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Human Rights & Global Supply Chains

Carsten Hansen (Dr.)

Executive Director, SourcingHaus Research & Consulting Group | Director, Sustainable Public Procurement Accelerator Lab (SPP Lab) | Research Fellow, Centre for Strategic Procurement and Supply Chain Management

发布日期: 2020年6月17日

COVID-19, Forced Labor Risk and Procurement Due Diligence

As the world is battling the COVID-19 pandemic with enforced quarantines, manufacturing lockdowns and restrictions of movement, these measures are having an immense impact on workers across global supply chains. The International Labor Organization (ILO) estimates that the COVID-19 pandemic will eliminate about 195 million full-time jobs[i], primarily among informal sectors and migrant workers, creating a population of desperate, unemployed workers competing for limited employment opportunities. This scenario increases the vulnerability to labor exploitation, including forced labor [ii], and as the COVID-19 crisis continues it is essential to elevate due diligence practices. This article aims at highlighting the scope of forced labor risks in global supply chains as a consequence of COVID-19, outline some basic due diligence measures for procurement practitioners to consider, and provide examples of some available resources, training opportunities, reports, and tools.

The UN Special Rapporteur has pointed out that while the COVID-19 pandemic has affected billions, the impact is much more severe for those in the informal economy, who are at risk of being “pushed into exploitative jobs that are tantamount to slavery”[iv]. Unfortunately, the same measures that help governments “even the curve”, also lower the safeguards against labor exploitation, as on-site police and labor inspections are reduced, and the capacity of governments and NGOs to monitor is diminished during office closures[v]. In this environment procurement practitioners are often unable to even perform standard on-site quality assurance of manufactured goods due to COVID-19 access restrictions, yet alone conduct meaningful labor or social audits at production facilities.

When “the ship is sinking,” you no longer question the context in which the life jackets were manufactured[vi].

The COVID19 crisis and the surge in global demand for medical equipment and PPE, has further amplified the pervasiveness of labor violations on a global scale. The media has reported on increased demand for cheap labor in medical chains targeting migrant workers[vii]. With the ongoing emergency, even governments may be tempted to relax import restrictions on critical medical equipment and PPE, despite concerns with forced labor. Once the lock-down restrictions are lifted and production resumes, there will be even more pressure to increase production to cover the back-log, and to lower production costs due to economic difficulties, which may further incentivize exploitation and use of unauthorized subcontracting to unethical producers[xiii].

With the dramatic increase in unemployment the balance of power has shifted toward employers, leading to lower wages and declining working conditions. Those without alternatives are vulnerable to labor exploitation, and can have no choice but to accept any job regardless of the conditions, or may fall prey to loan sharks promising low interest loans increasing the possibility of debt-bondage[iix].

As stated by the UN Secretary General, the pandemic has become far more than a public health emergency. It is an economic crisis, a social crisis and becoming a human rights crisis[iix]. In this historic downturn, and in accordance with the Guiding Principles on Business and Human Rights providing a global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity, procurement practitioners need to be aware of the increased risk of labor exploitation and apply practices to detect, mitigate and remedy against such violations.

Estimated forced labor in global supply chains

Forced labor, as set out in the ILO Forced Labor Convention, refers to “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily”[ix]. A list of 11 indicators has been developed for defining and identifying forced labor, including deceptive recruitment, passport retention, debt bondage, excessive overtime, and employers taking advantage of workers' vulnerable positions by intimidation, threats and more[x].

ILO estimates that 40.3 million people were in slavery worldwide in 2016, of which 24.9 were trapped in forced labor, 16 million were in the private economy. Children represented 18 percent of those subjected to forced labor exploitation[xi]. To put the problem in context, during the past five years, 89 million people in the world have experienced some form of modern slavery for periods of time, ranging from a few days to five years.

Most people enduring forced labor perform simple, low skilled, low paid, non-technological work, in sectors frequently using of agents or other middlemen to recruit workers, like agriculture, mining, textile manufacturing, leather work, which feeds into the global supply chains by taking advantage of the low-cost outputs. The industry sectors that are most vulnerable to forced labor, according to reported cases of forced labor, include[xii]:

The Global Slavery Index 2018[xiii] estimates the prevalence of modern slavery across the world, and highlights exposure in several key global manufacturing hubs, including South-East Asia and Eastern Europe. The phenomenon of modern slavery is also present in economies like the UK, USA, Australia, and Canada[xiiii].

Overview of Estimated Modern Slavery Prevalence 2018(xx)

Emerging national legislation and Due Diligence guidance

Prior to the COVID-19 crisis, there has been a firming global commitment on labor regulations and anti-slavery compliance. Regulations, such as the California Transparency in Supply Chains Act 2012, the US FAR (Federal Acquisition Regulation) Human Trafficking Rules (2015), UK Modern Slavery Act 2015, and US Trade Facilitation and Trade Enforcement Act, Section 910 (2016), and latest the Australian Anti-Slavery Act 2018, are examples of an increased willingness by national governments to regulate against forced labor. In April 2020, the European Commission also announced plans to develop a legislative proposal by 2021, that will require EU companies to conduct mandatory human rights and environmental due diligence on their operations and global supply chains[xxi].

The emerging legislation is tasking companies, and in extension procurement entities, to proactively identify the human rights impact of their operations and assess the effectiveness of their compliance programs and due diligence procedures. The following captures some of the initial steps to embedding human rights due diligence into procurement operations, including establishing formal organizational commitment, building awareness and capacity, adopting a risk-based approach in monitoring exposure, and finally communicating efforts to stakeholders.

Walking the Talk – some steps to help mitigate forced labor risks

State your position: Organizational commitment is essential when embedding human rights due diligence and should be presented in a policy framework, which communicates to suppliers, your commitment, expectations, and reliance on their cooperation in addressing forced labor.
Ensure awareness and organize training: Conduct training for procurement practitioners to educate and raise awareness of forced labor issues, and what to look out for when evaluating bids, formulating contracts, and otherwise engaging with suppliers. Training and collaboration should be extended to suppliers, so they understand your expectations.
Know your supply chain: Assess forced labor exposure using a risk-based approach, targeting spend categories and source locations that represent the highest risk of forced labor. Identifying procurement spend across high risk categories, highlights procurement segments that are more exposed, and therefore should be subject to enhanced due diligence.
Monitor effectiveness of your efforts and communicate: Reporting on effectiveness of due diligence measures demonstrates transparency and willingness to improve. A simple way is to report on the effectiveness of steps taken through a series of performance indicators and regular reporting schedules.

As the international community moves forward towards the 2030 SDG Agenda, there is a renewed focus on meeting SDG 12: “Ensuring sustainable consumption and production patterns”, and specifically SDG target 8.7 on eradicating forced labor, end modern slavery and human trafficking. Procurement practitioners can play a critical role in this effort and should engage proactively to prevent a new surge of labor exploitation and modern slavery, during, and in the aftermath of the COVID-19 crisis.

Helpful guidance resources, training, and mapping tools

In response to the global spread of COVID-19, the United Nations Development Programme (UNDP) has designed a simple and accessible tool, the Human Rights Due Diligence and COVID-19: Rapid Self-Assessment for Business (C19 Rapid Self-Assessment), to help businesses consider and manage the human rights impacts of their operations. This non-exhaustive list of potential actions allows for rapid, but continuous reflection on the human rights risks and impacts common to many industries. You can download the original version in PDF format in multiple languages on the UNDP’s website. For more information please go to: Human Rights Due Diligence and COVID-19: Rapid Self-Assessment for Business.

On 28th May 2020, UNDP has further released a Guideline for Sustainable Procurement of Healthcare Commodities and Services. The goal of this Guidance Note is to facilitate the implementation of sustainable procurement of health care commodities and services by providing criteria that may be used by UN staff for the requisition and procurement of health products and services.

Procurement practitioners can benefit from partnering with civil society organizations monitoring forced labor issues, and apply some of the many available mapping tools and templates. Here are a few examples:

The Danish Institute of Human Rights runs a project on Human Rights and Procurement, with a very useful and practical Toolkit on Human Rights for Procurement Policy Makers and Practitioners (March 2020).

Examples of COVID-19 related guidance:

The Australian Border Force (ABF) has provided a Guidance to Australian companies on steps they can take to manage exposure to modern slavery during the COVID-19 crisis.
Verite provides a helpful Guiding Principles for Responsible Businesses for the COVID-19 Pandemic and a guidance note on COVID-19 and Vulnerability to Human Trafficking for Forced Labor.

Examples of available Online Training Resources:

The London Universities Purchasing Consortium (LUPC), has developed a free online eLearning suite on Protecting Human Rights in the Supply Chain, developed especially for public procurement practitioners.

Examples of available Risk Mapping Tools:

The US Trafficking in Persons Report (2019), provides a detailed account of Human Trafficking incidents at country level on an annual basis.
The WalkFree, Global Slavery Index, highlights the prevalence estimates of people living in modern slavery country-by-country in 2018. The national estimates are calculated using country-level risk factors, including a Vulnerability Model and a Government Responds Model.
The CSR Risk Check is a useful CSR risk assessment tool, giving you an overview of the issues, you may encounter in your organization or company. The CSR Risk Check was developed by MVO Nederland and funded by the Dutch Ministry of Foreign Affairs.
The RightsDD Platform is a free and easy-to-use risk management tool built to help companies assess their own business operations for modern slavery risks.

Examples of Anti- Human Trafficking & Slavery initiatives:

The OSCE has produced a series of publications and guidelines on supply chain initiatives to prevent trafficking, notably around institutional procurement by states. Recent conference reports include September 2019: and May 2019.
The Business, Human Rights and the Environment Research Group (BHRE) undertakes research on the impact of commercial activities and human rights and the environment.
Know the Chain is a resource for businesses and investors who need to understand and address forced labor abuses within their supply chains. The organization benchmarks current corporate practices and provides practical resources that inform investor decisions and enable companies to comply with legal obligations while operating more transparently and responsibly.
Human Trafficking Risk Template (HTRT) is a free open-source industry standard template used to assist companies in their efforts to comply with major human trafficking and modern slavery regulations and improve their supply chain-related public disclosures.
Sedex is a global not-for-profit membership organization and a collaborative platform for sharing responsible sourcing data on supply chains.
Verité Forced Labor Commodity Atlas – Verité has developed a so-called Commodity Atlas, which provides up-to-date research and information on forced labor related to various commodities (i.e. gold, cotton, sugar, palm oil, etc.). A recent report is available here: Strengthening Protections against Trafficking in Persons in Federal and Corporate Supply Chains Research on Risk in 43 Commodities Worldwide.
The Ethical Trading Initiative (ETI) is a leading alliance of companies, trade unions and NGOs that promotes respect for workers' rights around the globe.