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July 25, 2017

The Responsibility of Corporate Boards in Fighting Modern Slavery

By Rachel Risoleo

In the fight against modern slavery, most people look to nonprofits and government agencies. But businesses and their boards of directors can be great allies on the front lines.

In a Forbes article published last week, Bob Eccles investigates the role a company’s board of directors can play to combat forced labor within complex global supply chains. Taking an in-depth look at corporate responsibility, the article questions American businesses’ obligation to maintain transparency on forced labor in their supply chains. Indeed, according to Eccles, a whopping 92 percent of investors are pressuring companies to increase transparency regarding environmental, social, and governance issues. Given the research, it appears that many are heeding that call. 

As human trafficking becomes a priority for governments and more understood by consumers and investors, companies are playing a more active role in uncovering and addressing slave labor in their supply chains. Driven by concerns about increased regulation and consumer and investor push-back, many companies are realizing that involvement from their corporate boards—to build interest in, enact, and enforce policies to mitigate forced labor—is key to ensuring that their brands and profits do not suffer. Corporate boards are tasked with identifying the issues facing a business and dictating policies to mitigate their impact. Boards are unique because they assess these issues while maintaining a careful balance with the interests of the company’s investors and financial success.

As Eccles points out, the failure of company boards to enact policies that eliminate forced labor in supply chains can have devastating consequences. Consumer influence is a key tool for delivering those consequences and should not be overlooked.

Consumer pressure can have a lasting impact on a company’s profits, brand, and morale. Eccles cites industries such as agriculture, food products, and manufacturing as among those most likely to be affected by a strong consumer response to modern slavery.

Of course, more can be done to eliminate forced labor in American companies’ supply chains, but forced labor in complex supply chains is not easy to combat. In our global economy, goods and products often travel through many countries and sectors before being sold, making it easy to be unaware of human trafficking abuses. 

To further combat this, some states have begun taking a more aggressive stance to regulate supply chains in addition to already-existing company policies. In California, the Transparency in Supply Chains Act requires companies headquartered or operating in the state to disclose their efforts to eradicate human trafficking. Statewide, approximately 3,200 companies are required to adhere to this law. Failure to do so can lead to fines and greater legal repercussions, both of which could permanently tarnish a brand.

California’s example should be followed on a national scale. Regardless of a business’s anti-trafficking efforts, regulatory bodies should continue to require companies to disclose their policies publicly. Likewise, to effectively solve trafficking in supply chains, laws and policies will have to create a level playing field. Rather than experiencing decreased revenues, companies must be rewarded for increased time and funds spent creating and enforcing robust anti-trafficking policies.

As Eccles points out, eradicating modern slavery cannot be accomplished with one change, but instead requires action by all those able to make real changes. Companies with global supply chains, economic influence, and a direct ability to end worker suffering in their supply chains have that power. Furthermore, consumers should continue to hold company brands responsible for failure to address forced labor. The work already being done by some company boards and consumers across the globe should be applauded.

Companies that have not yet initiated plans to combat trafficking should look to others for an example. Additionally, as consumers both in the United States and around the world, we should strive to reward brands doing the most to eradicate this crime. We must do our part to ensure that we are not providing a market for slavery.