Modern Slavery Revisited

July 30 2020 - ,

The Black Lives Matter movement has brought new exposure to historical issues of colonisation and slavery globally. Slavery may seem a relic of a distant and brutal past, but the horrific truth is that a great many people are still living and working in slave-like conditions worldwide, with modern slavery hitting the headlines yet again recently with sweatshops in Leicester and Uighur forced labour in the textile industry.

It's important at this point to clarify some of the different terms used, and keep in mind that when these terms are used, human beings are being referred to. Chattel slavery, which still exists in Mauritania despite efforts to criminalise it in recent years, refers to the outright ownership of human beings and their offspring as property. Modern slavery refers to a range of labour rights and forced labour abuses, including but not limited to the theft of official papers, unpaid work, below minimum wage pay, suppression of rights and controlling or abusive behaviour by employers. Trafficking refers to the movement of human beings for labour (or other, usually criminal, activity) against their will using coercion, exploitation and violence.

The victims of modern slavery are more likely to be women and more likely to be from BIPOC communities. Chattel slavery in Mauritania is also race-based, with darker-skinned Africans enslaved by lighter-skinned Arab Africans. The darker your skin, the more likely you are not only to have had your ancestors suffer the horrors of colonialism and slavery with the related generational trauma, but additionally it is more likely that you will suffer from continued systemic racism today and be more vulnerable to human rights abuses in many forms.

In recent discussions about reparations and statues, culture and rights, it seems one of the last fronts to tackle is the actual existence of forced, modern and child labour, all too often regarded as 'endemic' in industries which simply refuse to tackle the issues because it would involve paying a fair price for labour. While rightly examining our history and the cultural hangovers it has created, we must also endeavour to prevent current and future generations living in the same powerless and disenfranchised conditions as slaves from past eras. Change may be driven from two directions, firstly considerable pressure can be applied from investors and consumers, and secondly from workers themselves through unionisation and collective bargaining. On both fronts NGOs and governments have considerable parts to play in empowering workers and shoring up rights and the application of laws around labour rights and wage abuses.

On the first front, consumers can make it abundantly clear that any and all products produced with slave labour will not be tolerated. Whether this is shellfish from Thailand, cotton from China or Uzbekistan, or wallets and belts from US prisons, consumers can lobby for the labelling of such products so that they can identify them and avoid them. The focus up to now has been on creating labels which denote fair wages and labour practices, a more radical and impactful approach may be to label imports (and exports in the case of apparel from Leicester factories) which may have links to modern slavery. Who amongst us would be content to be seen bringing something with a 'made by slaves' label up to a shop counter or adding to our online basket?

The notion that continuing to buy these products somehow supports those at the bottom of the supply chain does not ring true, the systems are perpetuated because they maximise income for those at the top of the pyramid, not because they are providing fulfilment and security for those holding the whole pyramid up. There is also sometimes the argument posed that cheap goods are essential for those on lower incomes. However, the buying power of those living on minimum wage alone is not the source of multimillion profits at companies like BooHoo, and pitting consumers living in poverty against garment workers living in poverty serves neither of those groups. Young people are increasingly questioning the systems which have brought us to the precipice of a liveable planet and finding they don't work for people either, companies should be wary of what the next generation of 'consumers' will do when they reject the label of 'consumer' and take up the mantle of 'citizen' instead.

Likewise, investors can revisit the methodologies underpinning the selection of the companies in their portfolio to ensure that labour and human rights abuses are adequately covered and excluded if necessary. The Modern Slavery Act in the UK and other Transparency in Supply Chains (TISC) legislation can be utilised and pressure applied on governments to mandate compliance and enforce meaningful penalties for non-compliance.

The patchy nature of regulation and lack of central registers for compliance with TISC legislation (Section 54 of the Modern Slavery Act) would be easy to fix if governments were willing. Companies who are sector leaders in this area championed the introduction of TISC legislation but frustration with laggards doing the bare minimum to comply is growing. The Independent Anti-Slavery Commissioner in the UK, Dame Sara Thornton, has recently said '...there are all sorts of concerns that requirements are not tough enough, we definitely need to toughen up the requirements of the sanctions in section 54.'

Companies could link modern slavery targets to executive pay in the same way some have linked it to environmental performance. Exploitation of the planet often goes hand-in-hand with exploitation of people; so it is time for the 'S' in ESG to receive more close attention. Often overlooked as tricky and subjective, with fewer hard data points and indicators, the 'S' risk of investing in companies who maximise profit over health, safety and worker rights has become clear. Shareholder primacy at the cost of people and planet is not only now morally refuted, but also shown to be risky in terms of performance. The outperformance of mission and values-led companies, B Corps and purpose-led business, mean that investors would be remiss to ignore social issues. Values-led organisations such as charities can also ill afford to ignore the reputational hit of associating themselves with activities which conflict with their aims, or may harm their relationships with donors or beneficiaries.

Here at Ethical Screening, as a research team, we look not only for compliance with the UK Modern Slavery Act 2015, but at the quality of the statement itself along with a company's approach to managing its risks more generally. For companies outside of the UK, we also look at responses to the California Transparency in Supply Chains Act and to similar legislation in other jurisdictions such as the Australian Modern Slavery Act 2018.

The areas and sectors where the risk of modern slavery is at its highest is usually in a company's supply chain, although operating in a developed country does not mean the risk is zero, as we have seen in the recent cases highlighted in Leicester. Where there are instances of modern slavery (or other human rights abuses) in a company's supply chain, we will highlight this to our clients as a Violation - for example, people (including children) have been identified as working in conditions of slavery on coffee plantations supplying Nestle and Starbucks in recent years. Clients may choose to use these violations as the basis for exclusion from a portfolio. Investment managers may use them as a tool to engage with companies on improving human rights performance. Where a company has high-risk supply chains and has not taken sufficient measures to mitigate them, we would flag this as a concern. Again, this is used by human rights risk averse clients to exclude all the highest risk companies from their portfolios, and by managers who want to engage with companies where there is not currently evidence of violations but a real concern that policies and governance could be better. This distinction between ESG scoring and evidence of violation and overall risk is why we recommend a tri-partite approach that covers ethics, sustainability and ESG concurrently. Companies may be able to 'game' ESG scores with resources to throw at policies and auditing but the allegations of issues may continue to roll in.

It is sometimes helpful to think about certain industries, for example food, farming and textiles as having supply chainmail rather than supply chains. Linear supply chains descriptions suggest suppliers who directly supply manufacturers who directly supply retail, the reality is far more likely to look like an interconnected web of producers supplying many different manufacturers and retailers. Hence why apparel retailers are often 'caught out' en masse when a garment manufacturer is found to be in violation of codes of conduct. The response is usually to cut ties with the factory or disavow all connections entirely on the basis of contracts being illicitly passed on to sub-contractors. Either way the likelihood of those working in modern slavery being recompensed is woefully small and the chance of systemic change to prevent reoccurrences even smaller. The UN Global Compact set out by John Ruggie involves the widespread adoption of the 'protect, respect, remedy' framework, with remedy for victims still falling off the to-do list of many corporations. Dame Sara Thornton also picks up on this in her recent statement '...there needs to be better approaches to remedy - who can take action on behalf of workers.' Two options which could work are the French model where NGOs are able to represent workers, or the more radical, but perhaps necessary, option of making companies legally responsible for human rights abuses in their supply chains.

Internally at Ethical Screening we also offer training for employees not just on spotting non-compliance in the course of our research on huge multi-national corporations, but also a session on modern slavery in the UK and how to identify it and what to do it if you suspect the person doing your nails, washing your car or cleaning your office seems to be doing so under duress. Because the awful truth about modern slavery and its insidious and parasitic nature, is that it is just likely to be found on your street as in your investment portfolio.

Ethical Screening staff have completed training from the charity Stronger Together and also recognise the important work by the charity Unseen. Please visit their websites for more information.

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