Forced Labor, Modern Slavery and Human Trafficking: Understanding Coercive Labor Practices Globally.

Whether it’s called modern slavery, forced labour, or human trafficking, these exploitative practices deprive individuals of their freedom, through force or coercion. In this blog, we’ll explore the various forms of labour exploitation, how they manifest globally, and why businesses must take action to address these abuses in their extended supply chains, especially with the growing legal implications for both local and international companies.

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Defining Modern Slavery

Modern slavery is a broad term that can refer to several practices on the spectrum of labour exploitation, all of which are characterised by the fact that they deprive individuals of their freedom and violate their fundamental human rights. There is, in fact, no international consensus on the definition of slavery.  More than 300 international slavery treaties have been signed since 1815, but none has defined slavery in the same way. Modern slavery researcher Kevin Bales defines modern slavery as an economic relationship in which one person controls another through violence or coercion to benefit from the victim’s labour. The International Labour Organization (ILO), a United Nations agency, has defined various forms of labour exploitation to include:

1. Forced Labour: Work or service that people are forced to perform against their will under the threat of punishment. This can involve coercion, abuse, or deception and includes slavery-like practices such as bonded labour and human trafficking.
2. Human Trafficking: The process of recruiting, transporting, or harbouring individuals through force, fraud, or coercion for exploitation. Human trafficking often leads to various forms of forced labour and sexual exploitation.
3. Bonded Labour: A form of forced labour in which an individual is forced to work to repay a debt, but the value of their labour far exceeds the original debt, often trapping them in a cycle of exploitation.
4. Child Labour and Exploitation: Work that is mentally, physically, socially, or morally harmful to children and interferes with their education. The ILO categorises child labour as any work that deprives children of their childhood and potential, particularly in its worst forms, such as slavery, prostitution, or hazardous work.
5. Slavery and Slavery-like Practices: The condition where individuals are owned or controlled by an employer through abuse or threats of abuse, including practices such as forced marriage or child trafficking.
6. Domestic Servitude: A specific form of forced labour where individuals, often women, are coerced into working in private households under abusive conditions. Their isolation from the public makes it difficult to escape or seek help.

For more information on these definitions, visit the International Labour Organization.

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The Legal Landscape: Global and US Frameworks

Addressing modern slavery is no longer just a moral imperative; it’s a legal one. Governments worldwide, including in the USA, are increasingly adopting stringent regulations to combat exploitative labour practices. These laws compel companies to assess and manage the risk of exploitation in their supply chains, both domestically and internationally.

In the United States, several important laws address forced labour and human trafficking, with a growing focus on supply chain accountability:

• The Trafficking Victims Protection Act (TVPA): The cornerstone of US anti-trafficking law, the TVPA criminalises forced labour and human trafficking, provides protections for victims, and includes provisions for prosecuting offenders. US companies found to be complicit in trafficking activities, domestically or abroad, may face severe penalties.
• The Uyghur Forced Labor Prevention Act (UFLPA): This act bans the import of goods from China’s Xinjiang region unless companies can prove their products are free from forced labour. Given the US trade ties with China, this law has broad implications for businesses across various industries, from technology to apparel, who must ensure their supply chains comply.
• Tariff Act of 1930 (Section 307): Section 307 prohibits the importation of goods made with forced labour. US Customs and Border Protection (CBP) enforces this by issuing Withhold Release Orders (WROs) on goods suspected of involving forced labour. Companies must demonstrate their supply chains are clean to avoid disruptions.
• California Transparency in Supply Chains Act: Companies doing business in California must disclose efforts to eliminate forced labour and human trafficking from their supply chains. Although it’s a state law, its reach is significant, influencing corporate practices across the US due to California’s market size and economic power.

These USA laws are part of a broader global movement to increase transparency and accountability in supply chains, with substantial financial and reputational risks for companies that fail to comply.

The EU Corporate Sustainability Due Diligence Directive (CSDDD): This newly adopted law mandates due diligence across global supply chains, holding companies accountable for human rights and environmental abuses. This directive applies to European and non-EU companies—including those in the USA—selling goods or services into the EU. American firms must comply with these standards if their business operations touch the European market.

For USA-based businesses sourcing materials or selling products to the EU, failing to adhere to the CSDDD can result in significant fines, reputational damage, and loss of market access. Similarly, the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act enforce similar rules, ensuring that goods imported or exported across borders are free from exploitative practices.

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The Impact of Inaction

Inaction on exploitive labour practices can have dire consequences for businesses, including:

• Financial Penalties: Companies found in violation of the CSDDD could face fines of up to 5% of global revenue. The Uyghur Forced Labor Prevention Act also imposes significant penalties for companies importing goods made with forced labour into the USA.
• Reputational Damage: Consumers are increasingly conscious of a company’s ethical standing. Negative press around forced labour in a supply chain can severely damage a brand’s reputation, leading to loss of consumer trust and long-term financial impacts.
• Legal and Director Liability: Company directors may be held personally accountable for failing to implement proper due diligence measures. In some jurisdictions, legal action can be taken against senior executives for negligence in addressing forced labour risks.
• Loss of Market Access: USA companies selling into the EU or Canada must comply with local laws on forced labour. Failure to do so can result in goods being banned from entering these markets, causing significant financial and operational disruptions.

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What Can Businesses Do?

1. Conduct Thorough Risk Assessments: Assess every level of your supply chain, from suppliers to sub-contractors, to identify potential risks of exploitive labour practices, including forced labour or human trafficking.
2. Implement a Due Diligence Framework: Establish transparent processes for identifying, preventing, and mitigating human rights abuses in your supply chain. Align these processes with frameworks like the OECD Due Diligence Guidance for Responsible Business Conduct and ensure compliance with both domestic and international legislation.
3. Engage Stakeholders: Collaborate with employees, suppliers, and external partners to foster transparency and accountability within your supply chain. Regular audits and engagement with local communities can help identify and mitigate risks.
4. Communicate and Report Transparently: Publicly disclose your efforts to combat modern slavery in annual reports, sustainability statements, or dedicated modern slavery reports. This transparency helps build trust with consumers, investors, and regulators.
5. Prepare for Legal and Financial Implications: Ensure that your business has a strategy to deal with potential legal liabilities, penalties, and reputational risks associated with non-compliance. Stay up to date with evolving legislation in key markets, particularly in the USA, EU, and Canada.

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SlaveCheck – Your Modern Slavery Compliance Partner

Supply chain-based slavery - in all its forms – has become a serious compliance challenge for businesses operating in today’s global economy. A challenge that will not be met without the right partnerships, processes and technologies.

SlaveCheck’s supply chain due diligence solution was designed to help businesses convert this modern slavery compliance challenge into a business opportunity. Powered by ‘Collective Intelligence’ – the integration of human intelligence (HI) and AI – SlaveCheck’s ‘top-down / bottom-up’ approach uses AI to digitally map and risk-assess supply chains while simultaneously using HI – a growing ecosystem of collaborative partnerships with NGOs and other civil society organisations - to complete in-field investigations, develop and implement corrective actions and monitor their effectiveness. Add in automated risk monitoring and continuous feedback loops and SlaveCheck becomes the partner of choice for businesses to confidently and cost-effectively achieve compliance while driving measurable impact.

In a world increasingly demanding ethical and responsible business practices, partner with SlaveCheck and convert modern slavery from a compliance challenge into a business opportunity.

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