The auditor enters the building, clipboard in hand.  They run through the checklist: quality, pace, speed, and financial records.  They give a score, make notes on remediation and opportunities for improvement, then leave.  They never see that the workers are on their seventh straight 14-hour shift without adequate breaks.  They don’t ask to see the living quarters.  Why?  They weren’t told to look.

Modern Slavery has become an increasingly focused-on area of compliance, and for good reason.  It generates $150 billion a year in illegal profits making it the third-largest criminal industry behind drugs and arms trafficking. The International Labor Organization estimates that there are 40.3 million victims of human trafficking globally.  One in four victims are children, and more than 16 million people are exploited in the private sector throughout a wide range of industries. 

While governments around the world are beginning to address this issue with increased urgency, commercial enterprises can play a significant role in combating this evil.  How do you ensure your company’s business activities are not indirectly supporting, encouraging, or financing Modern Slavery?  One of the most effective and easily implemented measures your company should adopt is expanding the use of on-site factory inspections and audits to identify facilities engaged in these depraved practices. 

Expanding On-site Inspections and Audits to include Modern Slavery Risk

Most companies that rely on manufacturing as part of their business have existing processes for evaluating, inspecting, and auditing the manufacturing facilities they engage.  These evaluations, which typically occur on-site, take place throughout the lifetime of the engagement including during the facility selection and on-boarding process and periodically post-engagement (e.g., as a matter of course, at contract renewal, or when potential issues arise).  These on-site evaluations typically focus on only quality-related issues and processes including (1) compliance with relevant product-related specifications and standards, (2) reliability and efficiency of the machines and equipment, (3) overall production capacity of the facility, (4) technical capabilities of the employees, (5) product warehousing capacity, and (6) packing and delivery processes. 

On-site evaluations of manufacturing facilities generally do not focus on Modern Slavery-related red flags.  This is a missed opportunity for many companies as these red flags often hide in plain sight.  However, by making slight adjustments to an existing process and delivering some additional training, companies can dramatically reduce their exposure to Modern Slavery risk.  Specifically, the on-site evaluations, which are already happening (at least in a non-Covid world), should be expanded to evaluate factors relevant to Modern Slavery risk.  For example, these evaluations should be expanded to:

Review working conditions to ensure they are clean, sanitary, and safe

In addition, the individuals charged with the responsibility for performing the on-site evaluations should receive specialized training on (1) how to identify victims of Modern Slavery, (2) questions to ask while on-site, and (3) how to escalate concerns in an appropriate manner.  Moreover, the training should instruct the inspector to be on the lookout for Modern Slavery-related red flags including:

The results of the Modern Slavery-focused inquiry should be documented and shared with the company’s compliance team.  Where necessary, the compliance team should develop and implement appropriate remediation measures including requiring Modern Slavery focused contract clauses or attestations, scheduling more frequent follow-up inspections, or selecting an alternative facility. 

Conclusion

Manufacturing is an industry that is high-risk for Modern Slavery.  Companies that engage manufacturing facilities as part of their business should take proactive measures to minimize their exposure to this risk.  This does not require a significant investment of new resources or the development of new processes.  Indeed, by expanding their existing on-site evaluation processes to include a review of Modern Slavery risk, companies can effectively identify where this risk exists – and take appropriate remediation measures to address it.