Beyond Trafficking and Slavery

Carrots and sticks: increasing corporate accountability for ‘modern slavery’

Corporate accountability for modern slavery has received greater political and legislative attention in recent years, but is reporting enough?

Claire Falconer
26 May 2016

The container port in Singapore. Kimon Berlin/Flickr. (CC 2.0 by)

Labour exploitation, including forced labour, happens in the supply chains of corporations all over the world. Fishing boats in Thailand, construction sites in Qatar, and bedding factories in the UK have all been publicised as sites of forced labour, and many other labour abuses have been linked to the supply chains or operations of UK and European companies. This problem has long been known, but it is only recently that the role of companies in preventing and addressing labour exploitation has received significant political and legislative attention. This article looks at some of these recent efforts in the UK and the US, their current and potential impact, and considers what these efforts tell us about current approaches to ‘modern slavery’.

Legislating for transparency in supply chains

The UK Modern Slavery Act was passed in March last year and has been widely touted by the UK government as being unique and ‘world leading’. The most celebrated feature of the act is its transparency in supply chains (TISC) provision. This requires companies to prepare a “slavery and human trafficking” statement each financial year, which sets out the steps the company has taken to ensure that slavery and human trafficking is not taking place in any part of its business or supply chains. These statements must be approved by the board of directors and posted in a prominent place on the company’s website.

The stated aim of the TISC provision is to prevent modern slavery by creating a level playing field and increasing transparency in the steps taken by companies to tackle modern slavery. As the government has been at pains to make clear, the provision does not require companies to do anything other than report on what they are doing, and companies can comply with the act by reporting that they are doing nothing at all. The government will not collect or assess the statements, and there is not even a penalty for failing to produce a statement. As noted during the passage of the act, this provision was always intended to be “more carrot than stick”.  

The UK Modern Slavery Act’s TISC provision is modelled on the Californian Transparency in Supply Chains Act of 2010. As with the UK legislation, the Californian Act requires companies operating within California to report on their efforts to eradicate slavery and human trafficking from their supply chains. The Californian law applies only to retail companies, and has a slightly higher company revenue threshold than the UK Act ($100m [£64.3m] in California, as against £36m in the UK), but the general structure and requirements of the two pieces of legislation are otherwise very similar.

The impact of TISC legislation

Both pieces of legislation are based on some key assumptions about business and market behaviour. One such assumption is that businesses are willing and able to take effective action to identify and prevent labour exploitation in their global supply chains. A second such assumption is that consumers and the general public will use the increased information available to them to influence company action, in particular through their purchasing practices.

Whether or not these assumptions are correct is a matter of significant and ongoing debate. In just over five years the Californian law is generally considered to have succeeding in raising the awareness among companies, and in prompting some at the ‘top’ to change their policies and practices, but appears to have had limited impact on businesses and other actors, such as auditors, down the supply chain. Compliance with the reporting requirement itself has been patchy, due in part to lack of guidance, lack of enforcement by the Californian government, and the challenge in identifying which companies are required to report. Similar hurdles are likely to be faced by the UK TISC provision, in light of the weak enforcement mechanism and lack of provision for a central repository for statements in the legislation.

Already the UK Modern Slavery Act has prompted a flurry of activity on behalf of companies seeking to better understand the issue and to develop policies and reporting practices, as a result of which a reporting ‘industry’ of trainers and consultants is quickly developing. This increasing interest in the issue, particularly from more senior company executives, is a necessary step towards effective action. However it remains to be seen whether this interest can be sustained, and what the precise impacts are of the new policies and procedures.

Business at the centre of responses to modern slavery?

What is interesting about these laws, and the assumptions that go with them, is that they place business and the global market at the very centre of the solution to modern slavery. The potential impact of this approach is two-fold. First, in looking to market forces to solve the problem of exploitation there is a risk of overlooking the contribution of those forces to the problem itself. The demand for fast fashion, cheap food, and other products is fed by flexible, insecure, and vulnerable workforces. Concentrating effort on businesses and consumers as drivers of change fails to examine wider issues that impact on worker vulnerability – such as discrimination, migration policy, and labour market deregulation – and may only have minimal or temporary impact as a result.

Secondly, placing business at the centre of efforts to address exploitation allows governments to step back and divest themselves of responsibility. Under international law governments have an obligation to prevent forced labour and human trafficking, to protect the human rights of citizens, and to ensure access to an effective remedy in cases of rights violations. Yet the majority of governments comprehensively fail in these obligations, including by neglecting to adequately protect, monitor, and enforce basic labour rights. While there is undoubtedly a key role, and in fact a necessity, in companies taking action to prevent and address exploitation, this should not be allowed to mask or excuse government failures to properly protect the rights of workers.

Adding some stick

Increased transparency and other efforts by companies need to go hand in hand with increased action on the part of governments, the world over, to end impunity for labour rights violations. This includes strengthening labour inspection and enforcement to raise labour standards and truly ensure a level playing field. It also means building accountability within supply chains, for example by making head contractors responsible for the labour practices of their subcontractors, as occurs in Belgium.

Leading companies have been clear that they want and need strong regulatory enforcement – the task cannot be left to them alone. For companies that are less concerned with consumer reputation, and companies that otherwise flagrantly disregard labour standards, there must be some stick along with the carrot.

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