost to Highest Labor Protections
Hewlett Packard is one company that chose to directly address human trafficking, beginning with a corporate policy and Electronics Industry Code of Conduct (EICC) promoting responsible practices. For suppliers, the EICC means laborers are freely choosing employment, have reasonable working hours, there is no child labor, workers are treated humanely, and suppliers take responsibility for vetting labor agencies. The strategy begins with a preliminary risk assessment and includes the supply chain social and environmental responsibilities in supplier contracts. Suppliers complete a self-assessment which HP reviews. A critical step is the validation of supplier behavior via on-site audits, and supplier implementation of corrective action which is verified with a follow-up audit. HP also has capability building in addressing human trafficking through employee, management, supplier, and leadership training. The information is publicly reported in annual reports.
A project on human rights abuses by Stanford University, Simon Fraser University, and Yale has examined ways the global supply chain can be restructured to promote fair and equitable labor standards and protect workers from exploitation, forced labor, and abuse. The project prepared Blueprint, which is a way forward for government and businesses to address human rights violations across supply chains. One recommendation is to deal fairly and ethically with suppliers, with supplier relationships a key priority. Corporate buyers determine the pricing and delivery demands made on suppliers, and suppliers must meet those demands to get the contracts. Outsourcing and subcontracting to reduce costs has shifted production to geographic locations with low wages, weak legal protections for workers, and poor enforcement of labor standards.
Forced labor, according to Blueprint, is a logical consequence of business practices such as sourcing beneath the costs of production, paying suppliers late, imposing heavy financial penalties for production delays, refusing to pay more to cover increases in minimum wages, and unpredictable ordering. Some ways to end these practices in supply chains include benchmarking wages against living wage calculations in purchase orders and contracts, and establishing binding and enforceable agreements with worker organizations. Transparency, says the report, must “extend deep into global supply chains.” Lead firms can pave the way. They can rewrite corporate purpose statements to reflect duties towards stakeholders that include suppliers, ensure transparent supplier recruitment policies across the supply chain, and reform internal governance to address the factors, like cost minimization, that drive forced labor. Firms can establish predictable pricing structures that enable suppliers to pay fair living wages and safe working conditions. They can also engage employees to help identify indications of forced labor.
Business and Government Working Together
Of course, businesses and government must partner together in order to make significant changes in supply chains to address human trafficking. Costco learned that the supplier Charoen Pokhand (CP ) foods was beating, torturing, and killing workers. Burma and Cambodia migrant workers paid labor brokers to help them find factory work or work on building sites, and instead they were sold to boat captains and enslaved. CP Foods produced feed for prawns that were sold in U.S. and U.K. supermarkets, such as Costco and Walmart. Costco responded by joining a coalition that maps supply chains, helps with the implementation of transparency systems, and collaborates with industry leaders and government to implement effective policies and legislation to protect workers.
Eradicating human trafficking in global supply chains requires a coordinated private, public, and government effort. One of the ways to make true progress in ending human trafficking and forced labor is through transparency. As consumers demand corporations do better when it comes to corporate social responsibility actions and not just words, they are increasingly looking to buy products that are Fair Trade Certified, and from companies that are transparent about their supply chain activities. This leads to businesses making a sincere effort to look deep into their upstream and downstream supply chains to be accountable. Technologies such as the cloud enable tracing the provenance of manufactured goods from beginning to end, giving a clear sight into supply chain activities at all tiers. It is time to do what it takes.