CSCMP's Supply Chain Quarterly
March 23, 2019
Forward Thinking

Tech companies should do more to eliminate slavery, forced labor in their supply chains, report says

The watchdog group KnowTheChain says that information and communications technology companies have made public commitments to reduce their suppliers' use of forced labor, yet few have taken concrete action.

A recent report asserts that while companies in the information and communications technology (ICT) industry are aware of the risk that forced labor is being used in their supply chains, they are not doing enough to address the issue.

"The ICT Benchmark Finding Report" from KnowTheChain, an organization that educates companies about labor abuses within their supply chains, evaluated 20 of the largest ICT companies on their efforts to eradicate forced labor from their global supply chains. The assessment was based on information from the companies' websites as well as additional public disclosures they provided in response to KnowTheChain's inquiries.

The ICT industry is one of the most at-risk sectors for forced labor, according to KnowTheChain. The group cites a 2014 study by Verité, a nongovernmental organization focused on social responsibility in the supply chain, which found that one in three foreign workers in the electronics industry in Malaysia could be classified as forced labor. Many major ICT brands source components in that country.

For its own study, KnowTheChain evaluated companies in seven areas: commitment and governance; traceability and risk assessment; purchasing practices; recruitment; "worker voice"; monitoring; and remedy. According to the report, 18 of the 20 companies have made a public commitment to address forced labor, but far fewer have policies and practices in place for actually doing so. Of particular concern are migrant workers employed in factories, who often find themselves in debt to recruitment agents, deprived of access to their passports, and working excessive hours for minimal pay.

One of the largest areas of concern, the report says, is in the area of "worker voice." KnowTheChain says that most companies are disclosing too little information on how the workers employed by their first and second-tier suppliers can express grievances and whether they are able to associate freely.

Another area where supply chain workers are vulnerable to exploitation is recruitment. In particular, many recruitment agencies charge workers high fees to secure a job. Only a few companies have implemented policies to combat this practice. Examples include HP, which requires its suppliers to directly employ their workers and minimize the use of recruitment agencies, and Apple and Cisco, which require their suppliers to reimburse workers for any recruitment fees and to disclose the total amount of fees they have reimbursed. In general, however, researchers found a low level of awareness of the risk of forced labor associated with recruitment agencies among the companies it studied.

Scores for the 20 benchmarked companies differed widely. HP and Apple scored the highest, with 72 and 62 out of a possible 100, respectively. More than half of the companies scored under 50 points, however, and three (BOE Technology, Canon, and Keyence) scored under 15 points.

The published report contains not only the benchmark information but also recommended actions companies could take. KnowTheChain will be releasing similar benchmark reports for the food and beverage and apparel and footwear sectors later in the year.

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