Modern Slavery in Supply Chains
What’s the problem?
40 million people are victims of modern slavery globally. Forced labour is the most common element of modern slavery and the most extreme form of human exploitation. The International Labour Organisation (ILO) estimates that 25 million people are victims of forced labour, 18 per cent of whom are children. Around 16 million of these people are in the private economy and the ILO estimates that forced labour generates an annual profit of $150 billion.
Many products available in high-street shops are made by, or include ingredients grown, harvested or mined by people in slavery. Complex supply chains can make it virtually impossible to guarantee that a product has not been produced using slavery. Forced labour is present in many industries including hospitality, construction and cleaning. The way in which companies operate can increase the likelihood of it occurring.
Business models, operating context, and the nature and location of work are major risk factors for serious labour rights violations including slavery and trafficking. Sub-contracting and complex supply chains can make it difficult to monitor adherence to standards, while the presence of labour recruiters in supply chains combined with downwards pressures on costs can lead unscrupulous operators to maximise profits by exploiting workers.
What’s the TISC clause in the Modern Slavery Act?
The Transparency in Supply Chains clause requires companies with an annual turnover above £36 million to produce a Slavery and Human Trafficking statement, indicating the steps they are taking to prevent modern slavery abuses in supply chains and operations. All companies should have published their first statement by 30 September 2017.
Companies are recommended to include information on: their structure; supply chains; policies on modern slavery and human trafficking; identified risks of modern slavery and steps taken to mitigate the risks; staff training and capacity to tackle modern slavery and human trafficking.
Modern slavery statements must be signed by a company director on behalf of the board with a link to the statement available from a prominent place on the company’s website homepage.
To date (February, 2019) an estimated 8,000 out of the approximately 9,000-11,000 companies required to comply have published statements. Of the statements published, only 2-0% meet all the minimum statutory requirements set out in the Act. Analysis of the statements has shown them to be disappointing, often being short and vague. There are some innovators setting a high bar for best practice reporting, but for many companies the statements have become a tick-box exercise.
What’s CORE doing about it?
In October 2017 we published research exploring whether and how companies are including information on particular raw material and sector-specific risks in their statements, looking at the description of their operations and supply chains and their due diligence. Our initial analysis of the shortfalls in company reporting was featured in the Financial Times.
CORE has also developed Guidance and four mini briefings for companies and investors impacted by modern slavery legislation. Both provide assistance on how businesses can tackle modern slavery in supply chains and global operations. See the introductory video for more information.
In February 2018, CORE submitted evidence to the Public Accounts Committee inquiry into the implementation of the Modern Slavery Act. This evidence was used by the Committee in the oral evidence session and in the final report to pressure the Government to publish a list of those companies required to report and properly enforce s.54 of the Act.
In October 2018, CORE and partners made a submission to the Independent Review of the Modern Slavery Act. Our submission highlights the shortcomings of the Transparency in Supply Chains provision (s.54) with regard to the weaknesses of the reporting requirement, in combination with inadequate monitoring and enforcement. Many of our recommendations were taken up by the Independent Reviewers in their second interim report.
We are also part of the Modern Slavery Registry steering group, supporting the work of Business & Human Rights Resource Centre to drive up reporting standards by making company statements easily accessible.
LANDMARK LEGAL CASE: HIGH COURT AWARDS £1M COMPENSATION TO VICTIMS OF MODERN SLAVERY EMPLOYED BY KENT-BASED GANGMASTER
Following a high court ruling in 2016, owners of British company DJ Houghton Catching Services Limited were forced to pay £1 million to a group of migrant workers who were trafficked to work on farms supplying eggs for well-known brands.
Six Lithuanians formerly employed by DJ Houghton brought a civil claim against the company for subjecting them to inhumane and degrading treatment, which included paying them an income below the minimum wage, imposing salary deductions, and failing to provide adequate facilities to wash, rest, eat and drink.
Former employees told the High Court that they had been threatened and assaulted by Lithuanian supervisors who intimidated them with fighting dogs, and were made to work back-to-back eight hour shifts without a toilet break. Workers were forced to urinate in bottles and defecate in carrier bags in minibuses as they travelled between jobs on poultry farms that provided free-range eggs to supermarket chains Tesco, Asda, M&S and Sainsbury’s.
This landmark case sets a legal precedent, warning UK businesses to eradicate modern slavery from their supply chains and to expect legal action and high costs if they fail to do so. Since the ruling, more workers have brought similar claims of negligence, harassment, assault, breach of contract and breach of statutory duties.
THAILAND: SLAVE LABOUR IN UK SUPERMARKET SUPPLY CHAINS
In 2015, a Guardian-led investigation found that Asian migrant workers were brutally enslaved during the production of seafood for several major UK and US supermarkets. Thailand-based Charoen Pokphand (CP) Foods, the world’s largest prawn farmer, admitted to sourcing fishmeal used to feed prawns sold on the international market from boats manned by modern slavery victims.
Fifteen men documented the violence and torture that they and fellow workers endured while working non-stop 20-hour shifts trawling fish. The men were trafficked on to ships that often stayed at sea for years at a time, where they had to survive on less than one bowl of rice a day and slept in cramped quarters without access to a toilet. Some also reported cases of labourers judged unfit for work being shot and thrown overboard.
Retailers sourcing prawns from CP had condemned the use of forced labour in their ethical trading policies and many claimed to be performing social audits on their suppliers.
Despite Thai authorities claiming a crackdown on modern slavery, there is widespread evidence that labour abuses continue. Failure of suppliers to meet anti-slavery standards should prompt international retailers to take a stance against these practices, support efforts to combat abuses, and terminate contracts where necessary.