Best Practices in Credible Forced Labor Disclosures

Many companies’ forced labor, human trafficking, or ‘modern day slavery’ disclosures – whether mandated by transparency regulations or part of broader sustainability, corporate social responsibility, or human rights reporting – do not reflect a credible understanding of how specific practices of value chain partners and recruitment intermediaries in their supply chains expose vulnerable workers to the risk of forced labor. Consequently, many of the detection and prevention efforts outlined in these disclosures are not sufficiently targeted to effectively address the root causes of these insidious and deeply entrenched abuses.

CORE, a UK Civil Society coalition focused on corporate accountability, recently released a report on transparency in supply disclosures pursuant to Section 54 of the UK Modern Slavery Act 2015. They found that almost two-thirds of the sample statements they reviewed did not reference specific risks of slavery and human trafficking in the relevant supply chains of disclosing companies. Previous benchmarking of efforts to address forced labor by KnowTheChain, revealed that the extent to which global companies across multiple sectors trace their supply chains, conduct forced labor risk assessments, and disclose these processes ranked among the lowest scoring themes selected to assess company’s actions to combat forced labor. Just this week the Business and Human Rights Resource Centre released its report First Year of FTSE 100 Reports under the UK Modern Slavery Act: Towards Elimination? – which assessed that the majority of companies covered did not provide details on the complexity of their supply chains or risks identified.

At Verité, we assess the credibility of company forced labor disclosures based, in part, on the inclusion of:

• effective implementation processes to continuously identify, assess, and prioritize specific forced labor related risk indicators in a company’s supply chains;
• the outcomes of the risk assessments a company has carried out across all business areas in its own operations and in its supply chain summarized by issue, country, and tier;
• an explanation of the business controls a company has in place and is in the process of establishing to mitigate the identified risks; and
• specific examples of ongoing challenges and the company’s plan to ‘stay the course.’

The good news is that substantive, credible, and transparent disclosures are emerging across a range of sectors, geographies, and reporting platforms, that can serve as a blueprint for other companies striving towards best practices.

Hewlett Packard Enterprise (HPE) is a leading global provider of information technology solutions. HPE’s April 2017 Statement to comply with the transparency obligations under the California Transparency in Supply Chains Act 2010 and UK Modern Slavery Act 2015 contains detailed information about its forced labor risk screening, prioritization, and assessment processes. It also reveals a sophisticated understanding of the specific forced labor indicators occurring in its supply chain that increase risk and vulnerability. HPE disclose the region in which many of these risks were found, an explanation of critical findings, and the steps its suppliers have, or are taking, to remediate, how HPE will validate, and the consequences of failure to comply.

The Coca-Cola Company (TCCC) is one the world’s largest non-alcoholic beverage companies. TCCC expressly prohibited worker-paid recruitment fees and expenses in 2014. As part of its collaboration with the Interfaith Center on Corporate Responsibility’s (ICCR) Best Practice Guidance on Ethical Recruitment of Migrant Workers, TCCC disclosed a case study on the implementation challenges it faced in Taiwan. The case study contained detailed findings at un-named suppliers including worker paid fees as high as $6,000. These practices are systemic in all sectors in Taiwan that employ foreign migrant workers. TCCC’s transparency in sharing the challenges of remediating specific non-conformances including the refusal of one supplier to adopt TCCC’s no fees to workers policy on the basis that other customers did not require such a policy marks the company out as a leader in addressing these issues in supply chains.

ASOS is a London-based online fashion retailer of apparel, footwear, and beauty products, that sells to consumers across the globe. Its January 2017 Modern Slavery Statement covering 2015-2016 is a comprehensive and transparent disclosure of the steps the company has taken to identify and address specific modern slavery risks throughout it operations and supply chain, and the commitments it made to mitigate these risks going forward. Notably, ASOS discloses its forced labor risk assessment process across its business operations starting at the country level and provides commendable detail on how it prioritizes factories for further follow up. There are also transparent and illustrative case studies on formal risk assessments it has conducted in Mauritius and Turkey, in addition to its findings and remediation approach.

Marks and Spencer (M&S) is one of the UK’s leading retailers of own brand food, apparel, and home goods in stores and online, both in the UK and internationally. In June 2017, M&S published its second Modern Slavery Statement. M&S’s forced labor risk assessment process has expanded beyond product supply chains and now covers the entire scope of its business operations. The M&S interactive supply chain map identifies 98 percent of tier-one manufacturers and their Statement discloses the priority countries with the highest forced labor risk in its product supply chains. Their Statement describes how M&S due diligence and risk assessment processes include approaches beyond conventional social compliance audits, and includes a transparent case study on findings and remediation at tier-one suppliers in Thailand.