Towards Sustainable and Ethical Supply Chains

Did you know that the production of one electronic device can involve up to 1,000 suppliers? Intermediate products represent around 70 per cent of goods traded worldwide and their production involves more than 453 million people. [1] Now consider that according to the International Labour Organization (ILO) 90 per cent of forced labour happens within these supply chains. In today’s globalized economy, where materials and labour are sourced from all around the world, can you be certain that the devices you use on a daily basis, your computer, phone, television, tablet, oven, washing machine or radio, were not produced by persons who have been trafficked for labour exploitation?

The longer the supply chain, often with multiple tiers of subcontractors, the more difficult it is to ensure that goods and services procured were not produced by trafficked labour. Furthermore, corruption and a lack of governance  grease the wheels of trafficking and other forms of exploitation. International standards have recognized the duty of both businesses and governments to undertake comprehensive action to lessen trafficking risks and to protect against human rights abuses.  

The OSCE has demonstrated political leadership in preventing trafficking in human beings for labour exploitation.  The 2011 Vilnius Ministerial Declaration encourages “participating States to work with the business sector to apply principles of due diligence and transparency in assessing and addressing risks of exploitation throughout the supply chain”.  The Addendum to the OSCE Action Plan to Combat Trafficking in Human Beings, adopted in 2013, advocates for zero-tolerance policies or other similar standards in government procurement of goods and services.

In 2015, the OSCE Parliamentary Assembly adopted a resolution calling on participating States to require by law and regulation that all government contracts for goods and services go only to businesses that have a plan in place to ensure that their subcontractors and employees do not participate in activities that contribute to or constitute human trafficking.

At the 2016 Ministerial Council in Hamburg the OSCE foreign ministers adopted a Decision on strengthening good governance and promoting connectivity, in which they stressed the determination of OSCE participating States to fight human trafficking and labour exploitation, particularly in public procurement. They tasked OSCE executive structures to “support participating States in exchanging best practices on raising awareness of the relevance of internationally recognized labour, social and environmental standards, and on strengthening good governance and promoting transparency in public procurement processes”.

Multi-stakeholder initiatives

These OSCE commitments, together with international standards developed by the UN, the Organization for Economic Co-operation and Development (OECD) and the ILO provide a benchmark for governments, businesses and workers alike to undertake action to tackle labour exploitation and human trafficking. Often, such action is voluntary. Businesses can choose to join the UN Global Compact, an initiative where they agree to support ten principles in the areas of human rights, labour standards, the environment and anti-corruption. They can also rely on the UN Guiding Principles on Business and Human Rights, which outline the roles of both states and businesses in protecting the human rights of workers and providing remedies for violations. The UN’s Sustainable Development Goal 8.7 sets the target of eradicating forced labour and ending modern slavery and human trafficking.

Unilever, a multinational with 172,000 employees and 76,000 suppliers (2015 figures), is a good example of a company that has taken resolute steps to ensure that its supply chains are free of exploitation and human trafficking. It was one of the first to subscribe to the UN standards and it piloted the UN Guiding Principles Reporting Framework, which help businesses to report on how they are implementing anti-trafficking measures.

Another impressive example of voluntary business action is the Electronic Industry Citizenship Coalition, a trade association of more than 110 electronic companies. It has adopted a code of conduct that bans human trafficking and forced labour among its suppliers in more than 120 countries.  

The worker-driven social responsibility approach is yet another initiative of note. In the Coalition of Immokalee Workers’ Fair Food Programme, based in Florida, United States, farm labourers partner with supermarket giants and fast food chains to keep supply chains fair. The programme has been singled out as a promising model by the UN Working Group on Business and Human Rights.

In Germany, the government is working together with businesses in the Partnership for Sustainable Textiles, a multi-stakeholder initiative centred on the textile and clothing industry. Retailers, trade unions, civil society and the German Federal Ministry for Economic Cooperation and Development promote social, ecological and economic improvements all along the textile supply chain by implementing international guidelines.

Some governments have taken advantage of modern information technology to develop tools that support voluntary efforts by businesses and consumers to make purchasing choices that avoid goods produced with forced labour. The German government has launched a portal – also available as a smartphone app (www.siegelklarheit.de) – which presents and compares environmental and social labels for textiles, paper, computers and household products, explaining what each label stands for and ranking them. The United States Department of Labour has developed the app “Sweat & Toil”, which documents forced labour, particularly child labour, worldwide (www.dol.gov/dol/apps/ilab.htm).  

Encouraging as they are, initiatives such as these inevitably involve some drawbacks. First of all, no matter how well-meaning a business is, the standards it promotes can only work if there are appropriate compliance and verification mechanisms in place. Secondly, labour exploitation and human trafficking need to be eradicated everywhere, but even the best efforts by businesses can only address their own supply chains.

Government role

Governments have a critical role to play in preventing human trafficking in supply chains. They can pass and enforce legislation that protects workers and allows responsible businesses to compete fairly within the law. Without such regulations, businesses that implement measures to prevent human trafficking are often at an unfair disadvantage in relation to companies that exploit workers, distorting the market and undermining the competitive process.

The United Kingdom’s Modern Slavery Act (2015) is a good example of legislation designed to tackle forced labour and human trafficking. Its provision on transparency in supply chains requires businesses with a turnover exceeding a certain level to publish a statement either detailing steps they have taken to ensure that slavery and human trafficking are not taking place in their operations and supply chain, or explicitly stating that no such steps have been taken.

Another British government measure to protect workers from exploitation is the Gangmasters Licensing Authority (GLA), created in 2004 to regulate and inspect the activities of labour providers operating in the agriculture and horticulture sectors. The organization, which has recently been renamed the Gangmasters and Labour Abuse Authority (GLAA) and provided with additional police powers, works across the entire British labour market to investigate unlicensed activity and allegations of worker exploitation, including offences related to the national minimum wage, employment agencies and human trafficking.

Public procurement

Governments are powerful economic actors, spending a considerable part of a county’s Gross Domestic Product on public procurement contracts often worth millions. By leveraging their purchasing power to ensure due diligence in their own supply chains, they can be powerful agents of change in combating exploitation and trafficking. Several OSCE participating States have developed promising practices in this regard.    

The United States, for example, has put measures in place to prevent public buyers from purchasing products made or services provided by trafficked persons. The Federal Acquisition Regulations of 2006 require that all government contracts include a clause prohibiting human trafficking. In 2012, President Obama signed an Executive Order prohibiting federal contractors, subcontractors and their employees from engaging in specific trafficking-related activities and establishing new compliance measures for international and domestic contracts.  

Sweden has also taken notable steps to exercise social responsibility in public procurement. The Swedish county councils have developed a national code of conduct based on the ten principles of the UN Global Compact as well as procedures for monitoring contract performance.

Corruption is a serious challenge that governments face in keeping their supply chains monitored and manageable. The OECD estimates that between 20 and 25 per cent of public procurement expenditures are lost to corruption. The Office of the Co-ordinator of OSCE Economic and Environmental Activities (OCEEA) supported an initiative by the European Bank for Reconstruction and Development (EBRD) and the UN Commission on International Trade Law (UNCITRAL) to enhance public procurement regulations in the Commonwealth of Independent States countries and Mongolia.  The initiative helped these countries to improve their public procurement legislation and bring it in line with the UNCITRAL Model Law on Public Procurement, a template that assists national governments in introducing or reforming public procurement legislation for their internal markets.

In June 2016, OCEEA published the OSCE Handbook on Combating Corruption.  The publication provides information on a wide array of reference materials and legal tools, the latest legislative and policy trends and pertinent practices to prevent and suppress corruption. It also contains a designated chapter on public procurement, in which vulnerabilities to corruption are identified and preventive mechanisms recommended. Key international agreements and legal texts, which contain procedures, rules and good practices for fighting corruption in national procurement systems are presented and steps towards their implementation are suggested.

The OSCE Office of the Special Representative and Co-ordinator for Combating Trafficking in Human Beings (OSR/CTHB) recently published a survey on the implementation of anti-trafficking commitments by participating States. It shows that two thirds of participating States have policies in place requiring labour recruitment agencies to eliminate recruitment fees and debt bondage. Several have implemented public procurement policies that prevent them from purchasing goods and services carrying a high risk of being produced by trafficked labour.

Currently the OSR/CTHB is implementing a major extra-budgetary project on preventing trafficking in human beings in supply chains through government practices and measures”. The overall objective of the project is to build the capacity of OSCE participating States and provide them with practical tools, model guidelines and a compendium of resources to enact measures to prevent human trafficking in supply chains. Workshops were held in Berlin and London in 2016 and are taking place this year in Stockholm, Geneva and Astana, the latter in conjunction with Expo 2017 and the Second Preparatory Meeting of the OSCE Economic and Environmental Forum in June. Good governance is key to ensuring that the goods and services we all enjoy are not produced on the backs of persons who have been exploited or trafficked.

Article prepared by Aude Feltz, Junior Professional Officer in the Communication and Media Relations Section of the OSCE Secretariat on the basis of information provided by Ruth Freedom Pojman, Senior Adviser in the OSCE Office of the Special Representative and Co-ordinator for Combating Trafficking in Human Beings and Roel Janssens, Economic Adviser in the Office of the Co-ordinator of OSCE Economic and Environmental Activities.

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Publications by the Office of the Special Representative and Co-ordinator for Combating Trafficking in Human Beings:

Ending Exploitation: Ensuring that Businesses Do Not Contribute to Trafficking in Human Beings: Duties of States and the Private Sector (Occasional Paper Series No. 7, 2014) www.osce.org/secretariat/126305

Survey Report 2016 of Efforts to Implement OSCE Commitments and Recommended Actions to Combat Trafficking in Human Beings www.osce.org/secretariat/289951

Prevention of Trafficking for Labour Exploitation in Supply Chains (Conference Report, 2016) www.osce.org/secretariat/290106

[1] OECD, WTO, and World Bank Group (2014) ”Global Value Chain: Opportunities, Challenges and implications for policy”