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“If They Don’t Like Their Job, Why Don’t They Just Leave?” The Reality of Modern Slavery

When speaking about modern slavery in Asia, we have often been asked:

“If they don’t like their job, why don’t they just leave?”

This question highlights one of the most common misconceptions around modern slavery and forced labour in supply chains, that if the constraints on freedoms cannot be physically seen, then they must not exist.

The truth is these people are not usually being held in place by shackles and chains, they may be free to go home to their families each day after work, they may not be beaten each day by the employer, they may have voluntarily walked into this job or even paid a recruiter for the privilege of working. Why would someone in forced labour in supply chains continue to work for an employer who exploits them or who takes their wages? Why would they not simply leave?

Unfortunately, modern slavery has its own challenges. The answer is debt. Debt is one of the most fundamental global drivers of modern slavery in Asia and around the world today. This hidden prison entraps millions of workers into a form of bonded labour that is oppressive, suffocating, and incredibly challenging to escape.

This debt is often initiated during the recruitment period itself and is perpetuated by the common practice of recruitment fee payments by workers wishing to gain employment in oversaturated industries. Recruitment fees may be charged by recruitment agencies, the brokers that they employ to source workers, or even by the employers themselves. In many countries, this practice is entirely legal, and in some industries, it is so commonplace that workers are mistrustful of job offerings that do not include recruitment fee requirements. Workers victimized into modern slavery often willingly pay these fees, especially for jobs where many others are seeking the same kind of employment. Recruitment fees are particularly prevalent amongst migrant workers seeking low-skilled, low-wage jobs such as in factories, construction, domestic work, or agriculture. As such, forced labour in supply chains persists.

While these fees may be technically legal in many cases, unscrupulous actors may charge excessive fees or hide fees within the process that may lead the workers to take on debt to make the payments. Often, these loans are offered by agencies, employers, or related unregulated money lenders and may have staggeringly high-interest rates. Exploiters prey on the desperation of their victims for work and a lack of financial literacy, as well as deception and lies to bring the person under their financial control, resulting in a modern slavery situation.

Once the workers are indebted, they quickly find themselves working to clear their debts. This can very quickly become a cycle of exploitation where they do not receive the wages that they expected, are charged more hidden fees and costs, and must even take on more debts simply to survive. They are no longer working to thrive and provide for their families. They are working simply to tread water in a rising tide of debt and abuse. They have no choice but to continue. This highly effective method of control is used on millions of workers across a multitude of industries in the world today. In the most extreme cases, this debt can transcend generations as these unregulated debts are passed from parents to children with no end in sight from a modern slavery cycle.

Through our work addressing modern slavery in Asia and around the world, the link between debts and forced labour in supply chains is clear. Addressing how workers fall into debt during the recruitment process will be one of the key pillars if society is to end modern slavery for good.

Author: Phoebe Ewen

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Global Diligence in Supply Chain Sustainability

Due Diligence in Today’s Supply Chain Sustainability

COVID-19 has shifted the way we live our lives, both personally and professionally. This has taken a toll not only on the way we consume but also on how easy it is to forget where our products came from to provide, nurture and protect the ones we love. Implications of COVID-19 have caused many businesses to switch to a ‘sink or swim’ mindset, leaving unskilled and disadvantaged communities to feel the aftermath of pandemic-related disruption.

It’s easy to point fingers at industries and who should do what, but in fact we are all in this together. As business professionals, we have the ability to effect change, whereas millions of people at the bottom of the global value chain can only wonder when they will see their families and if the life they’ve been forced into will ever stop.

It’s our responsibility to shift our sourcing patterns to bring about sustainable supply chain practices, to provide the men, women and children with a life outside the deception that has enabled people like you and me to have the sense of security, as COVID continues to affect those whose voices are not being heard.

The Race to Supply Chain Sustainability

During this economic uncertainty, it is worth highlighting that many companies have stepped up to the plate to take the initiative on their sustainable supply chain practices before legislation has come into effect. Not only have initiatives been taken, but corporations that were one step ahead of the game have significantly reduced their modern slavery business risks, increased stakeholder acceptance, and put an immense amount of pressure on their competitors to follow suit to sustain market shares. With increasing expectation from stakeholders on supply chain sustainability and the need to identify where modern slavery business risks lie, businesses are scrambling to find a solution.

Unfortunately, solutions to supply chain sustainability are not as simple as a checklist, and neither is there a cookie-cutter approach. Each industry has its own set of needs, so they require personalised processes to identify what strategy will work best to eliminate their modern slavery business risks.

For example, company ABC has ten factories spread across three countries. Each country has its own recruitment agencies to source workers from two of the surrounding countries that they operate in. Company ABC publishes its anti-slavery policies and codes of conduct annually, ensures that it complies with local labour laws, carefully selects its supply chain mapping, conducts yearly audits, and ensures a high standard of purchasing practices. Company ABC believes that its internal work and efforts in its sustainable supply chain practices have greatly reduced or eliminated the risk of modern slavery in its business.

However, company ABC has not taken into account the roles and responsibilities of its suppliers and sub-suppliers into consideration. Although company ABC has committed to and worked towards a sustainable supply chain, deficiencies in its suppliers and sub-suppliers’ policies, codes of conduct, complicity with local labour laws, supply chain mapping, audits and training have all been missed as part of the process.

This example demonstrates how preventing modern slavery and eliminating business risks quickly become a challenging and daunting task that requires knowledge and expertise to strive towards a sustainable supply chain.

Steps Towards Supply Chain Sustainability

Both small and medium-sized enterprises and multinationals are often faced with the ‘how’ and ‘what’ should they be doing to manage the business risk of modern slavery. Collaborating with non-profit organisations is a company’s best method to work towards sustainable supply chain practices. Non-profit organisations in the anti-modern slavery space have specialised expertise, resources and tools to work with and identify modern slavery challenges specific to each industry.

Both free and paid resources are widely available to help the private sector to enhance and empower sustainable business practices through supporting companies to navigate the anti-slavery landscape. Although cookie-cutter strategies don’t exist, it’s good to understand how and what can be implemented today to set organisations up for success.

1) Knowledge

Understanding industry best practices is a great first step. There are online search tools that help businesses to dive deeper into industry-specific topics by searching archived news articles, blogs and websites from credible resources to understand the complexities of managing the business risks of modern slavery.

2) Roles and Responsibility Checklists

It’s important to know who and what managerial position within an organisation can play an important role in addressing modern slavery compliances and risks within supply chains. Understanding how decision-makers and employees contribute to preventing modern slavery is an essential part of a company’s modern slavery strategy.

3) Free Online Modern Slavery Toolkits

Workers’ vulnerability, workplace pressures, and health and safety concerns are ongoing challenges that impact business sustainability and profitability in the short, medium and long term. Managing supply chain sustainability has been and will continue to be a challenge; therefore, accessing free toolkits to mitigate and prevent modern slavery is key to managing stakeholder expectations.

4) ESG Modern Slavery Indicators

Indicators that articulate sustainability frameworks with stakeholders, such as ESG indexes, provide measurable and attainable data. Measuring the ‘S’ in ESG has been a cornerstone project that the Mekong Club has been developing for modern slavery indicators.

Implementation of indicators has proven to be an effective way to effect change and has already led to victim identification within supply chains.

5) Industry Benchmarking

Understanding where a business is with its modern slavery strategies against industry benchmarks provides an overview of how much work needs to be done. Supply chain sustainability starts with knowing what business risks are currently present and what metrics are being achieved. With governments and regulators globally clamping down, more companies are required to do everything in their power to present their efforts; otherwise, they risk condemnation and brand reputational damages.

One way to do this is to take a Anti-Slavery Scorecard self-assessment. This confidential tool allows companies to identify how their modern slavery strategies rate on a scale of one to a hundred. The score received acts as a comparative to the average scores within modern slavery supply chain sustainability. The free assessment reviews existing performances on modern slavery initiatives, identifies gaps between current and desired performance, and helps managers implement actions to improve performances.

Identifying and addressing modern slavery is a major obstacle to achieving supply chain sustainability. However, with the right training, tools and collaborations, it is possible to make a positive impact to protect and release the men, women and children who have been forced into working against their will.

Author: Nolan Clack

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The Many Faces: Ending Modern Slavery in Finance

The finance world is multi-faceted, and any one bank can employ thousands of staff, each with their own personal responsibilities and interests to fulfil. When we first engage with finance professionals on the topic of modern slavery risk, they often hold preconceptions about who in their organisation is responsible for addressing this crime or may lament over the fact that despite their interest in ending modern slavery, they do not have any personal leverage to do so. In fact, the Mekong Club has collaborated with a spectrum of finance professionals, and we have come to learn that there is no one person or team within any bank that is solely responsible for the modern slavery strategy. Addressing modern slavery in the finance world involves the cooperation and drive of a tapestry of people, each using their unique influence and knowledge to add to the collective response. Below is some information about the key roles and how our self-assessment can help you as a finance professional to understand the part that you have to play in ending modern slavery.

The Chair of the Board

The chair of the board, or equivalent highest level of management within a bank, is expected to set the tone of modern slavery compliance from the very top tier of the organisation. This is important as banks are often siloed between countries, departments, and business lines. Having a clear and consistent message from the top with regards to the bank’s standards and expectations related to modern slavery risk can ensure consistent approaches across the various siloes within any organisation. Banks that are required to produce modern slavery statements, such as under the UK or Australian modern slavery acts, often require the chairman or equivalent to sign the statement. These signed statements are publicly documented and state the company’s stance on modern slavery as well as a set of tangible actions and future commitments that will take place to address the issue. When staff within an organisation see such public statements endorsed by the highest level of leadership, a sense of collective responsibility is established. The chair and other senior leaders therefore have a responsibility to remain abreast of the company’s anti-slavery strategies and demonstrate public commitment to the cause.

The Anti-Money Laundering Compliance Officer

Anti-money laundering (AML) is perhaps one of the most immediate roles that comes to mind when considering who is on the front line of modern slavery prevention. Modern slavery, and related crimes such as human trafficking, are predicate crimes for money laundering and considered to generate at least 150 billion USD annually. Modern slavery is a highly lucrative crime for those involved because one can profit from the exploitation of another human being time and time again. The low-risk, high-reward nature of this crime perpetuates its growth. The anti-money laundering compliance officer is directly responsible for putting in place the safeguards to prohibit the criminals that profit from this crime from accessing financial systems. They create the systems and procedures required to scrutinise new and existing customers, incorporating modern slavery risk factors and modern slavery typologies into the process. They ensure that suspicious reporting procedures are developed and maintained to allow staff to safely and easily report unusual activity. They may oversee the risk assessment framework, ensuring that all crimes, including modern slavery, are part of a comprehensive risk assessment process. The AML compliance officer therefore plays a crucial role in setting the tone across all AML teams and the organisation as a whole – a tone of zero tolerance in allowing access to financial systems for the criminals who exploit other human beings for profit.

The Training Manager

Staff within any financial institution are continually learning, whether that be about new policies and procedures, new risks and trends, or customer service strategies. Training and capacity building form an integral part of any staff member’s workload and is often directly pinned to annual deliverables and KPIs. The team responsible for developing and implementing training therefore have a vital role to play in educating staff on modern slavery compliance and the roles that each department has to play in addressing this crime. Training must be informative and engaging and ideally refreshed on a regular basis to ensure knowledge retention and to account for new information and trends in the modern slavery space. As this crime is ever-evolving, up-to-date training is necessary for effective action against modern slavery risk. There are a wealth of modern slavery experts on hand to deliver in-house training for those teams with specific responsibilities which can further enhance engagement with this topic. Knowledge is power, and the training manager has the influence to leverage this power towards ending modern slavery.

The ESG Investment Manager

ESG investing involves considering ‘Environmental, Social, and Governance’ factors alongside financial factors when considering making an investment decision. Companies and investments can be rated using a range of ESG metrics which seek to score their activity in the three areas and reward those organisations that are making a positive change. Incorporating modern slavery indicators into ESG investments is increasingly expected, and there is a need for clear and measurable metrics in this space. ESG investment managers have a role to play in ensuring that their approach to ESG is holistic and includes modern slavery indicators. This ultimately will serve to encourage positive action, better modern slavery reporting standards, and a greater focus on the positive impact that investments can have on ending modern slavery. The ESG investment manager has the leverage to change how the world prioritises addressing modern slavery.

The Customer Relationship Manager

While analysing data may be one means to identify modern slavery risk, it is often the human interaction and intuition that can lead to the identification of modern slavery in daily life. Victims of modern slavery are found working in nail salons, car washes, construction sites and factories, and some are even taken into bank branches by their traffickers to open bank accounts that will be taken from their control. Relationship managers and branch staff have a unique opportunity to interact with their customers through making transactions, opening accounts or visiting their business premises as part of routine customer service. Modern slavery red flags that may be identified by frontline staff include victims being taken to open bank accounts with their trafficker posing as an interpreter, handling all paperwork and account cards, and speaking on behalf of the supposed account owner. Other modern slavery red flags include high-risk industries such as nail salons populated by staff showing signs of neglect, who may be fearful to interact, or whose business premises may show signs of secondary use as brothels, often tied to unusually high income levels in the form of cash. Customer relationship managers and other frontline staff are the eyes and ears needed to identify potential modern slavery victims and perpetrators.

The Procurement Manager

Banks have their own supply chains and have staff responsible for procuring a range of suppliers, services, and contracted staff. This area of risk exposure may not be one that immediately springs to mind when considering modern slavery risk as it relates to the finance industry, and yet overlooking modern slavery procurement risk could lead to modern slavery being found in the very office buildings used by the bank or in the supply chains of staff uniforms. Modern slavery is prevalent within low-paying jobs with high migrant worker populations, such as security guards, cleaning staff, refuse management, and catering staff. These workers may be coerced into employment through debt bondage perpetuated by high recruitment fees, threats to their families, and fraudulent employment contracts. Often in the case of banks, the hiring and management of such staff are outsourced to third-party labour providers, so the bank may not have direct oversight of the true working conditions of these employees despite their everyday presence in offices and branches across the bank’s network. Similarly, supply chains for branded merchandise and staff uniforms may carry modern slavery risk, and procurement teams have responsibilities to ensure that their suppliers are risk assessed and adhere to their expectations regarding modern slavery. The procurement manager has the power to ensure that modern slavery is not hidden in plain sight.

You!

There are many more people within finance that play a crucial role in addressing modern slavery. If you are a finance professional, take our Anti-Slavery Scorecard Self-Assessment to see how your company compares to others in the finance industry and learn more about the key role that you have to play in ending modern slavery.

Author: Phoebe Ewen

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Measuring Modern Slavery Risk in the Hospitality Industry Through Self-Assessment

Modern slavery, which is defined as the recruitment, movement, harbouring or receiving of children, women or men through the use of force, coercion, abuse of vulnerability, deception or other means for the purpose of exploitation, can be a serious issue for the hospitality sector. Throughout the world, this issue can pose reputational risks for the entire industry, from small budget hotels to five-star hotels at the top of the industry.

Because of the clandestine nature of this problem, many modern slavery situations within hotels are ignored or go unnoticed. There are four main touchpoints where modern slavery can occur in the hospitality industry:

Forced Prostitution: The privacy that hotels offer and the transient nature of their guests mean that they can be prime venues for commercial sexual exploitation, a term used to describe a person in forced prostitution. The victims of this crime are controlled by their captors using threats or debt for the purpose of generating profits through the sale of sex.

Supply Chains: Hotels procure a wide range of products, including seafood, furniture and linen, some of which can be harvested or produced with forced labour. For example, fishing industries around the world have been found to have seafood that is caught by modern slaves.

Third-Party Contractors: Hotels sometimes use third-party service providers as house cleaners, caregivers, gardeners and dishwashers. Some of these people might be migrant workers who are in employment situations that include debt bondage or forced labour.
Construction: Modern slaves can be found working on major hotel construction sites. Within the range of subcontractors supporting a major build, there are sometimes exploitative approaches used to recruit unskilled workers whose wages are withheld and never paid.

COVID-19 and the Hospitality Industry

The hospitality industry has felt some of the largest impacts of the spread of COVID-19. Travel has halted, and many countries have enforced quarantines and social-gathering bans which have resulted in the closure of many bars, restaurants, and hotels. As this situation continues to unfold, many hotels are facing empty rooms, which is having a devastating impact on their overall business. As a result of this crisis, there are many reasons why hotel workers may be more vulnerable to modern slavery during the ongoing pandemic period and beyond. These include loss of income, increased debt, low awareness of workplace labour rights, requirements to work excessive overtime to cover staffing gaps, and the inability to return to home countries safely.

Why Should a Company Carry Out a Self-Assessment?

Understanding the risk of modern slavery within hotel supply chains is now a priority for many hotels. For the past ten years, modern slavery has become an ever-increasing business risk for the hospitality sector. Governments and regulators around the world are clamping down, and more companies will need to show they have done everything in their power to reduce modern slavery in their operations or face condemnation and reputational damages. Beginning in 2012, transparency legislation has been put in place that requires major companies to indicate what they’re doing to address this problem. We are also seeing a rise in the number of class action lawsuits against major companies, including hotels. Modern slavery is now on the radar of the media and NGOs, many of whom are unafraid to publicly shame and thrust brands into the spotlight for failing to address it. Finally, in the investment world, there has been a concerted effort to include metrics related to modern slavery within environmental, social and governance (ESG) frameworks. Hotels that don’t pay attention to this trend may find their investment options will become more restrictive.

Understanding the risks associated with modern slavery is a key step towards protecting the hospitality industry from becoming exposed to them. One way to do this is to have your organisation take the Business Index Self-Assessment. This confidential tool, which can be easily completed in less than ten minutes, will allow your company to identify how it rates on a scale from one to a hundred. The score achieved can be compared with the average scores achieved by similar companies. This assessment will allow a hotel to review its existing performance related to a range of modern slavery initiatives, assess any gaps between the current and desired performance, and assist leadership to put in place actions to improve this performance.

A Good Time to Address the Modern Slavery Issue

The hospitality sector is well-positioned to identify and address modern slavery in all of its forms. With the right training and tools, it can have a positive impact on many vulnerable lives. Following the completion of company self-assessments, the Mekong Club is supporting and advising hotels in our network. The benefit of knowing how a company rates is that it allows a company to explore options. Below are some interventions that can be considered:

Modern Slavery Guidelines: Hotels can update their internal and external policies and codes of conduct to include statements related to modern slavery. This can help them to outline their commitment and operational response. The Mekong Club offers a modern slavery guideline to help with this process.
Modern Slavery Awareness Training: Comprehensive modern slavery awareness training is being provided to employees, contractors and subcontractors to help them understand the issue and address it. To be effective, this training should be provided in the local language of the employees. Infographics and awareness-raising posters can be distributed to employees to remind them of their responsibilities.

Modern Slavery Audit Checklists: More hotels are monitoring service contractors, construction sites and suppliers using comprehensive audits, surprise inspections, worker interviews, and document inspections. The Mekong Club has a modern slavery audit checklist that can be used to identify red flags related to forced labour cases.
Commercial Sexual Exploitation: Addressing commercial sexual exploitation requires hotels to train their employees to identify and report suspicious behaviour. Certain staff, in areas such as security, reception and housekeeping, are in a better position to spot signs of human trafficking. It is important that hotels assign responsibilities to supervisors so that action is taken when a case is identified.

The hospitality sector has a distinct advantage in being able to identify and address modern slavery in all of its forms. With the right training and tools, it can have a positive impact on thousands of lives.

If you are a hospitality professional, take our Anti-Slavery Scorecard Self-Assessment to see how your company compares to others in the hospitality industry and learn more about the key role that you have to play in ending modern slavery.

Author: Matthew Friedman

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Modern Slavery Business risks: Finance and COVID-19

Emerging Business Risks in Modern Slavery

As COVID-19 continues to impact every industry and economy, so does the business risk of modern slavery and criminal economy. Human traffickers operate using profits generated through their crimes and continue to exploit people across the world. With lockdowns still prevalent in many countries, traffickers adapt and find new ways to exploit communities for their own financial gain. In addition, soaring financial online fraud, cybercrime, and scams generate tens of millions of dollars in proceeds; money is taken out of reach from individuals and communities struggling to keep their heads above water.

This quickly changing criminal economy reflects that people are now even more likely to accept any work to keep themselves afloat. Thus, unfortunately, leading many into the trap of deception to a more prosperous life, which only leads to forced labor or sexual exploitation.

The changing forms of human exploitation related to COVID-19 have also placed a significant business risk on companies and their modern slavery strategies to adhere and respond accordingly to criminal activities.

While still challenging to detect, several mitigating measures could be put in place, and a risk-based approach can be applied where activity was known or suspected to occur. The changing nature of the economy means that such risk has shifted, and so new threats may emerge. For example, previous risk profiles may become outdated as exploitation methods turn, so many ways to launder funds and move cash proceeds of criminal activities.

The Challenges in Anti-Money Laundering and Modern Slavery During Covid-19

There are several immediate effects of COVID-19 on the ability of financial institution providers to accurately track their modern slavery and anti-money laundering efforts and safeguarding practices. In many countries, social lockdowns and restriction of movement pose a challenge to carry out routine customer visits, conduct in-person AML checks, and others much more severe and related to the sustainability and profitability of a business in the short, medium, and long term.

The reality of not being able to see business in operation first-hand, the greater chance for illicit activities to not be detected, and for accounts used for money laundering purposes continue to thrive without being scrutinized. Likewise, the barrier to not witnessing and interacting with customers in branches is left undetected by behavioral and suspicious indicators. This poses an ongoing modern slavery business risk that continues to be a challenge.

Industries with Business Risk for Modern Slavery

We are already seeing a significant increase of people and communities falling below the poverty lines worldwide. In addition, many workers who rely on daily wages have suddenly had their incomes come to a halt due to lockdowns, social distancing restrictions, and supply chain distribution.

The industries where workers are most impacted are factories, construction, domestic work, and agriculture. In addition, many of the people impacted are migrant workers who may have traveled across borders to find work and rely heavily on their income to support their families back in their home countries.

Debt begins to build up and result as a critical driver that results in these people being placed in modern slavery situations. Workers start to have no control over their identities, working for little or no pay and increasing their substantial debts, and cannot pay recruitment fees.

When their income stops, they are suddenly significantly more vulnerable to the lure of unregulated financial products, loan sharks, and taking on dangerously high-interest loans to keep afloat.

When people are financially vulnerable, they are much easier targets for exploitation, abuse, and forced labour. This is an area of concern for financial services providers, as they may find their bank accounts being used to process these so-called loan payments. As a result, they may find themselves inadvertently handling illegal or exploitative funding. Financial institutions may also find their commercial clients’ supply chains changing and risk profiles shifting in these uncertain times. For example, where forced-labour risk for a particular client’s factory may have been relatively low before, changing circumstances and increased desperation can lead to previously “safe” customers displaying much higher-risk characteristics.

Overall, modern slavery business risk has never been more prevalent, which is a concern that financial service providers must heed. As the Covid-19 pandemic continues and changes, so will the threat continuing to develop and grow. Financial service providers need to be first-movers to anticipate risk both occurring now and in the uncertain future. This will ensure that they protect their business, protect vulnerable people, and exclude criminals from accessing the financial systems they seek.

Author: Nolan Clack

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Modern Slavery: The Elephant in the Room

A topic often heard of yet still largely misunderstood. Modern slavery exists worldwide and is not just present in developing countries but globally. Often when we talk about modern slavery, a picture is painted of exploitation in factories and farmlands, images that are far removed from the shiny corporate office buildings where a good majority of our usual audience spends their working lives.

When we discuss modern slavery, most become sympathetic to the millions of victims and pledge to support the cause to fight this crime, but still assume that modern slavery is not something that they would ever witness.

But let us ask you this. What would you say if modern slavery could very well exist in the office building that you work in?

While this might seem like an absurd question, take a moment to think about your workday and how this could be remotely possible.

It is easy to take the workers that go far under the radar of our daily office lives for granted. The workers that greet you on your arrival, the people cleaning your office space, and the security guards contracted to help maintain a safe work environment.

These people are often the ones that are hired through external contractors to carry out the low-paying jobs that keep the corporate ecosystem ticking. They may have paid excessive fees to secure their job and been forced into debt to their employer. They may not be paid the wages that they were promised. They may have had their passports taken away, told they would be arrested if they spoke up. They may be told their families are at risk if they try to run away.

Step Forward

We don’t expect our readers to know the full extent of modern slavery within every industry, but self-educating is a great way to start. This can begin by simply looking around at the people working different jobs that you interact with each day, from the security guard outside your office to the people working in your local car wash to the staff in your nail salon. Read up about these industries and how modern slavery can exist in plain sight. You might be surprised to come across information you hadn’t known existed. Better yet, what you have newly discovered interests you so much you decide to share it with a colleague.

A lot like the elephant in the room, a small act of simply sharing information on the subject of modern slavery to others can go a long way to provide clarity on the issue. If 10 million people did a small thing each, that’s 10 million steps of progress.

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Unseen Modern Slavery in the Hospitality Industry

Anyone in the hospitality industry will be able to tell you that, in order to provide the best experience for customers, much of the work that goes into running a successful establishment happens ‘behind the scenes’. From room cleaners and caregivers, to security guards, kitchen porters, and gardeners: these workers’ labour is often unseen, away from the eyes of guests. As such, they are particularly vulnerable to hidden exploitation and slavery, even at the most exclusive of venues.

Contract workers

Frequently, the workers most vulnerable to slavery in the hospitality industry are contracters. Many venues utilise third-party service providers to make up their low-skilled and low-paid workforce. However, the consequence of this is that contractors are often less protected than their in-house counterparts in areas such as paid sick leave and paid annual leave which may not be mandated by law. As a result, many contractors are either forced to work involuntarily or take out financially restrictive loans in order to stay afloat.

These related issues of unpaid leave and debt bondage have been exacerbated by the COVID-19 pandemic. Due to the nature of the hospitality industry making it impossible to work from home, hospitality workers are more exposed to infection, and therefore need to isolate themselves more often. However, without paid sick leave, many cannot afford to take time off without getting into debt. The infected worker is also at risk of spreading COVID-19 to customers and other workers, so, ensuring that hospitality workers are paid fairly during leave should be a priority both for those seeking to prevent potential exploitation through debt bondage, and ensure the safety of their establishment during the global pandemic. In its worst forms, debt bondage can amount to modern slavery.

Migrant Workers

While they also happen to be frequently employed as contract workers, migrant workers are also exposed to an extra dimension of vulnerability in the hospitality industry. Part of the reason for this is due to travel costs incurred by the process of immigration. Immigrating is a costly process, heightened by the fact that many migrant workers in low-skilled low-pay industries pay high recruitment fees to secure jobs in saturated markets, these fees can amount to thousands of US Dollars. Debts incurred during the process can make it impossible for migrant workers to take unpaid leave. Migrant workers may also have family in their home countries that depend on remissions sent back from their wages, which only worsens their financial precarity.

Exploitation Indirectly Perpetuated by the Hospitality Sector

Although just as pernicious, much of the slavery associated with the hospitality sector is not directly related to the day-to-day running of the establishment. One often overlooked area is the construction of buildings themselves, such as hotels and casinos. Workers in the construction industry are at high risk for exploitative recruitment, high recruitment fees, and issues such as withholding of wages. Similarly under-addressed is modern slavery exposure in hospitality supply chains,where risk is found in a range of industries from farming, to fishing, to manufacturing of the food sold in restaurants, hotel furnishings, and so forth. Finally, hospitality venues are exposed to the risk of forced sex work, where threats or debts are used to control vulnerable people for the purpose of generating profits through the sale of sex.

Author: Scott Thomson

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Social Compliance: It’s Crucial to Business Success

At the Mekong Club, we focus on modern slavery, which falls under the broader umbrella of ‘social compliance’. By definition, social compliance focuses on the policies, procedures and practices that a company uses to protect the safety, rights, and health of their own workers and the workers throughout their extended supply chain. Modern slavery compliance forms an integral part of any social compliance strategy and as such developing a strong compliance approach can ensure that modern slavery is addressed in a meaningful way. Social compliance should never be something that comes from a checklist. Reputational and legal risks that result from failures and breaches in compliance can seriously threaten the good name and standing of a company. This can have a lasting impact on their profits, prestige and growth. Understanding the importance of social compliance can make the difference between a company that runs into trouble and one that thrives.

The main goal of a functioning social compliance program is to put in place systems and procedures to document, assess, and manage any risks or vulnerability. Third party audits are the most common approaches used to ensure a company is in modern slavery compliance throughout its entire supply chain. These assessments often focus on in-country labor laws, workplace and labour conditions, and workers’ satisfaction. Once completed, audit findings, observations and supporting evidence are used to make recommendations that remediate a risk deficiency and improve internal controls to mitigate the identified risk.

There are also a range of grievance apps and hotlines that can collect on the ground information related to employment practices. If issues are identified, they can be addressed through policy changes, training and improved communication with management.

There are three outcomes that result from a well-planned social compliance strategy.

When a company takes an active role in tracking and addressing social compliance topics, this often results in measurable increases in worker satisfaction, worker retention, loyalty and increased productivity throughout the entire supply chain. Satisfied workers contribute to a positive ambience at the workplace and increase workplace productivity.

When social compliance measures are tracked as part of an ESG framework, this allows investors to understand the financial risk and/or viability of a company. When the “S” indicators are tracked, this can help investors to feel more confident that a company will not face reputational risk factors that could reduce its overall value.

Finally, when companies voluntarily report on their social compliance efforts, it allows consumers to see that a company cares. This can result in increased customer loyalty and sales.
One outcome of the COVID crisis was a renewed emphasis on the importance of companies demonstrating that they care about the planet, communities and their workers. This increased emphasis has convinced many companies to revisit whether they are perceived as doing good or not.

The necessary skills and capabilities to tackle most social compliance problems, whether it be legal, risk, accounting, communications, or financial expertise, exist within most brands. With much more emphasis on ESG and “business with purpose,” these efforts will demonstrate that companies can be a part of the solution, not the problem. They demonstrate that robust social compliance and modern slavery compliance systems are not simply a pipe-dream but a practical necessity.

Thus, businesses that have good social compliance policies demonstrate that they are accountable to themselves, their suppliers, their shareholders and their employees. In this day and age, this is crucial to business’s success.

Author: Matthew Friedman

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Alliances Against the Finance of Slavery

Financial service providers are data fortresses, adhering to strict data-sharing laws that can hinder the sharing of information even between country-offices within one organisation, let alone between two separate institutions. These vast companies staffed by thousands are not well-known for collaborating with each-other but occasionally an issue so universally important comes up that this status-quo is disrupted. Through our work we have found that modern slavery is certainly one such issue.

Modern slavery is a criminal industry which is estimated to be worth USD 150 billion a year, generates a significant proportion of funds laundered through legitimate financial services, thereby exposing the financial services industry to the risk of being inadvertently involved in serious financial crime. Whether this be retail accounts used to exchange funds with traffickers, forced labour in commercial supply chains, or investments being made in industries that have known issues with labour exploitation, this is a widespread issue affecting all financial service institutions worldwide.

The Mekong Club, alongside Thomson Reuters Foundation, brought together fourteen multinational financial service organisations around this very topic. In 2019, the group worked together to collate and refine indicators of modern slavery that are vital for financial service professionals to understand. These spanned behavioural indicators that could be used to train frontline staff, to demographic indicators that may uncover risk based on a customer profile, to transactional indicators to flag illicit money movements. All of these indicators were presented alongside country and industry-level factors for consideration, with a focus on Asia Pacific. Crucially, a number of the institutions involved opted to provide anonymous case studies to demonstrate how such indicators can and have been used to identify illicit activity and stem the finance of modern slavery. Such an Alliance had never been formed in Asia before.

Mobilising a group that traditionally does not collaborate in such a manner and is understandably reluctant to share data is a challenging process. Risk Management professionals are often by their very nature risk-adverse and cautious and modern slavery is not necessarily a widely-publicised topic in Asia. However, through this project we found a wealth of passionate and dedicated individuals who were keen to leverage their experience and knowledge to further their industry against this crime. Modern slavery proved simply too big an issue to ignore. We were able to demonstrate, through working with these individuals and their teams, that there are some forms of sharing between finance companies that serve the greater good and can be achieved without compromising the high regulatory and legal standards that banks are held to. This has allowed us to widen our scope and engage with even more finance professionals, by presenting them with a piece of work that is proof of the role that finance can play in addressing modern day slavery.

There is still a long way to go in ending this multi-billion dollar crime but much can be achieved with the right people in the room. We find that every professional has their very own role to play to address modern slavery and helping them to see this and connect them with others can lead to exciting results that are far greater than the sum of each of our parts. We encourage you, the reader, to consider how you could contribute to addressing modern slavery and contact us to join our network to bring about sustainable change.

Author – Phoebe Ewen

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A Moon Goal to Address Modern Slavery

“We know that great things can be accomplished when people are drawn together by a common vision”

The Mekong Club, Research and Communications Group (RCG) and Ashbury Communications have written a new, groundbreaking strategic paper that challenges the private sector to eliminate forced labour from its supply chains by 2030 — and sets out a viable roadmap for realizing this goal without a negative effect on companies’ profitability.

“We know that great things can be accomplished when people are drawn together by a common vision,” said Matt Friedman, CEO of the Mekong Club. “Like the U.S. space programme before it set the goal of putting a man on the moon, our response to modern slavery today is fragmented and often inefficient. A large number of highly committed people are working without a common vision and there is limited evidence of effective progress. We believe that establishing a highly ambitious — yet achievable — goal for ending modern slavery within manufacturing supply chains will bring together these disparate efforts and free millions of people from exploitative labour practices, while not forcing business to choose between what is right, what is sustainable and what is profitable.”

A way forward

As well as establishing the 2030 goal, the paper sets out the first roadmap for the private sector to use in eliminating an estimated 3.7 million modern slaves from its supplier networks. This approach is based on five core components, each of which has clearly defined targets.

• Build a clear and common understanding of modern slavery and why business must respond;
  Equip counter-slavery actors with the information they need to act effectively, efficiently and decisively against modern slavery;
• Establish multi-stakeholder monitoring, feedback and remedy systems to identify, address and prevent further labour violations;
• Enhance the value of social audit processes through improvement and integration; and
  Support ethical migrant worker recruitment solutions.

The Mekong Club will facilitate these processes. Based on feedback from the private sector, a group of likeminded organizations will also work with businesses to collectively develop a set of Principles that support the 2030 goal.

Forced Labour is an ESG factor

The strategy, COVID, ESG and Going to the Moon: How Business Can Unite to Eliminate Forced Labour, highlights how companies’ efforts to eliminate modern slavery from their supply chains will be seen as increasingly important by the growing number of institutions investing in accordance with Environmental, Social and Governance (ESG) principles. The paper argues that the way that a company addresses ESG issues — including the risk of forced labour among its suppliers — has already become a key factor in determining its access to capital, customers and talent.

“Every ESG investor should be taking forced labour into account,” said Adam Harper, Managing Director of Ashbury. “As ESG becomes the dominant investment theme of our times, shareholders will expect companies to rapidly improve disclosure and action on the full spectrum of environmental and social issues. For climate change, there’s the Paris Agreement, national net-zero targets and a number of frameworks to help corporates and investors achieve them. For the first time, we are proposing an equivalent goal for ending forced labour — and a practical methodology to help move towards that goal.

Towards more standardised reporting

Sustainable investing has built up astonishing momentum over the last decade. According to research firm Opimas, the value of global assets applying ESG data to drive investment decisions has almost doubled over four years, and more than tripled over eight years, reaching US$40.5 trillion in 2020. In 2020, ESG funds attracted a record US$347bn of inflows, with 700 new funds being launched.

However, the Social component of ESG is widely considered to be the most challenging of the three components to measure. There are at present no standardised criteria or quantitative indicators for measuring social factors relating to modern slavery. The Mekong Club, RCG and Ashbury hope this initiative will enable companies to provide their investors and other stakeholders with more useful and consistent data about how they are addressing the risk of forced labour in their supply chains.

Pandemic effect

While sustainable investing has thrived during the pandemic, Covid-19 has also highlighted the vulnerability of the world’s poorest people as it caused the worst recession since the Great Depression. With global GDP expected to contract by 4.4% in 2020, the United Nations has warned that more than 200 million people could be pushed into extreme poverty by 2030.

This economic situation clearly puts more people at risk of modern slavery, yet efforts to help the estimated 40 million already trapped in forced labour have proved to be inadequate: it appears that only around 0.2% are receiving assistance. Phil Marshall, Director of Private Sector Engagement at the Research and Communications Group explained that: “The frustrating thing for me is that we actually know why many of these victims are not being identified. But it’s also an opportunity because we have some great examples of how we could help a lot more people, if we all committed to making this a priority.”

Author – Matthew Friedman

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Business With Purpose: Combining Efforts to Achieve a Greater Good

Today’s brands have come to understand that it isn’t enough to just make profits, to expand their market, or to establish prestige, there is also a moral imperative to demonstrate that a company cares. The phrase “Business with Purpose” is emerging as a statement of a company’s commitment to step up and to demonstrate concern or interest attached to something that is considered socially important. This might include topics ranging from global warming and forced labor, to more community-related issues such as the “me too” movement, or racial injustice and homelessness. There are three ways in which a brand addresses their acceptance of a business with purpose emphasis, including corporate compliance, Environmental, Social and Government (ESG), and corporate social responsibility (CSR).

The first approach, corporate compliance, offers effective oversight to protect a company by upholding both internal policies and rules, and federal and state laws. This emphasis helps an organization avoid lawsuits, legal actions, fines and the potential for naming and shaming. Most compliance programs have an inward emphasis, that addresses private and confidential matters. But with new legislation like the California Transparency in Supply Chain Act and the UK Modern Slavery Act, companies are now mandated to outline the compliance steps they are taking to offer transparency for consumers.

The second approach, ESG, refers to a category that is often referred to as “sustainable investing.” This is an umbrella term for investments that seek positive returns and long-term impact on society, environment, and the performance of the business. Within this category, the environmental and governance elements are well-established with a range of standardized metrics available to measure impact. The “S” element tends to be less operational. Most ESG efforts focus on the investment sector to demonstrate that a brand is moving towards sustainability and to reflect its desire to make the world a better place.

Finally, the third approach, corporate social responsibility (CSR), focuses on how well a company is making a positive impact on society and the environment. Examples of CSR include: company donations to charity, including cash, goods, and services, sometimes via a corporate foundation; company-organized volunteer activities, sometimes while an employee receives pay for pro-bono work on behalf of a non-profit organization; and ethically produced products which appeal to a customer segment. Unlike both the corporate compliance and ESG categories, this third component has more of an outward public focus.

Within most companies, each of these approaches tend to have a dedicated set of staff or departments that work independently to address the criteria for the respective method. The justification for this is that they each respond to a different set of constituents. While this separation is common, there is a case to be made for there to be a more unified approach that combines these efforts together to fulfil the criteria for a “business with purpose.”

As an example of how combining efforts can add value, following the 9/11 terrorist attacks against the two World Trade Center towers in New York City, the US government brought together 22 federal agencies to meet the department’s mission to “safeguard the American people, the homeland, and US values.” A sample of these agencies include: U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection, Federal Emergency Management Agency, U.S. Immigration and Customs Enforcement, the Transportation Security Administration, and the U.S. Secret Service. To increase information sharing and operational redundancies, homeland security was set up to “ensure a homeland that is safe, secure, and resilient against terrorism and other hazards where American interests, aspirations, and ways of life can thrive.” This approach allowed the strengths of each of these entities to combine to achieve a more comprehensive outcome.

While there is still a strong case to be made for the independent departments/staff to continue supporting each of the three components outlined above, at the same time, more emphasis on a complimentary, supplementary, combined approach to link each of the efforts also has merit. Advantages include: a more comprehensive analysis of interrelated factors allows an organization to demonstrate its internal and external sustainability efforts from top to bottom, it allows a business to increase its transparency in highlighting that every aspect of their business is open to oversight and scrutiny, and it allows for information and data from all three approaches to be combined, analyzed and used to ensure a robust assurance of business for purpose. In this way, 1 + 1 = 11 instead of 2 if the right consolidation of these factors is achieved because their synergistic effect can offer a significant advantage to those companies that choose to move beyond superficial transparency to full disclosure.

More and more companies are coming to realise that their efforts do not have to solely revolve around maximising profits and expanding their business. There is an emerging trend among companies based in Asia to integrate the idea of “doing something for the greater good” into their corporate DNA. This goes beyond simple web-based CSR statements related to an organisation’s policies and values, to integrating social values into action. This approach has a positive impact on the following areas: attracting young, talented employees who care about social issues; retaining employees; increasing staff morale; attracting potential investors; and connecting with socially conscientious customers.

Doing good and being profitable are not mutually exclusive. In fact, they can be complementary, and can even offer a competitive advantage. Consumers respect companies that take a social stand. In addition, many employees express great pride and satisfaction when their leaders demonstrate that they care. There is something inherently noble about a company taking on important social issues and publicly saying: “We feel that this is wrong and we feel compelled to do what we can to be part of the solution.”

Thus, finding ways to combine corporate compliance, ESG and CSR efforts together in a packaged approach can offer an effective pathway forward to achieve the noble objective of a business with purpose.

Author – Matthew Friedman

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How Reporting on ESG can Support your Marketing Efforts

Over the past year, ESG (Environmental, Social and Governance) in both the business and investment world has been a hot topic. While many might believe ESG falls considerably on investments; however, ESG undoubtedly falls under every component within an organization’s value chain. With more and more pressure from the public, governments and non-government organizations to publicly report on sustainability efforts, it has never been a better opportunity for brands to take the initiative to develop sustainability strategies as part of their competitive advantage.

Untapped Customers

Millennials and Gen Z consumers have been the most significant contributors to this recent shift in sustainability reporting. As a result, brands have been left with an open window of opportunities to engage with new customer segmentations with their sustainability effort creatively. Eager to express their beliefs, attitudes and opinions, untapped segments are waiting to be scooped up.

How to identify new segments with your sustainability efforts

• Take your company’s mission and vision statements and align them with UN sustainability goals that speak for your brand. Identifying these beforehand will create a foundation in the direction you wish to go.
• Apply your UN sustainable development goals (SDGs) towards one or more ESG metrics relevant to potential risks in your industry.
• Re-look at your business environment, segmentation, demographics, customer personas and compare and contrast them with your SDGs and ESG metrics and what is known in your market. You will quickly identify common desires your customers seek, but your brand has yet to offer as a method to strengthen your customer lifetime value.
• Leverage what has been discovered and apply it to your communication strategies. Defining and reporting your sustainability goals will go a long way in reaching, attracting, converting and engaging your customers.

New Talent

A big misconception I’ve come across over the years working in startups is that they have a relaxed workplace culture. Yes, typically, there are flexible working hours, collaborative work environments at co-working spaces while sipping endless coffee. While in some cases this is true, some might be surprised to hear startup teams are some of the most hard-working people I’ve ever met.

Why is that? Easy.

Startup founders have established a great sense of pride and compassion for what they do — a purpose.

Having this clear purpose in mind quickly allows the founders to identify key candidates in the hiring process. Ones with similar values, beliefs, attitudes and goals. Much of which the candidates can already see the enthusiasm on the job description.

Now take this same idea in startups and apply it with your company’s ESG strategy. We’ve already identified that Millennials and Gen Z have been the main drivers in sustainable business. These same people are the ones that are looking to engage and work for meaningful companies that pride themselves on similar values — leaving an opening for companies to attract new talent and increase employee satisfaction. Satisfied employees will inevitably increase work productivity, employee retention and overall better results for your company. This goes without saying enthusiastic employees will heighten your company’s talent pipeline for future growth.

Have your HR and Marketing departments come together to brainstorm an employee branding program in relation to your chosen sustainability metrics. An internal employee branding can be very well be used in your external communications to attract eager new talent with similar values.

“People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe” — Simon Sinek

Brand Story

While reporting on ESG in many countries in the world isn’t necessary, it doesn’t mean you should wait till it’s required. Instead, take this opportunity to integrate your ESG reporting as part of your brand story. Consumers aren’t looking just to purchase a product or service; they’re looking to engage with a brand that allows them to experience the story themselves.

One of my favourite brands that has nailed their storytelling while incorporating their sustainability efforts is Kraft Heinz. Growing up as a kid, I always recall having the iconic glass ketchup bottle on my grandmother’s dining table. Life then wasn’t so fast-paced, and sitting and eating together with family were always memorable experiences. Due to the shift in technology, we’ve shifted into a phase in society where we like things fast and forget to treasure little things in life, such as a simple family meal.

Yet, every time I see this 152-year-old brand placed on the table, it reminds me to pause and think of all the great memories and experiences growing up. Why? Because they’ve included their customers within their brand story. A story that the brand wishes for generations to pass down from generation to generation.

Although Heinz did not have ESG reporting while growing up, they knew reporting on sustainability and integrating within their brand purpose, vision, and values will engage consumers like myself to tie a deeper bond with the brand for years to come.

If you’re unfamiliar with Heinz’s story, I encourage you to take the time to read their brand history and their sustainability reports. This will only give you a better understanding of how to incorporate ESG within your own brand story.

Competition is fierce. How will you do your part to set yourself apart from your competitors?

This article was originally published by Nolan Clack, visit his LinkedIn blog and contact him at [email protected].