How Businesses Can Take Meaningful Action on Forced Labor Through Greater Supply-Chain Transparency
My coffee cup sits next to my glowing laptop, steaming. My iPhone sits on a paper task list. I splurge today and get a mocha. Wearing a black vest, blue zip-up pullover, jeans, and sneakers and feeling comfortable, warm, and well-fed on a rainy day, I wonder for just a moment: Where exactly did all these comforts come from?
It’s disturbing to find out that each of these rich-country comforts I so often enjoy—coffee, chocolate, rechargeable batteries in smartphones, and the cotton in my clothes—has been implicated in using forced labor somewhere in a long, complicated, and oftentimes opaque supply chain.
When I hear the phrase “supply chain,” I think of the inconvenience of sold-out toilet paper at the beginning of the pandemic. Sometimes I think of container ships coming from China, bringing untold numbers of widgets to American shores.
What I rarely consider, however, are the questions surrounding supply-chain transparency. How responsible am I for using and enjoying a product that well may have been made by a modern-day slave? And how would I even know if this was the case? And what can business do about it?
Forced Labor Is a Problem for Everyone, Including Business
Forced labor is hauntingly common in the modern world. Matt Friedman, CEO of the Mekong Club, a Hong Kong–based organization, works with a range of businesses and partners to prevent modern slavery within their supply chains. Friedman notes that in 2011, the United Nations estimated that the number of people in modern slavery was 21 million. The new revised figure that recently came out in November 2022 is 50 million. This increase resulted from better data and more people falling prey to trafficking during the pandemic.
When I hear the word “slavery,” I often think about transatlantic chattel slavery from the 16th to 18th centuries. Yet today, slavery wears a different mask. Friedman painted a picture for me of how a worker is first deceived into, and then trapped in, forced labor.
Imagine you’re a Nepalese man who earns $50 per month. A recruiter says you can make $250 per month working in a factory in Malaysia. You say, “Great—where do I sign up?” He says the process costs $1,500, but he’ll lend you the money to make it happen. The rough calculations still make sense.
But once you get to Malaysia, you sign an employment contract you can’t read, you earn $125 per month rather than $250, and your debt actually is $3,000. After working for a year, you realize your debt is only growing with interest, and you ask to go home. But your manager confiscates your passport and says you must keep working until you’ve paid off your debt. If you go to the local police, it’s your word against the company’s. Hope turns to despair, and you’ve become a modern-day slave.
Sometimes these workers’ conditions look like a cobalt mine in the Democratic Republic of the Congo, the topic of Siddharth Kara’s book Cobalt Red: How the Blood of the Congo Powers Our Lives. Sometimes people are trafficked through wide-ranging criminal networks moving them from Latin America to the United States. Other times, forced labor is even state sponsored, as in the case of the estimated 100,000 Uyghurs in western China reported by the US Department of Labor.
What’s clear is that the practice persists because it’s so profitable. Human trafficking and forced labor are second only to drug trafficking in profitability. The US Department of Homeland Security estimates forced labor makes about $150 billion in annual profit. And on a pound-to-pound basis, humans are often far more valuable than drugs. Ashleigh Chapman, founder of the Alliance for Freedom, Restoration, and Justice, says, “[Somebody] can sell a drug or a weapon only once. . . But [you] can sell a child 20 times a night.”
Despite widespread condemnation of modern slavery from governments and civic leaders across the world, forced labor is growing, not shrinking. And though it’s obviously a human rights issue, highlighted by everyone from the United Nations to International Justice Mission, it’s a huge problem for business, for at least three reasons.
First, if a large business is found to have forced labor somewhere in its supply chain, that can crush the brand’s reputation, especially given that 83 percent of socially conscious young consumers say they want to support brands that align with their beliefs. If you sell clothes and, say, the French government files a lawsuit against you for committing “crimes against humanity” by using cotton made by slaves, needless to say, you have a big public relations problem on your hands.
Second, if forced labor or human trafficking is found in your supply chain, it can be hugely expensive. Australia’s Westpac, one of the country’s largest banks, was hit with a $578 million fine for enabling payments between known child sex offenders. Governments are holding companies accountable for not only whose payments they process but also whom they hire and purchase from.
Third, government regulation against forced labor is ramping up across the world. The US is cracking down on child labor and passing legislation on supply-chain transparency and human trafficking. Australia, Britain, Canada, France, and Germany have strict legislation regarding forced labor and supply chains. Clean and transparent supply chains are necessary to doing business with Europe and the wealthy West. Conversely, US Customs and Border Protection can seize a shipment if there is forced labor at any stage of its supply chain.
Yet supply chains can be anything but transparent. Say you’re Microsoft, and you have 58,000 suppliers. How would you know if any of them used forced labor? Or say you’re a college student launching a fulfilled-by-Amazon e-commerce business. How would you know which of the goods you purchased on Alibaba were made by modern-day slaves?
Investing in Supply-Chain Transparency
“I’m descending through a cloud layer to reveal the city of Marawi, Philippines. . . . The crew of 11 under my command is tired from night after night of combat missions,” remembers Wes Lyons, a general partner at Eagle Venture Fund and former Navy officer. “The radio crackles with our tasking for the day: ‘. . . ISIS . . . children . . . bait for an ambush . . . find them before it’s too late.’”
Lyons became passionate about combating human trafficking after a harrowing experience hunting ISIS in the US military and seeing firsthand how the vulnerable are exploited globally. After his experience in the armed forces, he sought ways to combat forced labor and human trafficking through investing in scalable, sustainable solutions. One such solution is Evidencity, a “Knowledge as a Service” provider that “seeks the truth about your network of professional relationships: customers, suppliers, or vendors.”
Samuel Logan, CEO of Evidencity, worked in the 2000s as a journalist specializing in black-market economics. He wrote stories about coyotes moving immigrants to the US, drug dealers shipping cocaine via plane to the Caribbean, and secret networks in northern Mexico trafficking people in manufacturing. “Illicit economic actors overlap with licit economic activities,” Logan told me in an interview. “Say you have a 20 foot semi-truck, the last 5 feet are golf balls and the other 15 feet are human cargo. The company controls the trailer, but the truck is loaded by a subcontractor. The only person that knows about the people is the guy running the loading dock at 3am.” Rooting out forced labor, Logan came to see, would require a hybrid approach, combining data and on-the-ground investigation to find out what was going on.
Logan says there are three options for understanding whether there’s forced labor in your supply chain. The first is a tool such as Sourcemap, a supply-chain mapping software. Yet the challenge here is that since companies self-report, not all the information may be entirely accurate. The second option is a big data solution. Upload an entire supply-chain spreadsheet, and tools such as AI can highlight areas of risk, principally by region. So if you have 30 suppliers in Bangalore, India, big data will tell you where to look, but not how.
Third, and this how Evidencity works, is a hybrid solution that combines big data and a boots-on-the-ground approach. Say you’re a golf products supply company in Mexico with 1,000 suppliers. By monitoring criminal watch lists, derogatory social media posts, and sanctions and using other tools, you can narrow down that list to 120 flagged suppliers. Evidencity has a suite of products that, depending on the customer, takes a list anywhere from a basic review to a deep dive. From there, Evidencity takes a consultative approach, and, leveraging networks in 88 countries, it can find investigators to get offline information about potential practices involving human trafficking or forced labor.
Businesses can also use other tools to address forced labor and human trafficking. Investors can use broad tools such as World Wide Generation, which collects data on companies that track with UN Sustainable Development Goals, of which sustainable supply chains are one part. Companies can hire businesses such as Arena CX, a platform for business process outsourcing that provides alternative jobs for people in areas most susceptible to forced labor. The Mekong Club has worked with partners to innovate tools such as DiginexLUMEN, which helps companies collect standardized and comparable information about working conditions through anonymous surveys.
Businesses now have a suite of options to shed light on their supply chains, as well as a practical ethical and financial reason to do so.
Taking Action
“The first question I get,” Lyons told me, “is ‘what can I do?’” Most—including me—want to know practically how they can address forced labor in their supply chains.”
The first action step we can take is building awareness. “You cannot address an issue you don’t understand,” says Logan. Fortunately, there is a wealth of resources to help you better understand the issue. You can learn about the types of goods child labor produces and which fast-fashion trends depend on forced labor. You can learn how many slaves work for you and which products you purchase likely depend on modern slave labor. You can read books such as Where Were You? A Profile of Modern Slavery and listen to podcasts about reforming systems of care, identifying slaves in everyday life, building multisector partnerships, and advocating change. Education is the beginning of change.
The second step is pursuing vocation, or taking action right where you live and work. Vocation suggests that we can’t do everything, but we can do something. And that something is right in front of us. Take, for example, Kurt Johnson. Johnson is CEO and founder of FreightPOP, a software startup for shipping and transportation management. Because the majority of trafficking goes through trucking, Johnson and his investors at Eagle Venture Fund saw an opportunity. Being at a crucial nexus in the supply chain, Johnson decided to display on FreightPOP the truckers who had received training from Truckers Against Trafficking, a group that educates and equips truckers to recognize and report human trafficking. “Would you like to show your customers which truckers have been through this training? All things being equal, they may pick your company to ship their products,” Johnson told me in an interview. Johnson found one small area where he could make a change, and he took action.
Of course, few people actually work in supply-chain logistics. But if you’re a teacher, you can educate students about human trafficking. If you’re a nurse, you can learn to see the signs of human trafficking in hospitals. If you work in HR, you can hire an engineer who has survived human trafficking. If you attend a church, you can host a study on the topic and how your church can address the need. Vocation is a summons to respond to a call to love your neighbor wherever you are and whatever your field of work.
Finally, invest in change. Sometimes, this may include divesting yourself of public equities or businesses profiting from forced labor in, say, the solar panel supply chain. Other times, it may mean investing in for-profit businesses committed to designing market-ready solutions for eradicating forced labor from supply chains. By investing time, charitable capital, investment capital, and influence, businesses can take meaningful action on forced labor through greater supply-chain transparency.
Linked Together
Martin Luther King Jr. once wrote, “We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly affects all indirectly.”
Am I responsible for the products I consume, the supply chains that bring them to me, and the people’s lives affected along the way? As I sip coffee, wear comfortable clothes, and type on my laptop, I cannot help but think that the global economy has linked us all together in a common fabric of a single, human story.
We are buyers and sellers, employers and employees, suppliers and purchasers—but most fundamentally, brothers and sisters who all yearn to breathe free.
This article first appeared at Eagle Venture Funds.