The recruitment of migrants and refugees into forced labour; a lack of information on labour practices deep within the supply chain; and inadequate oversight of suppliers have emerged as the biggest threats to the brand reputation of global companies over the next year.
The 10 most significant human rights issues impacting business are identified in a newly-issued report from risk advisory firm Verisk Maplecroft.
The ‘Human Rights Outlook 2016’ draws on the company’s portfolio of global human rights data and its ongoing engagements with multinational business and international stakeholders. The report identifies the primary emerging risk areas for companies with global supply chains and provides strategic insight into the human rights landscape to raise awareness of responsible procurement practices.
Unethical recruitment of migrants is key supply chain challenge
The ongoing exploitation of migrants and refugees in global supply chains has been highlighted by the firm as one of the most pressing reputational issues facing companies.
According to the report, the increased prominence of the issue is owed to new mandatory reporting requirements from legislation, such as the UK Modern Slavery Act, alongside ever greater public scrutiny of supply chains following recent high profile slavery scandals involving migrants in the Thai seafood industry.
The report also recognises Europe’s migration crisis as the key emerging driver of incidents of forced labour occurring in a company’s sphere of influence within the region.
Labour brokers are identified in the analysis as playing a central role in perpetuating modern slavery through the exploitation of migrants and ethical recruitment is one of the key challenges that business will have to address this year. By charging excessive fees for recruitment and placement, which migrants are unable to repay, unethical brokers are channelling adults into conditions of forced labour.
Sectors highlighted as facing particular risk from these practices include food and beverage, retail, technology and manufacturing.
Scrutiny of supply chains and benchmarking of human rights to increase
“The risks for business are amplified by increasing public scrutiny of unmapped tiers of the supply chain and benchmarking of company human rights performance,” states Dr Alexandra Channer, principal human rights analyst at Verisk Maplecroft.
“Damage to hard earned brand equity, consumer backlash, and divestment by ethically focused investors pose real threats to companies who are found to be knowingly or unknowingly complicit in abuses.”
The firm expects public benchmarking of business practices to increase in 2016, as part of a wider shift from voluntary to mandatory reporting of human rights due diligence, which has begun with conflict minerals and modern slavery.
Although some businesses have developed extensive systems to monitor conditions across their Tier 1 suppliers and to promote ethical behaviour, the report finds that many have little visibility of the distant tiers of their supply chain and remain largely unprepared to meet these expanding challenges.
Traceability of metals and minerals key for the ICT and manufacturing sectors
The tracing of metals and minerals supply chains are identified by the analysis as particularly important for the information technology and manufacturing sectors. The majority of top exporting countries of tin, tungsten and tantalum – used in the production of many technology and automotive products – feature in the extreme risk category of Verisk Maplecroft’s Forced Labour Index and leave business highly exposed to association with slavery practices and child labour.
Sourcing from countries with high levels of risk underscores the importance of conducting effective due diligence and ethical mapping of supply chains to mitigate complicity in human rights violations.
New solutions and cross-cutting collaboration needed to address challenges
One of the key messages flagged in the Outlook is that companies are now held ultimately responsible for all workers who contribute to the commodities they use in their end-products. Brand reputation is therefore tied to a broadening perception of responsibility that exposes businesses to increased risks, especially if like many, they have not yet managed to trace products to their point of origin and to map supply chains transparently.
The report concludes that solutions to challenges, such as unethical recruitment, will require shared responsibility and collective action from international organisations, governments, business and NGOs. However, a new toolbox will also be needed if companies are to successfully identify, manage and mitigate human rights risks across global supply chains.
By adopting innovative approaches, such as empowering workers through real-time mobile phone surveys, human rights training and long-term partnerships to reward ethical suppliers, businesses can also establish leadership on the issue and reap dividends in relation to brand equity and ultimate business performance.
The 10 Human Rights Risks to Watch in 2016:
1. Labour Brokers: Building trust in ethical recruitment
2. Supply Chains: Achieving traceability
3. Moving Beyond the Audit: Increasing supply chain responsibility
4. Mandatory Reporting: Enhancing supply chain transparency
5. Migration: Preventing forced labour in European supply chains
6. Living Wage: Meeting worker and public expectations
7. Working Conditions: Rising labour rights scrutiny in Trans-Pacific Partnership (TPP)
8. Social License to Operate: Managing the impact of the commodity downturn
9. Gender Parity: Paid parental leave and mitigating discrimination
10. 2015 United Nations Climate Change Conference (COP 21): Integrating human rights into adaptation and mitigation of climate change impacts
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