Week of 31 January 2022
Due diligence-based legislation could speed glacial progress on modern slavery
Our key takeaway: The global prevalence of forced labour shows that modern slavery acts and voluntary initiatives are not working to combat exploitation in supply chains. It’s time for emerging legislation, based in human rights due diligence, to pick up the torch.
KnowTheChain released a report providing evidence for effective human rights due diligence, based on its findings from five years of measuring company efforts to address forced labour:
- Efforts to address forced labour in supply chains are a “litmus test”: According to the report, if companies cannot identify and eliminate one of the most egregious forms of abuse, there is little chance for the broader human rights agenda. So far, “companies are failing this test.” For example, around 16 million remain in conditions of forced labour in the private sector “with evidence suggesting higher levels of exploitation than ever before.” This has only been exacerbated by the COVID-19 pandemic. It’s clear that the voluntary efforts and disclosure-based laws that have been employed to date (such as modern slavery acts) are not effective towards combating forced labour. By contrast, the report points to due diligence-based requirements linked to penalties (like Section 307 of the U.S. Tariff Act allowing the government to seize goods produced with forced labour) as a better roadmap for where legislation should be headed.
- Companies are failing to implement human rights due diligence: KTC’s analysis of its sector benchmarking shows that few companies are putting in place the elements for robust HRDD—elements which are being increasingly codified in law. For example, 36% of benchmarked companies in the ICT, food and beverage, and apparel and footwear sectors do not disclose whether they conduct human rights risk assessments in their supply chains, and just 9% of companies that do conduct assessments include workers in the process. In addition, 81% of companies do not indicate whether they have adopted responsible purchasing practices like fair payment terms and reasonable lead times. 29% of companies lack a grievance mechanism accessible to supply chain workers; of the companies with such a grievance mechanism, 93% do not share whether the perspectives of workers are taken into account during design and implementation. However, adidas and Lululemon “stand out as having advanced steps and implementing increasingly effective policy to eliminate forced labour. These companies demonstrate strong commitment and effort to eliminate forced labour, demonstrating this is both achievable and commercially viable.”
- Progress remains slow: KTC reports that, “[o]f the 56 companies we assessed three times over the course of five years, a quarter (25%) still do not report carrying out the baseline step of conducting a human rights risk assessment of their supply chains. Nearly half (45%) of these companies have yet to disclose even first-tier supplier lists, and 64% still do not report engaging with stakeholders on forced labour, such as trade unions, local NGOs or policy-makers in countries where their suppliers operate.” Critically, KTC finds that companies are lagging behind in the two areas that are most fundamental to addressing forced labour in supply chains: adopting responsible purchasing practices and ensuring workers’ right to freedom of association.