Slavery: a modern problem?

Human trafficking and slavery are not remnants of another time, as IoD Governance Leadership Centre Research Analyst Amanda Reid explains.

In 2015 the United Nations agency, the International Labour Organization, estimated that 21 million people globally were victims of forced labour, with annual profits of US$150 billion. Entire communities are trapped in illegal physical coercion, threat of harm, restriction of movement, and debt bondage, as part of global supply chains, appearing in commodity production, low-skilled manufacturing, and subcontracted service sectors across developed and developing countries.

In an environment of closer public scrutiny of operational and supply chain practices, there is real reputational risk for businesses who do not apply adequate due diligence to worker exploitation and who do not develop an anti-modern slavery culture. Media interest in “brands behaving badly”, including consumer reactions on social media, can be extremely dangerous and companies need to manage these risk.

Stories of inhumane working conditions, the use of child labour, and bonded or forced labour, include:

• the 2013 Rana Plaza tragedy in Bangladesh, where more than 1,300 garment workers died in the building collapse
• allegations of trafficked and forced labour in Andaman and Irish sea prawn fishing fleets, with reports of labourers kept in cages, subject to regular beatings or deprived of sleep
• the endemic use of child labour in Indian mica mines
• and closer to home, New Zealand’s first human trafficking conviction in 2016 where several Fijian migrant workers were exploited and unpaid.

Bali Process

New Zealand is a member of the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime (Bali Process), a forum for governmental policy dialogue, information sharing and practical cooperation across 48 member countries. Regulation of migration and labour is a key focus as these are strongly connected to workplace exploitation vulnerability. Australian ministers have previously criticised the Bali Process for not including businesses in discussions, something that will be remedied in 24-25 August with the next meeting of the forum including international private sector representatives, such as Wal-Mart. Rob Fyfe, Icebreaker chairman, will represent New Zealand.

Targeting global supply chains

The United Kingdom’s Modern Slavery Act 2015 (the Act) is the world’s most far-reaching legislation in eliminating slavery and human trafficking in global supply chains. The Act introduces a number of requirements and measures to protect victims, including new criminal offences, powers of enforcement, and reporting obligations.

Section 54 of the Act applies to all businesses (companies, partnerships, or part of a group structure) supplying goods and/or services within the UK, regardless of where they are incorporated, and have an annual turnover of more than £36 million. This section of the Act, the “Transparency in Supply Chains” clause, is of particular interest for New Zealand businesses or subsidiaries which may operate in the UK, as the Act has wide extraterritorial implications, and gives the UK a broad international jurisdiction in much the same way as Section 7 of the UK Bribery Act 2010 (Failure of Commercial Organisations to Prevent Bribery).

Businesses subject to the Act are now required to engage in significant due diligence to find slavery and exploitation risks in their operations and supply chains, and to publish robust anti-slavery and human trafficking statements on the steps they have taken to eradicate modern slavery and trafficking. The statements must be prominent and accessible from the homepage of the company’s website, and updated annually. They must also be approved and signed by company boards, demanding buy-in and proactivity throughout the business.

The Act is deliberately intended to encourage business transparency and accountability, and to use consumer and investor pressure to drive change. It is expected that non-compliance with the legislation will have adverse consequences for company reputations.

Risk exists in any business where there are:

• complex supply chains • low margin
• labour-intensive goods or services, or
• where levels of labour protection are low or non-existent.

Industry sectors with elevated risk of modern slavery include:

• Garment and footwear: antislavery.org reports that Uzbekistan, the worldleading exporter of cotton, is “one of the few countries in the world where the use of forced labour in the cotton industry is systematically organised by the state”. Working conditions in South East Asia garment and footwear industry have also come under scrutiny.
• Hospitality and tourism: High staff turnover, seasonal work, the use of migrant workers, and low wages make this a vulnerable sector for exploitation.
• Food processing and production: High use of seasonal migrant workers and placement agencies also create higher levels of risk. In New Zealand, 1,600 growers, labour hire contractors and packhouses will be audited on labour/human rights issues to comply with German food wholesaler and retailer requirements.
• Minerals: The US Department of Justice lists diamonds, granite and numerous other mined products from several African nations in its “list of goods and their source countries which it has reason to believe are produced by child labour or forced labour in violation of international standards”. Progress on cleaning up the mica supply chain in India has been slow, with corruption and lack of local capacity marring the validity of supply chain traceability schemes.

One of the key provisions of the UK Act was establishing the role of Independent Anti-Slavery Commissioner. Kevin Hyland, the first person to occupy the role, has led a successful international effort to secure an explicit target in the United Nation’s Sustainable Development Goals to take immediate and effective measures to eradicate modern slavery and human trafficking. The work of Commissioner Hyland affects businesses across the world, and his priority areas include international collaboration, and building private sector engagement and partnerships.

At home

The Ministry of Business, Innovation and Employment (MBIE) held a roundtable discussion in early June with Commissioner Hyland. Roundtable participants represented a range of organisations and industry sectors such as Countdown, Foodstuffs, Z Energy, NZ Post, Horticulture NZ, Inshore Fisheries, NZ Wine, Kiwifruit Growers, Zespri, Air New Zealand, the Sustainable Business Network, Transparency International, Pipfruit New Zealand and the Institute of Directors.

Three of the roundtable participants, Z Energy, Air New Zealand and NZ Post, already require their suppliers to adhere to basic human and labour rights, and publish supplier Codes of Conduct on their websites. Air New Zealand is also affected by the UK Modern Slavery Act and has published a statement on their website accordingly.

The roundtable discussion was moderated by MBIE’s international trafficking expert, Rebecca Miller, and supported by the Labour Inspectorate’s Assurance and Sector Engagement team, who engage with industry sectors to improve compliance with labour legislation.

What does this mean for directors?

Directors have a key role in enabling trust and confidence in business. Slavery is a modern problem. Increasing transparency and scrutiny on human rights and supply chains means directors need to be engaged and informed to ensure they’re part of the solution not the problem.

For more information: antislaverycommissioner.co.uk

Anyone with concerns about human trafficking or exploitation in New Zealand should contact Immigration New Zealand or the Labour Inspectorate on 0800 209 020.

Published in Boardroom Aug Sep 2017 issue