Pressure is mounting for more transparency on possible human trafficking in supply chains, with new legislation in both the United Kingdom and the United States.
In March, the U.K. enacted the Modern Slavery Act of 2015, which takes effect in October. The law requires companies with annual worldwide sales of more than £36 million to publish yearly statements outlining steps they have taken to prevent human trafficking in their supply chains. The law applies to companies that do any business anywhere in the U.K.
In July, U.S. representatives Carolyn B. Maloney (D-NY) and Chris Smith (R-NJ) introduced the Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 in the U.S. House of Representatives. It would require public companies with more than $100 million in global revenue to disclose measures to prevent human trafficking, slavery and child labor in their supply chains as part of their annual reports to the U.S. Securities & Exchange Commission. Sen. Richard Blumenthal (D-CT) plans to introduce companion legislation in the Senate.
"Some companies may participate knowingly in human trafficking to pad the bottom line; others are willfully ignorant of where and how their inexpensive products are made; and still others simply do not know," Smith said in a press release. Smith also authored the Trafficking Victims Protection Act of 2000, which directs the U.S. State Department to publish an annual report on worldwide trafficking.
The bottom line is there is no excuse for a company's complicity or ignorance in the suffering endured by human trafficking victims hidden away in the supply chain. It is not enough for a company to say they are unaware of human trafficking in their product line; consumers and Congress want to know that companies are actively taking steps to ensure there are no connections between human trafficking victims and their business products and services.
The bill was introduced the same day the State Department released its latest assessment in a report titled Trafficking in Persons Report 2015. The report notes that human trafficking can occur at several points in the electronics supply chain, including:
- Mining of raw materials
- Component manufacturing
- Product packaging and assembly
The risk of human trafficking is higher when turn-around times are short, such as when OEMs quickly ramp up manufacturing to meet demand for a popular new smartphone, the report adds.
These national laws follow the passage of a law in California - the Transparency in Supply Chains Act of 2010, which also requires companies with worldwide revenue of more than $100 million to report on actions to eradicate human trafficking in their supply chains. Violations are punishable only by an injunction to compel compliance, but California's Department of Justice apparently started sending out letters requesting evidence of compliance this spring.
The U.S. State Department recommends that high-level executives promote their policy and build an assessment of labor practices into supplier evaluations. It also suggests that an effective policy include these provisions:
- prohibits both human trafficking and activities that facilitate it, such as charging workers recruitment fees, contract fraud, and taking away workers' documents to keep them from returning to their home countries;
- responds to risks that are particular to a specific industry or region;
- requires freedom of movement for workers;
- pays employees at least the minimum wage in all countries of operation, preferably a living wage;
- includes a grievance mechanism and whistleblower protections; and
- applies to subcontractors, labor recruiters, and other business partners.
"By fully mapping its supply chain, down to the level of raw materials, a company can gain a better understanding of gaps in transparency," the State Department says. "Companies can then create a plan to target those areas where high levels of spending overlap with industries or locations with high risks for human trafficking."