The collapse of the garment factory in Bangladesh last week, which killed at least 705 workers and injured thousands of others, has put a spotlight on a problem that plagues many supply chains: the use of slave labor.
Coincidentally, at the Ariba LIVE 2013 conference yesterday, I attended a presentation by Justin Dillon, Founder and CEO of Made in a Free World, a nonprofit group that is “building a coalition of consumers, businesses, and governments to disrupt the system of slavery.” Check out the short video below for an overview.
To make consumers and businesses more aware of this problem, Made in a Free World, with funding from the US State Department, launched slaveryfootprint.org, an online survey that calculates your “slavery footprint” — i.e., the likely number of slaves involved in making some of the products you use.
The US State Department estimates that there are 27 million slaves globally. In response, federal and state governments are taking action to drive down the use of slave labor in supply chains. California, for example, passed the California Transparency in Supply Chains Act of 2010, which went into effect in January 2012. The law requires “retail sellers and manufacturers doing business in the state [with over $1 million $100 million in annual worldwide gross receipts] to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale, as specified.” As part of the law, companies must (among other things):
- Conduct audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit.
- Require direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.
- Maintain internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
- Provide company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.
On the federal government front, President Obama signed an Executive Order Strengthening Protections Against Trafficking In Persons In Federal Contracts on September 25, 2012. The order prohibits federal contractors, contractor employees, subcontractors, and subcontractor employees from engaging in a variety of trafficking-related activities, including:
- Using misleading or fraudulent recruitment practices during the recruitment of employees, such as failing to disclose basic information or making material misrepresentations regarding the key terms and conditions of employment, including wages and fringe benefits, the location of work, living conditions and housing (if employer provided or arranged), any significant costs to be charged to the employee, and, if applicable, the hazardous nature of the work;
- Charging employees recruitment fees;
- Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity documents, such as passports or drivers’ licenses.
Companies are also starting to take action — albeit, reactively in many cases. This past March Disney announced that it was stopping production of branded merchandise in Bangladesh, due in part to the factory fire near Dhaka that killed 112 workers last September. The company is also stopping production in Ecuador, Venezuela, Belarus and Pakistan by April 2014 (these countries scored low in a World Bank report that assessed countries on accountability, corruption, violence, and other metrics). “After much thought and discussion we felt this was the most responsible way to manage the challenges associated with our supply chain,” said Bob Chapek, president of Disney Consumer Products.
And as I highlighted last week, according to an article in the Wall Street Journal, “Wal-Mart Stores Inc., Gap Inc., and Hennes & Mauritz AB met with about 30 Western retailers, labor groups and nongovernmental organizations to work on a plan to prevent industrial disasters like last week’s deadly building collapse in Bangladesh.The discussions included creating a clearinghouse of factory-inspection results, so companies can see where other retailers stopped production over safety concerns, participants said. The group plans to publish the results of the talks in May.”
The bottom line: the use of slave labor in supply chains is a symptom of poor supply chain visibility. As with sustainability, trade security, and product safety and quality, if you want to make progress on eradicating slavery, you have to develop a more granular and detailed understanding of your supply chain. You have to improve the way you communicate and collaborate with your suppliers, especially lower-tiered ones. And most importantly, you can’t outsource the responsibility; the buck ultimately stops with you, the brand owner. You have to see and walk your supply chain, from start to finish, with your own eyes and feet.
How many slaves are in your supply chain? It’s a question many companies can’t answer today. And it’s a question many companies have never even asked. But consumers are starting to pay more attention to this problem and they are asking the question, so if you haven’t already, it’s time to bring this question up at your next executive meeting.
Adrian, good article.
I think the key here is who answers that question: how many slaves are in your supply chain?
Right now, Western audits – proven to be spectacularly flawed in Bangladesh (after 20 years of trying to get the system right since the first sweatshop scandals) – only ask factory owners these questions (questions that of course include things like, ‘do you outsource?’ or ‘have you got a building permit for that third floor extension?’).
We have to finally admit that factory owners – and not just lower tier here, just look at Foxconn – are both highly skilled as well as highly motivated to lie: if their margins only exist because they use child labor – margins that bring the buyers there in the first place – they can’t – for business reasons – do the right thing.
So asking them – with more audits – is never going to get you the answers. When the day comes when the auditor calls, they will do as they have always done and bundle the kids onto the roof (common practice) take the bars off the windows and smile.
In which case, brands might think they know their supply chain is clean, so to speak, but they are living in a fantasy world.
The only solution here is to ask the same question (s) to the workers themselves. If it is mandatory for an audit for workers (off site and anonymous of course) to give you the real truth (something you can then contrast with the rosy picture painted by factory bosses), then you can really get some answers.
Of course, getting workers to speak up is not going to be easy, but you’d be surprised how many don’t want to work in factories that are going to burn down or collapse on top of them. And how many have access to a mobile phone.
Question is: who is going to give them a call – and do you really want to listen, because listening will cost money. Although perhaps less than the current rates for compensation and bad publicity.