Human Trafficking and the Private Sector

Countering trafficking and unfair labour practices by integrating human rights into corporate values and operations.


Many companies struggle to understand where, when, and how human trafficking occurs within their intricate supply chains. This lack of knowledge contributes to the ongoing problem of forced labour, which affects approximately 40.3 million people globally. Human trafficking and forced labour are particularly acute in Asia, where workers across a range of sectors are often forced into exploitative work conditions and modern-day slavery.

The length and complexity of corporate supply chains in today’s global economy places companies across all industries at high risk of association with human rights’ abuses and unfair labour practices. High-profile exposés linking human trafficking and exploitation to the supply chains of large companies have created a surge in corporate social responsibility initiatives aimed at mitigating or remedying transgressions.

Why Private Sector Should Bother?

Tackling human trafficking, forced labour and related human rights abuses is now more than just an ethical imperative advocated by human rights’ groups or a corporate social responsibility box-ticking exercise: it is now a business imperative for the private sector and failure to manage them ‘could negatively affect a company’s share price, brand value and operational performance’.

The increased focus on the issue of human rights reflects a growing sense that private sector actors must take responsibility for violations with which they are associated.


Business Risks Associated with Human Trafficking and Forced Labour

Legal Risk

Human trafficking and forced labour are considered crimes in most countries around the world. Companies found involved or complicit in such activity could face prosecution resulting in criminal or civil sanctions including fines, compensation to victims and imprisonment. Trafficking and forced labour are also violations of international human rights law.

Threats to Brand Value and Company Reputation

Allegations of human trafficking and forced labour can present serious threats to brand value and company reputation, particularly for those companies operating in consumer goods industries. Brand “contamination” can be difficult to reverse, and allegations such as these can threaten both existing and future business partnerships, resulting in a loss of contracts and/or future business opportunities.

Trade-Related Risk

In some countries, trade regulations strictly prohibit the import of goods that have been produced by trafficked or forced labour. In these jurisdictions, allegations of abuse can result in imported goods being seized by public authorities, inspected, and released only when shown to be untainted.

Threats to Investment and Finance

Allegations of human rights abuse, forced labour and human trafficking can significantly threaten investor relations and risk divestment from both ethical and mainstream investors. They can also jeopardize access to public funds such as export credits, as public authorities increasingly link the financial support they provide to business with proven ethical performance.


Engaging the Private Sector

In recent years, business actors of all kinds have taken a number of steps in the fight against human trafficking. This can be broadly categorized as “preventive” or “protective” action, with the former focused on awareness raising, communications and media campaigns, and the latter including measures to protect or correct wrongs suffered by trafficking victims.

Prevention

Policy engagement and codes of conduct, Supply chain risk assessments, Mapping and social audits, Awareness raising and capacity building of staff and suppliers, Establishment of effective grievance mechanisms for workers, Supporting community-level engagement, and Public advocacy campaigns.

Protection

Implementing corrective action where a case of trafficking is discovered, Providing for the immediate protection of victims, Ensuring the right to redress and compensation, Supporting the longer-term economic and social rehabilitation of victims, and Reintegration into the community.

And, Partnership

The private sector also possesses characteristics that make it uniquely situated for engagement and partnership in countering human trafficking and forced labour. In particular, their position in relation to streams of commerce, focus on innovation, and access to resources, position it as a potentially valuable partner. Leveraging the private sector’s resources, innovative practices, and unique positioning will help advance anti-trafficking efforts.

There are a range of opportunities for private sector partnership in the fight against human trafficking on both the supply and demand sides of the equation. Government regulation can serve an essential function in incentivizing the private sector to use its unique characteristics and position to counter human trafficking.


Why Private Sector Should Be Motivated?

Every successful business must emphasize profitability; but it is just as critical for success and sustainability that a business take a holistic, people-centered approach that places human rights at the core. When companies promote corporate ethics, values, and brand without embedding a meaningful human rights approach that is operationalized throughout their business practices, these often remain figments of public relations. This approach to countering trafficking does not penetrate the root causes of the problems and contribute towards corporate sustainability.

Successful companies are good at business, but they are often less capable in operationalizing human rights due diligence standards within their operations to prevent trafficking and labour rights abuses from ever occurring. The boldest among them will engage proactively with key stakeholders and embrace equitable and ethical standards in meaningful, tangible, action-oriented ways.

A company must engage stakeholders (e.g., employees, communities, investors, business partners, and government officials) in a transparent way that advances its understanding and identification of human rights concerns and stiches a human rights approach into the fabric of its corporate values. By failing to do so, effective and sustainable solutions will not be reached, opportunities to collaborate and work in step with other important actors will be foregone, and recurring challenges related to human trafficking and forced labour will persist in supply chains.


Call For Action

Here are steps that companies can take to integrate human rights into corporate values, and counter trafficking and unfair labour practices:

  1. Adopt and implement the UN Guiding Principles on Business and Human Rights (UNGP). This is the first global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activities (including human trafficking and forced labour).
  2. Use the UN Guiding Principles Reporting Framework. This easy to understand tool aims to support companies in implementing and reporting on their human right activities according to the UNGP.
  3. Conduct a Human Rights Impact Assessment (HRIA) to identify the potential human rights impacts, including human trafficking and forced labour, within your company’s operations.
  4. Employ human rights, trafficking and forced labour related benchmarking tools:

Corporate Human Rights Benchmark is the first initiative to compare the human rights performance of the largest companies. Its methodology is based on the UNGP and specific industry standards and has specific criteria for forced labour and human trafficking.

Know The Chain specifically focuses on benchmarking corporate performance on forced labour and human trafficking in corporate supply chains.

5. Engage in strategic partnerships. Forming win-win partnerships with other key stakeholders is an effective way to navigate the vast number of resources, initiatives and available options to integrate a human rights centered-approach into corporate values and operations.


Dhiraj Karki is the founder and senior consultant at dkompany, a specialized economic consultancy providing strategic advisory services in the field of trade, investment and development, as well as law, regulation and compliance. Karki is a Nepalese national and has worked on private sector development and inclusive economic growth issues in Kathmandu for the past ten years. He can be reached at dk@dkompany.biz

This article has benefited from Karki’s recent association with Winrock International where he served as a Private Sector Engagement Specialist for USAID Hamro Samman, a 5-years program to counter human trafficking in Nepal.

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