Hugh Helferty, Executive-in-Residence at the Smith School of Business, Queen's University, YES.

To me, the answer to this question is very clear: Yes, ending forced labour and modern-day slavery in global supply chains requires binding legislation, rather than corporate self-regulation and self-disclosure. While corporate self-regulation and self-disclosure might gradually reduce forced labour and modern-day slavery, binding legislation is necessary to end it in global supply chains.

In considering this question, it is helpful to divide companies with global supply chains into three groups. First, there are companies with global supply chains that are already ‘clean’ – that is, free of forced labour. They may be this way because of deliberate action or by happenstance – the supply chain may have begun and stayed clean. The challenge for these companies is to have and sustain systems to proactively keep their supply chains clean. Well developed and resourced systems and processes are essential to keep something as complex as a global supply chain free of forced labour.

A second group includes companies that want to have a clean supply chain, but do not. Perhaps they view a clean supply chain as an aspirational goal, but have not put the resources in place to make it a reality. In the rush to bring new products to market, they may have compromised with the view that they will address the issue later. Whatever the reason, these companies need to move from having a clean supply chain as their goal to having it as a requirement. Some companies may get there on their own, but others will require legislation to drive them to put the resources in place to achieve and sustain it.

The third group of companies includes those for whom a clean supply chain is simply not important. It may be that their drive for lower costs overrides all other considerations. Or, they may rationalise their behaviour by telling themselves that their (exploited) workers are better off than if they were not working at all (as though that is the only alternative). Whatever the reasoning, these companies will not clean up their supply chain unless they are forced to do so.

Some might argue that, in considering global supply chains, we are discussing major corporations that have the capacity to self-regulate. If we encourage them to do the right thing, then they will ultimately do it. This argument is flawed. First, global supply chains are not limited to major corporations. In today’s interconnected world, some medium- and even small-sized corporations, with more limited resources, have global supply chains. Both regulation and government support may be needed to help them find and eliminate forced labour.

A second problem with that argument is that having the capacity to self-regulate does not guarantee that a corporation will do so. For example, BP had a longstanding goal of no accidents and no harm to people and the environment. Despite the tremendous resources at its disposal, the company failed to put effective systems in place to prevent disasters. Roughly every five years, somewhere in the world, BP had a major incident involving loss of life and environmental damage. Despite this fact, effective internal action was not taken. It took the 2010 Deepwater Horizon explosion at a cost of 13 lives, enormous environmental damage, $62 billion, and the CEO’s job to force BP to dedicate the resources needed to tackle this challenge effectively. We simply cannot expect all corporations that have the capacity to clean their supply chains to do so. For some, legislation will be necessary to make them act.

Of course, legislation alone does not guarantee compliance. Adequately resourced enforcement is essential to ensure that a law has the desired effect. Recently, Volkswagen has admitted to deliberately incorporating software into its diesel cars to trick regulators in multiple countries into believing that the vehicles met emissions targets. In fact, emissions were as much as 40 times the standard. While the ruse worked for a number of years, the company was ultimately caught. Once again, the costs were very high: premature loss of life, environmental damage, tens of billions of dollars, and the CEO’s job. The fact that this happened at a major corporation like Volkswagen reinforces the need for capable enforcement.

Recently, the U.S. government passed a law to prohibit the importing of goods produced by forced or child labour. Implementation of this is challenging and the government needs to put the resources in place to do so effectively. If they do, it will do more than clean supply chains for goods coming to the U.S. Chains supplying other countries will also be improved, and some of those nations may follow the legislative lead taken by the U.S.

Forced labour and modern slavery in global supply chains need to be eradicated. Binding legislation is essential if we are ever to achieve that goal.