The issue of modern slavery has again been hitting headlines this month. This is no longer simply a moral issue – businesses are facing increasing commercial, reputational, regulatory and legal risks. We outline below how efforts to hold businesses accountable for complicity in human rights violations are accelerating.
Cutting ties with forced labour in China
In response to mounting evidence into the scale and the severity of forced labour in China, involving Uyghur Muslims in Xinjiang Province, the Foreign Secretary, Dominic Raab has announced a package of measures to ensure that British organisations are “not complicit in, nor profiting from” human rights violations. This includes updated guidance to UK business and a minister-led campaign of business engagement to highlight the risks faced by companies with links to Xinjiang, as well as support to help bar companies that are profiting from forced labour from government procurement in the UK.
Critics, such as the FT’s Jonathan Ford, have questioned the effectiveness of the governments existing approach to modern slavery, suggesting that ‘bosses…need more reason to worry about their suppliers’ labour practices’. Mr Raab’s recent announcement of an urgent review of export controls to prevent the export of any goods that could directly or indirectly contribute to human rights violations in Xinjiang could do just that. This is the approach taken in the U.S. which has enforced import restrictions against companies suspected of using forced labour. It has this month announced a ban on the import of all cotton products and tomatoes from China’s Xinjiang region – including products manufactured in other countries. This will present challenges for the clothing industry; one-fifth of the world’s cotton comes from China, and the majority of that comes from the western province, which is home to 11 million ethnic Uyghurs. While the UK government’s approach to export controls remains to be seen, businesses are already facing mounting pressure to cut ties with suppliers in China that profit from forced labour.
More robust requirements for companies, and a greater focus on corporate accountability for human rights violations occurring in their supply chains, are also on the horizon. As we outlined last month, The European Commission has committed to introducing mandatory human rights due diligence this year. While it’s not yet clear whether the UK government will follow suit, increasing pressure from policymakers, civil society and investors, means that businesses would be advised to enhance their human rights due diligence processes, which should underpin their approach to modern slavery.
Modern slavery survivors launch a legal case
Meanwhile, three survivors of modern slavery are suing the waste and recycling firm Biffa and the employment firm that placed them into employment, for damages. The perpetrators of the crime – organised crime groups who trafficked victims from Poland, infiltrated the recruitment agency and controlled victims’ bank accounts – have already been convicted. However, in line with international human rights guidance, the claimants case rests on businesses’ responsibility to ensure that they are not complicit in human rights abuses. As their solicitor argues, ‘it is very unlikely that these crimes could have taken place if proper procedures had been in place to prevent them’. It will be interesting to see how the case develops, but as the issue of effective due diligence gains momentum, it is unlikely to be the last.
Spotlight on the financial services sector
The Biffa case also shines a light on the important role of the financial sector in detecting and disrupting modern slavery, which is estimated to generate $150 billion in profits for organised crime annually. This topic is the focus of a new report and project from Themis, The Independent Anti-Slavery Commissioner’s Office and TRIBE Freedom Foundation which pulls together research, resources and advice for the financial services sector. The report draws attention to the sectors exposure to a range of financial, reputational and regulatory risks associated with modern slavery. These risks are compounded by worryingly low levels of awareness in the sector – in particular at senior management level. This is a key concern as, to be effective, modern slavery strategies, need to be led from the top. As scrutiny of the financial sector’s role in preventing human rights abuses continues to grow, businesses would be wise to start engaging more proactively on the topic now. A welcome finding is that this is an issue that a large proportion employees care about, and are demanding that business do more to tackle this issue.
To find out how we can help you to strengthen your approach to modern slavery please get in touch with our consultant, Pendragon Stuart.
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