Human Trafficking (pt. 2)
Picking up where we left off in our previous episode, host Eddie Newland continues his conversation with Ben Fouracre and Archana Kotecha, Head of Legal at Liberty Shared. They discuss where where human trafficking occurs, the global supply chain and where businesses should take caution, and ethical sourcing for everyday consumers.
TRANSCRIPT
S1: 00:08
Welcome to BRG's ThinkSet Podcast. I'm your host, Eddie Newland. BRG is a global consulting firm that helps leading organizations advance in three key areas: disputes and investigations, corporate finance, and strategy and operations. Headquartered in California with offices around the world, we are an integrated group of experts, industry leaders, academics, data scientists, and professionals working beyond borders and disciplines. We harness our collective expertise to deliver the inspired insights and practical strategies our clients need to stay ahead of what's next. For more information, please visit thinkBRG.com.
On today's episode of the ThinkSet Podcast, we've got the second half of our two-part episode on human trafficking, where we continue our conversation with BRG Director Ben Fouracre and Archana Kotecha. If you haven't had a chance to hear Part One, be sure to check it out on iTunes, Spotify, or the BRG ThinkSet website, thinksetmag.com. And with that, let's get started.
So far, we've covered a number of areas involved in combating global human trafficking, namely the legal progress being made and how companies can address their exposure to involvement through risk assessments and analysis of their supply chains. Next, I want to start by asking Archana about the technologies they developed to help in this process. Archana, could you tell us a little bit about how those work?
S2: 01:40
One of the important things that audits often miss is the context within which people are working. So for example, in a country where there [are] no rights or freedom of association for migrant workers, it's very important in that context to really zero in on what kind of operational grievance mechanisms a company has on a ground level. Are workers able to air their grievances? Are they able to get this dealt with, particularly in a country where rule of law is weak and they might not be able to enforce their rights in a court of law? This dimension is often very much overlooked, and I feel that audits often lack the worker voice. You'll have in the audit the observations of the auditors, etc., but there is very rarely, if ever, an independent dimension, which is the workers' voice of what it is that they are encountering and whether they are indeed satisfied with working conditions, or whether there is an exploitation or not.
In terms of what we do, a lot of what we've been doing has really been to work on this sort of information loop and feedback. So really looking at capturing data in a very comprehensive fashion of what is actually going on on the ground. And to really be able to get that data back into the loop and share it with individuals who are able to make a difference. By these, I mean the banks who are banking a lot of these accounts, the investors who will need to see this information in order to be empowered to make a decision on whether they would like to invest in this particular sector or not. And even other stakeholders, or buyers, or retailers who are further upstream and who need to be seeing the information, the granular information, of what is happening on the ground in order to make an assessment of what other relationships that they need to investigate further, or to change in any way.
S1: 03:30
Okay. So that gives me a much better idea of the gaps that you guys are trying to fill and a bit of background as to how it's developed. Archana, if somebody was going to ask you why they should do this, what is your answer and the most convincing argument you think there is beyond the obvious of, "It's just plain wrong"?
S2: 03:50
This really is beyond the moral imperative argument now, because trafficking and related forms of exploitation present serious legal financial and reputational risk issues for business. Risk to people is the most ultimate risk to business. And you know, from a legal perspective, you have criminal and civil law violations. And one must remember that issues such as passport retention—which is widespread practice across many countries and in many supply chains—is actually against the law. In wage theft, in deception, in exploitation of people or forced labor-type issues, criminal laws are breached. And when it comes to the financial piece, I mean any funds, any proceeds, or any money or services that come from people who are working in exploitation, or even those who have been deceived are proceeds of crime and they have an anti-money laundering implication there. And finally, if you really look at the damage that this can do to a brand of these stories getting out, we've seen over the last ten years that, at different points in time, exposes about slavery in the fishing industry in Thailand, slavery in the palm oil industry in Malaysia and Indonesia, cotton in Uzbekistan, etc. And this does a lot of damage, not simply to the countries and the sectors in particular, but also to the brands who do business with individuals located and businesses located in those countries. So for me, it's the legal, the financial, and the reputational risk beyond just the moral imperative that this is plainly wrong.
S1: 05:31
Ben, would you have anything to add that?
S3: 05:33
In terms of the business perspective, it's as Archana mentioned. I mean, I think number one, the ethical case. The key question is how do we want to run our business? And I think going forward, as well, I think that there'll be a demand for much more transparency from stakeholders in businesses to ensure that the businesses that we're supporting and funding are actually as ethical as we want them to be. I think one of the key things that I find when I'm talking to Archana is really a lot of people don't understand how close they are to the actual issue. So you can feel that you're quite separated from the issues that Archana talks about. And so it's a lack of awareness, I think, of actually what's going on in the field in terms of what issues are taking place and how it affects us. I mean, we all have smartphones, and do we know who's making the components for those smartphones? And we all have access to clothing and nice food, but do we know all the way down the supply chain how those raw materials were put together and who was responsible for doing that?
So I think that the ethical case is one of the key ones; but also, as mentioned, the legal risk is there; the financial risk has implications for businesses in terms of your tendering processes going forward. So any violations of human trafficking could affect your ability to apply for tenders going forward. It can affect procurement requests, especially when those requirements for transparency on supply chains and third parties, the investors are seeking more assurance on due diligence processes. They're seeking more assurances on compliance and supply chains, and in companies having active policies in place to mitigate such risks.
I think your operational risk is also key. We've seen a lot of instances where issues have ended in workforce disputes, strikes, violence, and unrest. So issues can lead to stops on operations that can lead to stops on orders for critical parts. So that can be extremely disruptive for businesses. And again, as mentioned, the reputational risk is huge. You have regulators, you have consumers, clients, investors, business partners. And I think businesses are being asked more and more to make sure that they're providing transparency and accountability on these issues. We cannot rule out access to information. These days we have very targeted media campaigns, we have whistleblowers, we have MPOs such as Liberty Shared, we have watchdogs. So there's no secrets anymore in terms of the businesses that we're running, and any issues can be easily picked out and broadcast around the world very quickly.
So I think these are the real questions that need to be asked to businesses in terms of how they're getting their ducks in a row and why they should pay attention to these issues.
S1: 08:10
We've talked a little bit in generalities about the regions and the areas where these issues have popped up the most. But, Archana, what countries are the biggest trouble spots for human trafficking violations right now? And is there a common thread among them?
S2: 08:23
It's fair to say that no country in the world is immune from this problem. Now the degrees at which countries are impacted, of course, varies. I think it's safe to say that Asia sees the largest number of victims globally. And within the context of looking at countries, it's important to separate out three sets of countries. One, the countries of origin of the victims, where their journey to exploitation begins. There is indeed a huge level of violations there, because oftentimes that's where the initial recruitment, the initial indebtedness, the initial deception, etc., happens. And the individual embarks on a journey of exploitation.
The second set of countries is the country where the individual is actually set to work. So the destination country where the sort of supply chain relationships, etc., are located and where the exploitation actually takes place. Those countries really vary depending on what sector it is that you're looking at. So for, example, […] tea in India, palm oil in Malaysia and Indonesia, electronics in Malaysia, fishing in Thailand, rubber in Thailand. But by and large a lot of the—as Ben said earlier—agricultural sectors, sectors where there is a huge reliance on temporary, cheap, unskilled labor., etc.
And then the other set of countries that people often don't talk about is—and where I also believe violations do take place—is where the goods and services produced by the exploited individuals are sold. And there is a level of accountability there, because by continuing to purchase from countries where exploitation is taking place without putting a degree of due diligence and ensuring that individuals are not exploited in production, the countries that are buying also failing in respect of respecting human rights obligations there. So Asia is definitely an issue. The prevalence is quite high across Africa as well. But it is also fair to say that Europe and the United States also have their fair share of problems. In some countries, sex trafficking is a lot more prevalent than labor trafficking. In others, labor trafficking is a much bigger issue. But I think over time we have known a lot more and been a lot more familiar with sex trafficking, and now we really are catching up with how widespread labor trafficking is, really understanding a lot more the sectors and the geographies that are impacted.
S1: 10:53
So, Ben, Archana just touched on a few of them. But from the other side, what industries have you found are the most problematic, or have the most that they have to look out for when they are operating?
S3: 11:03
Well, you're looking at supply chain complexity, lack of resources, cost pricing pressure, manual labor shortage, a need for temporary staffing, unsociable hours, and hard labor. So agriculture is key. Electronics, textiles, obviously is a key area. Forestry, mining, construction, and, of course, finance. So they're really the key sectors. Just sort of wanted to add to something Archana said just previously in terms of the sex trafficking. I mean that's the key issue in Japan. We don't necessarily have any real legal focus on the issue right now, but it takes place in Tokyo on the streets. You can see young girls being coerced into pornography. They are forced to sign contracts they can't get out of. Their identities are taken and everything's uploaded onto the internet or made into DVDs and sold quite readily on the streets and through online providers. And that's an issue that is not something that's publicized particularly in the media here. But it's taking place, and it's kind of like a vague awareness, but not really much action being taken. So I think that, you know, a lot of these issues are taking place relatively close to where we're living, where we're operating. And education is one of the key things in terms of raising people's awareness of that.
S1: 12:20
Ben, if a business executive tells you, "I understand all of this, this is a tragedy. But at the end of the day, I have a business to run and there's only so many things that I can control." How do you change their mind? What have you found? Is it the reputational risk? Is it the financial risk of worrying about partners pulling money, or investors getting cautious or pulling out? What have you found is the most convincing argument to turn somebody who might not be on board when you first speak with them?
S3: 12:50
It's a great question. If everything we've talked about hasn't convinced them, then it's essentially going to be finance, because financial risk is the key. No company wants to take on a financial risk. So I think we would tend to be focusing on case studies of companies that have had issues. And even though they may also be aware of those, I think that that's going to be the biggest decider. But then I think also one of the things that we would look to do is we would look to elicit input from stakeholders in the industry. I think one of the most effective, most powerful ways of doing this is to have someone like Archana come into your organization and just talk you through some of the cases that she's seen. And I think that your employees would certainly then be pressuring you to make some changes in the business, if they haven't already been done. I think stakeholders as well would agree that they don't want to be supporting that type of activity. I really think that that's the only argument we can put forward to someone. Of course, you have to run a business, but if you're going to run a business and you want to be profitable, then ultimately you need to have transparency on your supply chain.
S1: 13:56
Is there anything that you would add to that, Archana? Something that you found to be maybe more effective than others when you're talking with folks in the business world?
S2: 14:04
It's becoming better known and documented that businesses and investment into businesses that are environmentally and socially conscious are much more profitable long term. And as investors start to say, "We demand higher standard. We care about the environment. We care about social issues. We care about governance," sectors will have no choice but to up their game, and to really improve the way that they operate and the standards by which they abide. And I think that's one of the most compelling arguments we can make. We can see already in Europe and in the United States how investors do make demands and do expect that companies be a lot more environmentally and socially minded. If you look at a lot of the statements made by Larry Fink, he talked about companies with a purpose. And those really are the companies that will end up being much more profitable long term than others. From a human perspective, profitability can never justify criminality. We are talking about criminal activities and we are talking about people who do experience exploitation in the name of making a profit. And the commodification of people through exploitation is nothing short of immoral.
I mean, imagine what it's like to leave your village to go in search of better opportunities. To pay a huge fee to go to a job in a foreign country that most people living in that country don't want to do. You get there and then you are made to work really long hours. You are heavily indebted. Working conditions are poor. Potentially your freedom of movement is limited. Your passport is taken away from you, and you are sending very little money home. There is nothing more devastating from a migrant's perspective, and let alone the cases where we do see exposure to chemicals, or health and safety hazards at work, or physical and sexual violence. There is nothing right about that. And for everybody who is a consumer, it is extremely problematic to be consuming goods that come from situations like these that have gone into the creation of those goods.
S1: 16:17
This has been really informative, as somebody that read a little bit about it in anticipation of chatting with you both. I don't think I quite understood everything that went into it and I've learned a great deal. So closing with something, looking forward to actionable. I sit here as an average citizen. I don't own a business that deals with a large supply chain. I don't have to worry about a number of the things that we've been talking about here today. But how can I make sure that I'm not contributing to this? In other words, how can I make a difference?
S3: 16:45
I would always say that it goes back to being aware and information. An average citizen is a consumer. So look at the companies that you're consuming from. Look at who's providing your food, your clothing, your electronics. I would suggest that that's where the average person can be doing something actionable. We have a choice as a consumer in terms of whom we're buying from and whom we're investing into. And I think just being aware of the issue as it relates to those organizations is something that an average person can certainly do. And then make a choice as to whether they want to be supporting that type of company, or whether they choose a company that has a very ethical standpoint on human trafficking.
S1: 17:27
Archana, is there anything that you would add to that?
S2: 17:29
I totally echo that. And also I'd say, you know, it's not just about knowing what you're consuming, but also about consuming a little bit less. Because fashion, for example, is so disposable and so cheap. We buy fifteen black jackets; buy a bit less, because this is a story of supply and demand. The more we demand, the more people are supplying us. And also, you know, we are all individuals. Some of us are parents, members of a community. Some of us are students, some professionals. I mean use whoever you are, and whatever you do, to raise awareness of the issue and harness your power as a consumer to demand better standards for those who are exploited, so that we can enjoy our creature comforts without the shadow of slavery hanging over our heads. If you work in a bank, I'm sure there's something you can do to raise the profile of the issue within the compliance and the legal teams, or the financial crime teams. Get NGOs to come in and speak to your staff, if you work in a business. Likewise, if you're a student. Start educating students at an early stage about their consuming habits—they're consumers of tomorrow. Our hope really relies on better awareness and education now, so that as we go into the future, we don't make the mistakes that we have made to date.
S1: 18:46
That's some pretty good advice. Thank you again so much for joining us here today on the podcast. I hopefully look forward to catching up with you both again soon, and we can check in and see what else we can continue to improve going forward.
S3: 18:58
Oh, thank you. Very much. Thank you, Archana.
S2: 19:02
My pleasure. Thank you.
S1: 19:04
This ThinkSet Podcast is brought to you by BRG. You can subscribe to the podcast and access other content from ThinkSet magazine by going to thinksetmag.com. Don't forget to rate and review on iTunes as well. I'm Eddie Newland, and thanks for listening.
The views and opinions expressed in this podcast are those of the participants and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group or its other employees and affiliates.