Building a sustainable and ethical supply chain

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Forced Prostitution

Fact: 4.5 Million girls/women in forced prostitution

Slave Boats

Fact: Some of the fish we eat may come from slave labor

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Sweat Shops

Fact: 14.2 Million men, women and children languishing in forced labor

Domestic Servitude

Fact: Up to 5.5 million, mostly adolescents, need to be protected from exploitation and abuse

What about our children? Fact: Over 25 percent of slaves are below the age of 18 5.5 million

Key Elements of the International Definition – Adults Trafficking and children (age<18)

The act…

By means of… • • • • •

• Recruitment • Transportation • Harboring

For the Purpose of Exploitation

Threats Use of force Abduction Fraud Deception

Human Trafficking = Slavery Restriction of movement

Withholding Wages Debt and other forms of bondage Retention of identify documents

Slavery Markers

Physical and sexual violence Threats to self or family

There are 21,000,000 Slaves! 1,600,000

1,500,000 600,000

11,700,000 (Asia) 1,800,000

3,700,000

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Adults versus Children 26% Adults 74%

Children

Forced Labor versus Forced Prostitution 60 percent of this is associated with product supply chains (the items we all buy)

24%

Forced Labour 76%

Sex Industry

2.1 million new slaves per year

5,800 new slaves per day

240 new slaves per hour

1 new slave every 15 seconds

UK, EUR

Two Forms of Trafficking: Local and International




USA








Middle East




NE Asia (Taiwan, Korea, etc.)


  

WHERE DO PEOPLE GET TRAFFICKED TO?


    
  


 Sex Labor Both

How does the Process work?

Deception and Lies

Family Debt

Kidnapping

Sale of a child

Price of a slave: Then and Now

An average slave in the American South in 1850 cost the equivalent of $40,000 in today’s money

Today a slave costs an average of $90

What Motivates Traffickers to do these things?

Who are the Criminals?

Trafficking Recruiters Traffickers Exploiters Enforcers Criminals

Traditional Responses? Prevention

• Mongolia cellphone • Nepal peoples tree

• Going after the “bad guys” • Putting the criminals in jail

Victim Support

Legal Response

• Helping the victims • Job Training

Who are the traditional responders? Government

• • •

Raids and rescues Sending victims home Helping victims

• Human rights • Research • Repatriation

United Nations

Civil Society

• Prevention • Victim support • Legal support

New Responders • Private Sector • Consumers

How are we doing? 9000 8000

50,000

7000 6000

Global Slave Figure

Prosectutions

5000

Convictions 4000

Victims Identified

3000 2000 1000

20,900,000

0 2004 2005 2006 2007 2008 2009 2010 2011

4,000 Convictions

50,000 Victims Helped

Profits Versus Funding

Annual Profits from Trafficking in Persons

$32 billion

Annual Amount spent on potato chips in America: $6 Billion

Annual support for trafficking of persons: $350 million

Solutions to Slavery Why Now and How It Is Relevant

Current Anti-Slavery Climate There is increasing frustration that expectations are not being addressed. Attention is shifting from government to business.

California Transparency in Supply Chains Act (SB 657)

Background • When? As of January 1, 2012. • Who? All retailers and manufacturers with annual global revenues over $100 million who do business in California. This impacts firms along the global supply chain in Asia and around the world. • What? Businesses must disclose on their website homepage what they are doing to remove slavery from their supply chains. • Why? “To educate consumers on how to purchase goods produced by companies that responsibly manage their supply chains”

Five Requirements Disclosure must include information about what the company is doing to, including

1. Verification: Verify product supply chains to evaluate and address risks of human trafficking and slavery 2)

Auditing: Perform independent supplier audits to evaluate compliance with company standards

3)

Certification: Require certification by direct suppliers that materials incorporated into company products comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business

4)

Internal Accountability: Maintain internal accountability standards and procedures for employees or contractors that fail to meet company standards on slavery and trafficking

5)

Training: Train relevant company employees and management on human trafficking and slavery, particularly concerning the mitigation of risk within supply chains.

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Corporate Response Case Study: Safeway

The disclosure states what they are doing to ensure slavery and human trafficking are removed from their supply chain: • • • • • • • • •

Survey merchandise supply chains Evaluate risks of slavery and human trafficking Audit risk areas Set or strengthen labor policy to comply with social accountability standards Verify supplier responses Inspect factories Provide ongoing training for Safeway employees who have sourcing responsibilities Develop and maintain internal accountability standards and procedures in case of violations Require +5000 suppliers to Safeway to certify that their products, and those of their sub-contractors, are slave-free

Penalty for Non-Compliance • The California Attorney General will order the company to take remedial action. • The Franchise Tax Board will compile an annual list • Non-compliance may result in “naming and shaming” by advocacy groups and media.

Impacts the Global Supply Chain SB 657 has consequences for business around the world. Here are a few examples of how it already affects some in Asia.

NGO Activism & Consumer Empowerment

From Activism to Consumer Awareness Legal & Political Pressure

+

NGO Activism

+

Investigative Journalism

+

Empowered Consumers

Online Tools Educate Consumers Smartphone Apps

Interactive Maps

Spreading word via social networks & online petitions

Slavery and the Law Destination Country: 1) Upon arriving, she is picked up by an Hong Kong agent who offers her contract to sign in an (Initiation) unknown language The details are explained to her She signs She is asked to hand over her documents so copies can be made 2) When she asks for them back, she is told she can’t have them She is taken to a small apartment that has 25 other women from different locations (only one speaks Mandarin) – attached to the apartment is a sewing workshop

1) For the employer: -Information to persons entering employment (Employer must inform each employee clearly the conditions of employment) (Employment Ordinance, section 44(1)) -General Prohibition of employment of children (Shall not engaged a child (definition: person under 15 years, Employment Ordinance, section 2) in industrial undertaking)) (Employment of Children Regulations, Chapter 57B, Regulation 4(1)b) and Offences and penalties Regulation 9(1)) -Contracting out (If contract reduce extinguish, reduce any right, benefit or protection conferred by the Employment Ordinance, the contract is void) (Employment Ordinance, section 70)

2) For the employer: -Information to persons entering employment (Employer shall give one copy of the written contract to the employee for retention and reference) (Employment Ordinance, section 44(3); A Concise Guide to the Employment Ordinance, p.5) -Robbery (Theft Ordinance, Chapter 210, Section 10) Destination Country: 1) Each day she is forced to work 16 hours a For the employer: Exploitation Period day, seven days a week -- sewing Maximum working hours: 2) If she makes a mistake or is short on her 1) no legislation on maximum working hours in HK except if it is a young person (attained age of 15 quota, she is hit years but not the age of 18 years (Employment Ordinance, section 2; definition of “industrial She is given two meals a day undertaking”, Factories and Industrial Undertakings Ordinance, Chapter 59, section 2) 3) She is not allowed to leave the premise for any reason If young person: 4) She is told that she owes money as 1) General conditions as to hours of employment of young persons (Employment of Young Persons outlined in the contact --- the amount is (Industry) Regulations, Chapter 57C, Regulation 8 + Penalty for contravention of regulation 8 (1), unclear Employment of Young Persons (Industry) Regulations, Chapter 57C, Regulation 19) 5) She is told she will not be paid until this amount is covered Overtime: After six months, she is told she will get 1) no legislation for overtime in HK (agreement between the parties) money from that point on, but the money If young person: no overtime permitted (Concise Guide to the Employment of Young Persons will held by the manager (Industry) Regulations, p. 2) 6) Bribes are paid to local labor inspectors to ignore the business and the zoning breaches

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Implications for the Banking World

• Most of the above transactions use the commercial banking system – trade finance, cash management, etc • Proceeds from criminal activity of trafficking and slavery practices are being laundered when they enter the banking system

What can you do? • Do what you already do for anti-terrorism under the Patriot Act but include a specific representation from the client that their funds are not proceeds from slavery and trafficking • Add to your Know Your Client (KYC) that the client is not using proceeds from slavery

Risk, Legal and Compliance functions can use the work they already perform, namely AML and KYC procedures, for antimoney laundering by terrorists (Patriot Act) and anti-drugtraffickers (various anti-drug trafficking acts) to identify asset being laundered by those using slavery.

With an increase in naming and shaming, investigative journalism and NGO surveillance and monitoring, there will be the increased possibility of organisations engaging in slavery for profit in business being identified and punished under a variety of existing and new legislation.

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