International Labour Day: shining the spotlight on working conditions

Forced labour: the $150 billion industry

Although slavery was legally abolished by most countries 150 years ago, millions of men, women and children are still enslaved; according to the International Labour Organization (ILO), 21 million people are in forced labour. Other sources put this figure at nearly 46 million and an estimated 5.5 million victims of modern slavery are children. 

It takes many forms including sexual exploitation, forced labour, criminal exploitation and domestic servitude. According to the ILO, forced labour in the private economy generates $150 billion in illegal profits

Modern slavery in the supply chain

There is the perception that modern slavery occurs deep down in global supply chains in less economically-developed countries. However, the reality is that it lurks in the dirty underbelly of every country in the world. Even in Europe, there are an estimated 1.2 million people living in modern slavery.

Combatting modern slavery

Not only should investors be aware of modern slavery in their direct operations, but with increasing legislation trying to combat it, the companies in which they invest must also effectively manage risks caused by it. Legislation includes:

  • In 2010, California passed the Supply Chain Transparency Act  – which is aimed at mid and large cap companies with global annual revenues of $100 million or more – roughly 3,200 organisations. It requires them to report on what they are doing to eradicate slavery in their supply chain. 
  • The UK followed with its own Modern Slavery Act in 2015 which requires any company doing business in the UK with global turnover of £36 million or more to disclose on their website what they are doing to ensure slavery does not exist in their operations, including their supply chain. 
  • France passed a due diligence law in February.
  • The Joint Standing Committee on Foreign Affairs, Defence and Trade in Australia has recently launched an inquiry into whether Australia should introduce a modern slavery act. This has been supported by several PRI signatories.

What is the PRI doing on labour standards?

In 2013, the PRI launched a collaborative engagement on labour standards in agricultural supply chains. 67% of companies improved their reporting and practices on labour standards. Investors can see the full details of this engagement, along with key engagement questions here

A second phase of the engagement was launched in 2016, focusing on specific aspects of supply chain labour practices where companies were lagging such as supplier codes of conduct and corrective action. Findings from an initial benchmarking exercise show that most companies report on their policies, but few report on how they implement them. Follow the engagement here.

What are signatories doing?

  • CCR and others have been engaging on recruitment fees for several years. ICCR issued a statement commending ConAgra Foods for revisions to its supplier code of conduct prohibiting  workers paying  recruitment fees. . Coca-Cola was also commended for adopting a new policy for its suppliers/bottlers looking at responsible recruitment. Finally, a resolution was withdrawn from Archer Daniels Midland after the company announced it had adopted a human rights statement. 
  • Following the collapse of the Rana Plaza factory that killed over 1,100 garment workers and left many more injured, investors have collaborated to improve safety standards in the garment industry. 24 April marked the 4th anniversary of the collapse, and was commemorated with an investor statement commending the improvements that have been made in the sector, and calling for the Accord on Fire and Building Safety and the Alliance for Worker Safety to continue addressing systemic risks and worker safety until all issues have been remediated. It was signed by nearly 140 investors.
  • Shipbreaking practices: Shipbreaking is one of the world’s most dangerous jobs because of the lack of protective equipment given to workers. This is shown by two recent explosions on LNG tankers at Gadani in Pakistan. For the third year in a row, KLP has been contacting companies in their portfolios sending ships to be beached in Bangladesh, Pakistan and India. They are working with other investors and lenders on this issue.
  • This investor collaboration on the living wage encourages FTSE100 companies to adopt the UK living wage. Currently, 30 of the FTSE100 have been accredited by the Living Wage Foundation and a further 20 are committed to implementing the standards. 

A webinar to launch ICCR’s new report, Best Practice Guidance for Ethical Recruitment of Migrant Workers will occur today at 11am EST / 4pm BST. Register here.