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With an increasing shift from voluntary to mandatory human rights due diligence, which includes preventing and addressing forced labor, leaders are questioning the implications for their business: What are the business risks associated with forced labor in supply chains? Which sectors are most affected by forced labor risks? How can businesses engage with suppliers to mitigate risks? How have recent events, such as the COVID-19 pandemic, further impacted these trends?
Now is the time to move from commitments to action and ensure a rights-respecting approach is integrated across the supply chain.
What Business Leaders Need to Know
The terms “human trafficking” and “modern slavery” are broad categories that encompass various forms of exploitation of persons for commercial gain, such as debt bondage, child, and forced labor. In the context of an ongoing shift from voluntary to mandatory due diligence, recent legislative measures on businesses and their supply chains underscore the need for business action.
On November 19, 2024, after months of political deliberations, the European Union approved a ban on the sale of products made with forced labor. The EU Regulation on Prohibiting Products made with Forced Labour marks a decisive step in complementing due diligence and reporting obligations for businesses. It also represents an upward trend of more stringent penalties that large economic markets have adopted to address forced labor risks in corporate value chains.
In the same vein, the US Department of Homeland Security (DHS) added dozens of companies to the Uyghur Forced Labor Prevention Act (UFLPA) sanction entity list. These companies are involved in the production and sale of a variety of agricultural, electronic, and pharmaceutical products and raw materials such as aluminum, copper, lithium, and nickel. This shows a tendency to scale the enforcement of the UFLPA to a range of commodities affecting virtually every industry—a direction likely to continue under Trump’s administration, which is set to appoint key figures amongst the original proponents of the Act.
These developments make it clear that failure to prevent labor exploitation will lead to investigations and fines, but they do not provide specific guidance on how to avoid this. Instead, most policy-makers direct companies to generic business and human rights principles that are easier said than done.
Guidance is necessary and has practical implications, such as determining the right data standards needed to depict a forced labor risk picture and supplier traceability; identifying thresholds for remedial actions based on often scattered, non-specific, unverified risk data; and implementing theoretical frameworks, such as the repayment of workers’ fees, where case studies are far and few.
It follows, that to tackle one of the most heinous crimes of our society—human exploitation—businesses are now required to make the fundamental shift from the “theory” to the great age of “implementation” of anti-slavery policy and principles.
Guidance on implementation is likely to be self-taught and won’t come from governments outside of business expertise. Applying abstract concepts to day-to-day practices—often at the end of intricate supply chains, across informal economies, and in conflict- and climate-affected environments—can be a challenge; a journey to be taken in a few, strategic steps.
Authors
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Global Lead, Human Trafficking and Forced Labor, BSR
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Manager, Human Rights, BSR
Topics
Collaborative Initiatives
A Volatile Risk Framework
What is going on right now, and what are the implications for business?
Companies can expect more legal, consumer, and investor scrutiny of their linkages with forced labor across their value chains, and in more industries than ever before. The ILO estimates roughly 28 million people in forced labor globally on any given day, 50 million if we consider all other forms of exploitation. Of this number, 86 percent is estimated to happen in the private economy.
At the same time, the United Nations Office on Drugs and Crime recently released insightful data on the extent of human trafficking. The headline shows a 25 percent increase in identified victims worldwide, with a 31 percent increase in identified underage victims. Compared to two years ago, the number of victims trafficked for forced labor surged at 47 percent.
This is a considerable increase in previous figures, pointing at the pervasive effects of COVID-19 on workers’ welfare and more accurate predictions on the extent of the issue. As pointed out by the UN, in the past few years, the pandemic has halted most of the remittances of foreign workers to their countries, production stopped, pushing inevitably significant shares of households into precarious and exploitative jobs, including children.
Sectors that were once less associated with cases of labor exploitation, such as automotive, energy, and electronics, are seeing more reports pointing at the risks of forced labor in their supply chains and in connection with raw materials.
Other industries, such as agriculture, textile, and construction, which have already been under scrutiny, are now at an increased risk in middle- to high-income countries where modern slavery and labor exploitation wasn’t considered as widespread. Undocumented migrants and poor migration governance in these regions expose workers to exploitative practices and debt bondage.
The recent flare-up in child labor cases in the US are just an example of this, with media outlets and civil society reports in the UK and the agricultural and food processing sectors in the EU describing how modern slavery spares no country, no region, and no operation worldwide.
Furthermore, the highest number of goods confiscated through the UFLPA import ban originated from Vietnam, Malaysia, and Thailand, demonstrating how supply chains are thoroughly comingled and interconnected in sourcing countries.
Sex trafficking and child trafficking for sexual exploitation remain a pervasive criminal activity in our society, impacting the travel and hospitality sector, and are sometimes a byproduct of labor exploitation in manufacturing. The traditional means of grooming individuals has moved online, hidden through a web of fake job advertisements and tactics profiting perpetrators put in motion. In addition to this, AI has the potential to amplify such unlawful activities, impersonating criminals for trafficking purposes.
Corporate social auditing and certifications are an instrument, albeit not sufficient, to prevent and address such harm, as many of the most egregious violations are hidden from plain sight. Most interventions to address risks are not designed in collaboration with business partners or rightsholders, raising doubts about their preventative value over the long term.
With the Sustainable Development Goals 2030 targets around the corner, and financial and legal action intensifying, it is time to prioritize strategic action by recognizing the inherent risks of modern slavery in the private economy across sectors and geographies.
Actions for Business
Embrace the term “prevention” before it is too late: heighten due diligence on forced labor and document efforts
Due diligence on forced labor should be integrated into business efforts to prepare for upcoming regulations, such as the EU’s Corporate Sustainability Due Diligence Directive, the EU Forced Labor ban, and the current US UFLPA by identifying, assessing, and prioritizing actual and potential forced labor impacts. Preventive efforts are key to act before the next allegations of forced labor or human trafficking in corporate supply chains are out in the media.
In doing so, global businesses can prioritize further due diligence in high-risk sectors and geographies that are likely to be the target of enforcement action, at least initially. Enforcement action by US Customs and Borders Protection has targeted several commodities in documented cases of forced labor, including cotton, polysilicon, aluminum, solar panels, and, now increasingly, agricultural products.
While enforcement action has principally targeted shipments from China and neighboring countries from Southeast Asia (Malaysia, Thailand, and Vietnam), public authorities across the EU will follow a risk-based approach, prioritizing value chain steps where there is a higher risk of forced labor.
Businesses should continue to monitor forced labor trends closely, including official publications and sanctions lists. Key sources of government information include the US Department of Labor List of Goods Produced by Child Labor or Forced Labor, US Office of Trade Withhold Release Orders, and the US Department of Homeland Security UFLPA Entity List. Businesses should stay aware of investigations and reports by civil society organizations and academic institutions (including via the Business & Human Rights Resource Centre) as these frequently inform the issuing of new trade enforcement orders in the US and will influence EU forced labor enforcement action.
Companies should also keep a clear paper (or most likely digital) trail of due diligence efforts to prepare for potential information requests from public authorities involved in enforcement action under the UFLPA and EU Forced Labor Ban.
Prevention Part II: Engage with strategic corporate suppliers in sourcing locations
Suppliers should be considered part of the solution--not just the problem--in the forced labor equation if we are to effectively tackle the issue systematically. They can provide first-hand insights about the systemic factors leading to forced labor and help design context-specific solutions. There is a need to provide targeted support for small- and medium-sized enterprises to address risks of forced labor in their operations and supply chains, in particular from high-risk sourcing geographies. At the same time, standards for transparency and due diligence are necessary for business partners to cascade processes and scale interventions.
BSR’s consultations with brands and suppliers across Southeast Asia in late 2024 highlighted that relationships between buyers and supplies are top-down and one-sided. Deeper engagement with business partners to clarify expectations on forced labor, appropriate resources, and guidance, including on recruitment fees and the piloting of financial and non-financial incentives, could all be influential in effecting longer-term change. Businesses should harness new opportunities to collaborate with other businesses to provide engagement at scale, including through BSR’s supplier engagement pilot in Southeast Asia.
To start these efforts, human rights functions should convene a cross-functional working group to identify priorities and deliver more tailored, focused support to strategic suppliers and addressing forced labor. Such working groups may include functions from procurement, commercial, and sustainability, and include global representation. The Global Business Coalition Against Human Trafficking (GBCAT) supplier library is a good starting point for more tailored information on forced labor for corporate suppliers.
Leverage data and technology to go deeper on human rights due diligence
The forced labor data landscape is crowded, fragmented, and siloed. Too many data points are being collected with inconsistent follow-up action from businesses and limited direct impact for workers on the ground. The vast repository of data makes it difficult for businesses to prioritize and act upon forced labor insights.
Companies should (re-)assess their data collection practices on forced labor to understand which data points are being collected directly or indirectly via third-party platforms (e.g., SAQs, audits) and identify opportunities for greater streamlining of efforts, including through harmonizing data storage internally and the consolidation of datapoints collected at the desktop phase.
In a world of blossoming generative AI, technology can be used to map supply chain inputs. Tools can offer a good basis for companies to focus efforts in high-risk areas, but they cannot be the silver bullet in addressing issues of trust, transparency, and a full forced labor “risk” picture on the ground.
Consult experts with lived experience—and remunerate them for this work
Experts with lived experience bring a wealth of different skill sets that are critical to successful and effective anti-trafficking efforts. They should be engaged to inform businesses’ governance and specific anti-trafficking programs.
Businesses can hire experts with lived experience to consult on specific campaigns or in the development of tailored resources. They can also incorporate lived experience, or survivor organizations and networks, in existing governance structures (e.g., Boards, Steering Committees) to more clearly and directly integrate their expertise into the development of business goals, strategies, and decision-making processes (PACT’s Survivors Council Members provides one such example).
Importantly, all survivors must be compensated for their time and expertise in line with other hires or consultants.
Collaborate with peer companies to address root causes and share information
No one company can address the root causes of modern slavery. There is increasing recognition that business collaboration, both within and across sectors, is vital to move the needle on addressing drivers of forced labor and exploitative practices. Collaboration can take multiple forms; companies can share knowledge (e.g., on supplier practices, recruitment fees, and signals of online trafficking harms), pool resources (e.g., by conducting joint audits), and leverage their combined influence to advocate for policy change (e.g., on strong migrant worker protections).
Beyond business collaboration, the nature of modern slavery requires tackling root causes of a systemic problem by involving responsible policymakers to address drivers and create a level-playing field for companies to act.
For example, BSR’s Collaborative Initiative Tech Against Trafficking (TAT) gathers leading tech companies to advance and scale the use of technology to prevent, disrupt, and reduce human trafficking. TAT supports anti-trafficking organizations to scale using tech via its Accelerator Program and acts as a community of practice to address trafficking harms on online platforms.
With emerging legislation and increased scrutiny, the time is ripe for businesses across sectors to move from theory to implementation in their forced labor due diligence efforts. Companies can double down on prevention efforts by going deeper on risk mapping and engaging suppliers. While collaboration across teams and geographies is critical, the scale of the issue means that no company can go at it alone. Collaboration with industry peers, governments, civil society actors, and experts with lived experience have become more necessary than ever to chart an effective path of preventative action going forward.
How BSR Can Help
BSR has a dedicated team to support members in their human trafficking and forced labor efforts via tailored one-to-one advice and collaboration action. BSR’s advisory services and collaborative efforts can help your company to:
- Conduct an assessment of forced labor risks across company operations and supply chains using UN Guiding Principles-aligned methodology
- Design an anti-trafficking strategy to address risks and respond to existing and upcoming regulations, including the US Uyghur Forced Labor Prevention Act and the EU Forced Labor Ban
- Assess, benchmark, and prepare modern slavery reports in line with best practice
- Convene members across sectors on specific issues to address systemic challenges and approaches related to modern slavery (e.g., human rights due diligence on forced labor in high-risk geographies)
- Test pilot solutions to reduce technological and commercial barriers of data sharing between companies and other actors, including civil society and governments
- Join a pilot on supplier engagement on forced labor in Southeast Asia to provide training and joint dialogues on country-specific challenges related to forced labor
- Engage leading governments on the modern slavery agenda in fostering good policy to address root causes
To scale efforts through collaboration, BSR invites members to join the Tech Against Trafficking initiative. The collaboration is open to members across all sectors with an interest in exploring the nexus between tech and trafficking. Core areas of focus for 2025 will be on data collection and sharing, how to address online trafficking harms, and tech innovation.
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