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The Risk of Human Trafficking in the Supply Chain

By Steve Banker / / July 27th, 2015

Today, the U.S. State Department released its 2015 Trafficking in Persons Report. This report ranks countries based on efforts to comply with the standards in the Trafficking Victims Protection Act of 2000.

When many people thing about human trafficking, they recall news reports about the kidnapping and sale of women and children by terrorists in the Middle East and Nigeria; the sex trafficking of girls lured from their homes in Central Europe; or wealthy families that have hired Nannies or maids, confiscated their passports, and turned these “employees” into slaves.

But human trafficking is also a supply chain issue. One section of the report is called “The Risk of Human Trafficking in the Supply Chain.” Here are some excerpts from that section:

“Traffickers can target vulnerable workers anywhere to fill labor shortages everywhere along a supply chain. In the electronics sector, for example, human trafficking may exist in the extractive stages (mining for raw material), in the component manufacturing stage (where separate pieces are produced or combined), and in the production stage (where a good is assembled and packaged in a factory).”

Many supply chains start on a farm.

“The sheets in a hotel may be made with cotton harvested by forced labor… The international community must both understand the supply chains of the products used to provide a service (hotel sheets, airplane parts, medical equipment) and also examine the risks to those workers who provide them (house cleaners, caregivers, dishwashers).”

“Although human trafficking is found in many trades, the risk is more pronounced in industries that rely upon low-skilled or unskilled labor. This includes jobs that are dirty, dangerous, and difficult—those that are typically low-paying and undervalued by society and are often filled by socially marginalized groups including migrants, people with disabilities, or minorities.

“Risks may also be higher in industries of a seasonal nature or where the turn-around time for production is extremely short. In these industries, the demand for labor increases drastically at the time of harvest or when a new product—be it a smartphone or a roadway—must be manufactured within a strict timeframe. For example, East and South Asian migrant workers in the garment sector are vulnerable to forced labor and labor exploitation, including long working hours and forced overtime, especially during periods of high consumer demand.

“The urgency to hire employees can also result in a dependence on labor recruiters and their agents, which in turn creates layers of separation between the employer and the worker. This disconnect means that employers can be unaware of bad practices related to hiring within their operations, leaving workers exposed to exploitation.

“Finally, in industries where fierce competition leads to constant downward pressure on prices, some employers respond by taking cost-cutting measures to survive commercially, from reducing wages or ignoring safety protocols, to holding workers in compelled service through debt bondage or the retention of identity documents.

The report rightly notes that while governments need to do more to stop trafficking, they need the support of business as well. “There are many measures businesses can take to mitigate the risks of human trafficking throughout their operations. For starters, business leaders can create anti-trafficking policies that address the common risks in their operations and supply chains…”

Many companies have responded. According to the Governance and Accountability Institute, 72% of the companies included in The S&P 500 Index® publish corporate social responsibility (CSR) reports. Corporate social responsibility (CSR) reports reflect the philosophy that corporations have a variety of stakeholders – investors, employees, sup-pliers, customers, and the broader society – and that to attempt to meet the needs of some stakeholders at the expense of others can be both irresponsible and financially short sighted.

The Global Reporting Initiative (GRI) offers a widely followed reporting format that makes it possible for readers to more easily compare how different companies are doing in CSR. The latest version of the GRI report, the G4 version, looks at a companies’ economic, environmental, and societal impacts. The societal impacts include labor and human rights practices, which most definitely includes avoidance of human trafficking. Further, the report takes an extended supply chain view toward human rights. Companies should not just be fair employers, they need to be insuring that their suppliers have fair labor practices.

The G4 version is the newest GRI reporting standard. Most companies are not yet reporting on fair labor practices across an extended supply chain. But leading companies are.

The State Department report can help companies that want to work with responsible suppliers. It identifies “Tier 2 Watch List” and “Tier 3” nations where human trafficking is most common. In some cases, the country analysis indicates problem industries. For example, it says of China, “… Chinese men, women, and children (are) subjected to forced labor in brick kilns, coal mines, and factories, some of which operate illegally and take advantage of lax government supervision.” Private companies sourcing from such nations really should be doing extra due diligence. - 24/7 Support including Chat

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