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Weak Supply Chain Practices Still Leave Room for Modern Slavery, Report Says

In a newly released report by the International Corporate Accountability Roundtable (ICAR) and Focus on Labour Exploitation (FLEX), researchers have determined that weak supply chain reporting practices continue to allow exploitation and forced labor to flourish around the world.

The report, “Full Disclosure: Toward Better Modern Slavery Reporting,” is a culmination of findings and recommendations consisting of information gathered from 15 companies, 38 civil society organizations and trade unions, four investor groups and 12 national governments. Inside the report, ICAR and FLEX reveal that corporate reporting practices have improved materially over the past decade—but that more work remains to be done if businesses want to ensure they are not active participants in an environment that supports exploitation.

“The first wave of modern slavery reporting has now been reviewed and analyzed by experts. Whilst reporting has served a purpose in highlighting the long road ahead in achieving improvements for workers in supply chains, it is now time for businesses to face up to the risks of abuse and exploitation posed to workers in their supply chains,” FLEX CEO Caroline Robinson said in a statement. “This report sets out a roadmap to achieving risk-based reporting, in which companies undertake a detailed review of the impact of their operating behaviors and environment on workers. Key to the success of this work is meaningful engagement with workers on the ground, in order to shine a light on abuses and seek urgent remedies.”

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Corporate awareness of slavery and exploitation in supply chains has risen lately, thanks to efforts from organizations like YESS, which recently announced it had launched a campaign to combat modern slavery in cotton supply chains.

Regardless, The International Labour Organization (ILO) estimates that 24.9 million people are currently being subjected to forced labor practices across the world. As the report points out, businesses can be largely unaware of circumstances under their control that lead to exploitation in supply chains. A 2018 report on modern slavery by KnowTheChain found that, among the 43 businesses it studied for the report, only 13 displayed a passable resistance to illegal recruitment practices and human rights abuses.

Recent anti-slavery legislation, such as the Transparency in Supply Chains Act in California and the U.K.’s Modern Slavery Act (MSA), serve as examples, according to the report, of policies that take half measures when it comes to supply chain reporting by failing to enforce effective penalties.

However, ICAR and FLEX argue that corporations have plenty of compelling reasons to enforce more comprehensive reporting in their supply chains aside from government pressure. For example, full disclosure can compel external stakeholders to participate in what the report calls either “name and shame” or “name and fame.” Meaningful work towards preventing human rights violations can improve a company’s public standing and give it an edge it might not otherwise have.

Beyond improved publicity, researchers argue that investors typically respond positively to improvements in disclosure practices. More and more, investors value transparency in all stages of a business—especially its supply chain.

“Investors are increasingly connecting reporting to better forecasting of long-term sustainability and sustainable growth,” an investor group told ICAR and FLEX researchers. “In addition to the business case, many investors represent money that comes with a set of values behind what people want to invest in.”

The ultimate recommendation from ICAR and FLEX is for governments to pass comprehensive human rights due diligence legislation. However, researchers also acknowledge that current human rights laws are already limited by the participation of businesses due to the lack of meaningful noncompliance penalties in existing policy.

According to the report, modern slavery reporting requirements have “overall failed to bring meaningful improvements for workers.” To encourage proper supply chain reporting, researchers recommend that legislative requirements for reporting come with financial penalties for noncompliance and an increased level of corporate liability for infractions.

“Modern slavery reporting requirements are only one of the policy tools that can be used to address forced labor and human tracking in global supply chains,” researchers said. “These laws need to be accompanied by additional legal and policy tools to truly be effective. Some of these tools include strong domestic labor laws and strong labor inspectorates, access to remedy, allocation of adequate resources to guide good corporate reporting and evaluation of reporting, and the promotion of collective bargaining.”

Two apparel companies were highlighted by the report as examples of organizations that have taken proper steps to combat exploitation independent of legislation. In particular, Asos’ partnership with Anti-Slavery International and its comprehensive approach to risk assessment in its supply chain, via “desk-based research, supply chain mapping and audit,” is presented by ICAR and FLEX as a positive example. Marks and Spencer was also lauded for its self-driven improvement in supply chain reporting and its cooperation with civil society organizations.