Fighting Forced Labor is an Endurance Sport: You Have to Put in the Work
By Tu Rinsche, Skytop Contributor / February 8th, 2022
Tu Rinsche is an award-winning human rights leader and Founder of All Rights Advisors, a boutique rights-based sustainability studio that helps clients boldly advance their ESG goals through authentic communications and bespoke program design. She has effected change over the last 20 years as a leader on all sides of the table — within government, nonprofits, donors, business and civil society. With deep relationships and proven results within highly matrixed, global organizations, Rinsche translates visions into reality. She has designed and led impact strategies and large-scale initiatives that have positioned high-profile companies and civic organizations as leaders in their respective fields.
Prior to All Rights Advisors, she shaped and redefined organizational and programmatic strategies for groups focused on investigating, illuminating, and addressing environmental and human rights abuses, most recently at Transparentem and Minderoo Foundation-Walk Free. Previously, she worked in the corporate world, leading human rights due diligence and sustainability programs for iconic global brands – Marriott International, The Ritz-Carlton, and The Walt Disney Company. Tu began her career with the U.S. Peace Corps in Mauritania, followed by the U.S. Department of State where she served as the lead expert on forced labor, child labor, and supply chain issues in the Bureau of Democracy, Human Rights, and Labor.
Tu has a B.A. in International Affairs from The George Washington University and her Master’s in International Affairs from Columbia University. She is the recipient of Nomi Network’s 2019 Corporate Social Responsibility Award. She serves on the Board of Verité and is a former national Board member of Summer Search. She is also a member of the Vital Voices D.C. Council and Chief. She currently resides in the Washington D.C. area.
Forced Labor Exists in All Supply Chains
No matter what industry you’re in, if your company has global operations or sources from overseas, forced labor exists in your supply chain.
Forced labor is found in sectors such as fashion, information technology, jewelry, agriculture, manufacturing, hospitality, food, and construction. The latex gloves that your doctor puts on before examining you might be made by a worker who can’t escape debt bondage. The produce you buy in a supermarket or serve in your corporate cafeteria may have been picked with child labor. The cozy hoodie you wear during the weekends could have been made by a young woman who was forced to work throughout the night. These are all scenarios happening every day to real people.
An Enormous Scale
Forced labor is a problem on an enormous scale. Global estimates depict modern slavery as the third-largest illicit business worldwide, following drugs and weapons. It generates an estimated $150 billion a year in illegal profits, including 34% of profits through some 25 million people trapped in some form of forced labor in the private sector.
Eighteen months ago, as COVID-19 was disrupting everyday life, I was uncovering forced labor in the global supply chains of dozens of global retail brands for an investigative human rights non-profit organization. Our findings became a centerpiece for a New York Times article underscoring growing interest by media in the role that modern slavery plays in the global economy. I learned that a number of the companies thought it was impossible to help the foreign migrant workers toiling in garment factories in Malaysia. Some gave up and stopped engaging. But those that collaborated ended up helping thousands of workers improve their lives. All of this was done during the pandemic when everyone thought it was impossible as COVID-19 raged on.
This experience and the decade that I’ve spent driving change inside Fortune 500 companies have made me hopeful that corporations can successfully reduce instances of forced labor. I have seen the good, bad, and unexpected.
Forced Labor is a Reputational Risk
What is clear is that forced labor is absolutely a reputational risk for companies. However, forced labor is also an opportunity for companies in an age of shareholder activism. I also know that companies can’t do this alone and need to identify and build a community, which may include unlikely partners, to support them along this journey.
Whether you’re a start-up, SME or global brand, making a positive impact requires courage, patience, financial resources, and curiosity. There are challenges – for instance, the vital data you need to drive results may not exist. The most important thing is to take action by embedding and conducting human rights due diligence. This will allow you to get a firm understanding of your company’s impact. If you have that in place, you’ve reduced risk.
Just like any endurance sport, taking action on forced labor requires the right mindset, strategy, tools, and community to support your human rights journey towards the finish line.
Standing Still Is Risky Business
Companies fail on forced labor because they’re not doing the work. Despite the unprecedented resources at their disposal, a recent report on business due diligence on forced labor in the three highest-risk sectors – information, communications and technology, food and beverage, and apparel and footwear – revealed bleak results:
29% is the average score among companies assessed on a scale of 100%
More than 33% do not provide evidence that they are assessing human rights risk
81% provide no evidence they are adopting responsible purchasing practices to mitigate forced labor in their supply chains
Only two out of 129 companies stood out as having robust policy and implementation to address forced labor
Activists, governments, investors, and even some of the more proactive global brands on this issue increasingly recognize that voluntary corporate efforts aren’t enough to produce desired impact. The rise of human rights transparency and due diligence regulations have changed the question from “why should I address forced labor” to “how and when should I take action.” That means companies have unprecedented opportunities and resources to establish human rights due diligence, craft long-term strategies, execute plans, measure results, and communicate their efforts. The cost of waiting to react to forced labor issues only after they have arisen is too high.
Inaction Can Put You Out Of Business
One of the most powerful tools that the U.S. federal government uses right now is the Withhold Release Order (WRO), which falls under the jurisdiction of the Customs and Border Protection (CBP). CBP has issued more WROs since 2016 than it has in the past decades.
As of January 2022, there are over 50 active or partially active Withhold Release Orders across 10 countries citing reasonable evidence of forced labor in the production of identified goods ranging from diamonds to apparel to cotton to stevia to tea to palm oil to tobacco products to carpets.
The orders allow the government to detain goods “reasonably believed” to be made with forced labor from entering the country. Any interested party can submit a petition by following a specific process and provide evidence that “reasonably but not conclusively” proves forced labor. CPB can then leverage the full power of section 307 of the Tariff Act of 1930 to bar the importation of any product whose supply chain is tainted by forced labor.
An instructive case study of a WRO involves Top Glove, the world’s largest manufacturer of disposable latex gloves – at a time of peak demand during a pandemic.
In July 2020, CBP issued a WRO based on information that showed multiple forced labor indicators in the company’s production process, showing “reasonable but not conclusive information” involving workers who were exposed to debt bondage, excessive overtime, abusive working and living conditions, and retention of their identity documents. This set in motion a 14-month saga for the Malaysia-based company that could have risked putting it out of business.
Ultimately, CPB lifted the WRO on Top Gloves products. But only after it worked with a credible, independent social compliance group to address the 11 forced labor indicators to prove that its products were no longer being manufactured with forced labor. It also improved employees’ labor and living conditions at its housing facilities in Malaysia and paid more than $30 million in remediation payments to workers to fast track resolution. Had Top Glove been more proactive from the start, it could have avoided many of these costs as well as the fourteen months of lost sales. But the costs Top Glove incurred paled in comparison to what they could have been.
One month after lifting its Top Glove WRO in September 2021, CBP issued additional WROs for several other rubber glove manufacturers in Malaysia. As a result, one of those companies – Supermax – last fall was barred by the U.S. government from entering the U.S. market and then lost more than $200 million in business with the Canadian government. Besides facing government action, Supermax’s customers are now coming under broader public scrutiny that has led to the U.K. government facing legal action over its decision to keep Supermax as an approved vendor in light of the forced labor allegations.
The lesson? Don’t wait for forced labor allegations to show up in your General Counsel’s inbox. Get started with your game plan now.
Make a Game Plan and Trust the Process
Just like an endurance race, getting started or restarted on your forced labor journey requires having a game plan. It is not enough to have good policies, public reporting or even the latest technology tools without consistent human rights due diligence application and implementation across the entire corporate value chain, from sourcing to waste management. It requires a proactive mindset to identify strengths and weaknesses; to implement a human rights strategy tailored for your business; to embed human rights due diligence; to apply lessons-learned to make improvements; and to take an enterprise-wide approach to accountability.
Proactive companies must:
Develop a human rights strategy;
Put in place the right internal teams, tools, and funding to implement policies and initiatives;
Monitor the risks and best practices unique to their sector;
Be on the lookout for a wide range of human rights issues; and
Most importantly, not wait until a government forces them to act.
Companies must embed human rights due diligence into their routine operations. Executives that fail to do so are putting their companies at risk.
The good news is that companies equipped to proactively address forced labor issues can take pride in driving positive change while mitigating high-stakes risks.
Here are four areas for companies to act on:
1. Business Case and Human Rights Strategy
Human trafficking has been taboo for decades. That started to change in the last 15 years as governments began collaborating on high-profile crackdowns and global media began to shine light on the issue. Within many corporations, particularly in the United States, it remains a sensitive issue – especially for companies that have reason to doubt that their business practices match their core corporate and brand values.
The most common consequences of corporate missteps that I’ve witnessed on this issue fall into the following categories:
Consumer backlash
Employee backlash
Legal repercussions
Financial consequences
Operational nightmares
Board member activism
Investor disinterest
Creating a proactive strategy to combat slavery can protect your corporate identity as well as your consumer-facing brand’s appeal to both consumers and employees. Increasingly, companies are being proactive about environment, social, and governance (ESG) and this is part of it. Your human resources team will also thank you since the pandemic accelerated the global war for talent and the next generations of the workforce are more likely to want to work for ethical businesses that care about people and the planet.
To survive the modern business climate, create a holistic program that is aligned to a global framework with an agreed upon theory of change, such as the UN Guiding Principles on Business and Human Rights (UNGPs). Companies need to address modern slavery through a multidisciplinary approach focused on diverse operational impacts and opportunities.
2. Human Rights Due Diligence
There are plenty of resources on the core components of human rights due diligence. The key is to just get started.
The first step is research. Understand your risks and impacts. Map and review supply chain data. Engage with your suppliers to dig deeper on root causes. Integrate your findings into corporate policies and processes. Once you understand your risk and impacts, identify external groups to help you navigate the complexities, to conduct an independent assessment, and to propose solutions you can follow with the confidence of a seal of approval.
It is never too late to conduct human rights due diligence. In fact, it would be smart to combine human rights with environmental due diligence (HREDD) as companies continue to commit to net zero carbon targets. An unprecedented number of transparency and due diligence laws are being proposed or already in force, including on HREDD. One of the latest bills being proposed that require companies to disclose both social and environmental due diligence policies is New York’s Fashion Sustainability and Social Accountability Act. The Fashion Act is part of a global legislative trend mandating increased transparency in supply chains and risk-based approaches by companies across sectors to prevent abuses at the supplier level and beyond.
3. Collaboration
“If you want to go fast, do it alone. If you want to go far, do it together.” (African Proverb)
Hitting the ground running not only requires the right pair of running shoes and the sufficient financial resources (for lots more running shoes), but also a community with expertise who can help you at every point of your journey. You can’t fight forced labor with zero budget or by doing it alone.
Sometimes it might feel easier to do the work on your own schedule and time. However, at the end of the day, you may have less positive impact than done in collaboration with peers and other groups. By partnering, you can increase your knowledge on the issue, learn about best practices, pool resources, and coordinate on ambitious goals to create greater change on a faster timetable.
I’ve built and designed a variety of partnerships over the past twenty years, and there are many different approaches, as well as pros and cons. Not every collaboration is a good fit. But they are absolutely worth it if you have the right partner(s).
4. Communications
A company that implements human rights best practices not only avoids risks, but has a story to tell a broad range of interested stakeholder groups. Activating communications goes beyond messaging corporate policies. To help you achieve your goals, ideally you will partner with communicators who can create and execute a robust, integrated storytelling plan that aligns with your objectives and timing.
It is more important than ever to build internal and external communications into your game plan. Companies can accelerate change through strategic storytelling, celebrating wins, and owning the challenges. Don’t just talk about the good stuff; sharing what has been tried and failed is equally important. In an age of shareholder, employee and consumer activism, transparency is absolutely critical to gaining trust and loyalty is critical.
Are you ready to take immediate action? If so, take the following five steps:
Embed and implement robust, proactive worker-centered human rights due diligence (HRDD);
Establish an enterprise-wide, multidisciplinary executive structure that will be accountable for HRDD, as well as specific forced labor policies and initiatives;
Develop and implement internal governance, standards, and processes that focus on operational capabilities and risks, including supply chain partners beyond tier one;
Partner, collaborate, and leverage external, credible experts and local community leaders with real-world experience; and
Develop and share robust internal and external communications about your company’s human rights journey, from how it started to how it’s going to future ambitions and results.