In a world of complex supply chains, migrant workers, sub-suppliers and a constant squeeze on costs, corporate leaders and their stakeholders are keenly aware of the risk of labour exploitation.
And for good reason. No industry or region is fully insulated from the social deficit which has emerged from the rise of the modern global economy. The figures are astounding. The International Labour Organization (ILO) estimates that almost 21 million people are currently working in some form of forced labour, with 14.2 million in economic activities such as agriculture, construction, domestic work or manufacturing (pdf).
What’s more, many of these victims have been trafficked across national borders in the process. As campaign coalition Stop The Traffik points out, the hidden and illegal nature of human trafficking makes gathering statistics on this difficult. However, the ILO estimates that 44% of those working in forced labour are also victims of trafficking (pdf).
The rise of compulsory transparency
The fight to eradicate the scourge of forced and child labour, sometimes referred to as modern-day slavery, has re-emerged as a defining issue in this century and cannot be left to any one stakeholder alone. Given the influence and impact that multinational corporations have, there is significant scope for corporate leaders to champion reform and action in this area.
While voluntary corporate initiatives to combat forced labour and trafficking in corporate supply chains have been the prevailing model for the past two decades, the landscape of social responsibility is quickly shifting.
Beginning in California in 2012, following effective campaigning and lobbying to then-governor Arnold Schwarzenegger, mandatory corporate disclosure of a company’s non-financial activities has been on the rise. From US President Obama’s executive order on trafficking and federal procurement, to the UK Modern Slavery Bill’s recent amendment to include supply chain disclosure provisions, to the EU’s adoption of a non-financial reporting directive, compulsory transparency around global corporate practices – including human rights, labour and social impacts and policies – is the latest tool being employed by legislators to place social expectations on corporations.
Over the past few decades, multinational corporations have grown significantly in terms of size, assets, resource control and revenue, not to mention societal influence. In fact, the largest among them have become equivalent to national governments in terms of economic power.
This growth has been accompanied by growing expectations by society and government. While many leading companies recognise both the importance of embracing the expectations that come with this and the economic rationale underlying their social license to operate, others have been slow to rise to this challenge.
Weighing up the value of global supply chains
It is, of course, critical to recognise that the global corporate supply chain can be a force for good. Among other things, they provide a wide range of low-cost products to consumers, an influx of capital to developing nations, a living wage for those in parts of the world with few economic opportunities, and higher profits and returns to corporate investors and employees.
In the modern global labour market, there is a continuous supply of workers in foreign jurisdictions ready to produce goods at lower cost than the domestic labour market. In many instances this is a positive development for workers in communities overseas and for the corporations at the top of the supply chain.
However, with their multiple levels of subcontracting, particularly throughout impoverished regions where labour laws are non-existent or not enforced, global labour and product supply chains also provide fertile ground for inhumane practices and working conditions. The United States Department of Labor, for example, has produced a list of 136 goods produced in 74 countries using forced labour, child labour, or both. These goods include everything from strawberries, coffee, chocolate and palm oil to footballs, bricks, rubber and cotton.
Responsible business practices benefit companies
Many leading companies already understand that their strategies shape the lives of millions. The most forward-thinking believe that business is an integral pillar of society and recognise that the people they rely on at home and abroad are central to building sustainable and lasting businesses. Responsible corporations know that sustainable practices and robust compliance programs are not only good for the communities in which they operate, but also for longer term business prospects.
And since mandatory disclosure requires all multinationals to take notice and action rather than just the industry leaders, this ultimately helps level the playing field.
The recent movement toward mandatory reporting and disclosure in the non-financial realm is not without its critics. Some believe supply chain transparency laws do not constitute any real change from the prevailing corporate-driven model for CSR, while others oppose increased regulation and oversight as unnecessary state intervention, believing that industry led efforts have the best chance of success. In reality, it is a combination of corporate leadership and regulation in this area which will help ensure all market participants rise to acceptable standards.
One thing is clear. The trend away from voluntary reports towards mandatory social reporting for global corporations is here to stay and may represent a first step towards increased legislative requirements, ultimately backed up by government enforcement and serious liability for corporate wrong-doers.
No matter where one believes the solutions lie, the ultimate goal is a global economy free from forced labour, trafficking and other abuses. For the millions of victims who go out into the world seeking work in the hope of building better lives, we must commit to seeking the best path forward.
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