The hardest of hard problems: modern slavery in the supply chain

This is the impact of COVID-19 on modern slavery – World Economic Forum, April 7 2020

Lockdown breaches, exploitation, and modern slavery in fast-fashion giant Boohoo’s supply chain in Leicester – Clean Clothes Campaign, July 1, 2020

Forced labour is the price of a cheap cotton T-shirt – Financial Times, September 17, 2020

Innovations in the Business Models of Modern Slavery: The Dark Side of Business Model Innovation – Academy of Management, July 9, 2018

Why modern slavery thrives in multinational corporations’ global value chains – Multinational Business Review, September 17, 2018

Organisational responses to mandatory modern slavery disclosure legislation: a failure of experimentalist governance? – Accounting, Auditing and Accountability Journal, July 8 2020

I think it would be too simplistic and a little bit glib to say, capitalism is the root of this, but capitalism is, is the roots of this. The need that the public has for consumption and the need that our economic model has for consumption of goods and services drives a requirement for companies to produce things more and more cheaply in order to compete.

Denise: Welcome to episode 13 of New Climate Capitalism.

Our topic today is modern slavery in the supply chain.

This is one of those big, disturbing issues that affects all of us. Each time we buy a bar of chocolate, an iPhone, an item of clothing, it is likely that someone, somewhere, a fellow human being, will have been subjected, often against their will, to abject working conditions to produce that item.

How should we define modern slavery? What are its root causes? And what can companies and consumers do to fight it?

To find out, I spoke to Michael Rogerson, who is a researcher at the University of Bath specialised in modern slavery. He comes from an accounting background, which makes his perspective quite unique on an issue which is usually dominated by activist NGOs.

If you’re working on the “S” of ESG, you should be following this very closely. And if you consider yourself an ethical consumer, or if you’re worried and would like to do better, do not miss this episode.

Denise: So today’s episode is on modern slavery legislation and the supply chain, and I’m delighted to welcome Michael Rogerson, who is a researcher in modern slavery at the university of bath. Welcome, Michael, 

Michael: Thank you very much, Denise. 

Denise: Uh, could you say a few words about, because, uh, this is, um, you know, not, uh, Not a very well known topic.

Could you, um, tell us a bit about your background and how you ended up in this, uh, research area? 

Michael: Yeah, sure. So I always wanted to do a PhD for some reason, um, and was put off when I did an undergrad degree and ended up in industry where I worked around the world for 10 or 12 years, including some roles, particularly one of the last roles I did in construction in the Middle East, um, where the role sort of came into contact with this emerging area of modern slavery and awareness of it. And this was about the time that the Guardian published some exposés on how companies, particularly British companies had been caught up in labour abuses in the Middle East.

Because I’ve always had an interest in corporate social responsibility ended up being the go-to person in the company for what we might do about this and, um, how we can mitigate the risk, how we can potentially even turn it into some kind of advantage if we kept our firm out of the news and by extension of our firms of the local government and contracting parties.

Then I went back to university and did a master’s degree at the university of Cambridge. And I studied modern slavery there because I was exposed to it and became interested. 

Denise: Can I stop you right there? What was the master’s in? I mean, where would one find modern slavery represented? 

Michael: Okay. So, just to clarify, the university of Cambridge has newish center called the Institute for Sustainability Leadership and it offers master’s degrees and also partial master’s degrees, uh, which are focused on people in practice.

So. It’s very much focused on, um, using where you work as a research platform and then applying what you find through your research at the Institute for sustainability leadership back into your workplace. So I did what was effectively half of a master’s degree. Um, and I used the construction company that I’d been working for previously.

Um, And you’re right to highlight this because there aren’t too many places outside of PhD programs where you’re a bit more free to research, whatever interests you, I ended up at Bath because the first person to write a paper on modern slavery was at Bath and is now my supervisor, Professor Andy Crane. 

Denise: But, um, I think you mentioned to me earlier when we spoke that, um, you originally came from an accounting background, which is quite different. I think it makes your perspective quite unique 

Michael: Yeah. Um, and we’ve, we’ve found my supervisors and I, that accounting is an extremely unique, uh, viewpoint in that there’s very little research being done from an accounting perspective. And when most people think of accountants, they’ll think of the people, either dealing with payroll or supplier or, or customer payments in and out.

Um, but if you think of accounting more broadly, you think of corporate disclosure, you think of accountability. You think of measuring what happens in a business and accountants have. A much broader overview of what’s happening in most areas of an organization than almost anyone else, even really the board, because they’re dealing with data coming into and going out, coming in from, and going out to all of the, those parts of organizations.

So whether it’s operations and supply chain or marketing, Or things that happen at board level, accountants will have some view of it and they are, we are quite uniquely positioned to be interrogating those data that come in for things like tender prices for contracts and hourly rates of pay and who’s being contracted to do what.

Um, and so, yes, you’re absolutely right. A lot of the research and work being done on this is being done from a supply chain perspective. And that is important, but accounting can offer some insights that I don’t think other researchers are likely to have access to. 

Denise: I’d like to ask you first, um, to define modern slavery because I, um, I’m not familiar with this term and, um, I think it’s quite tricky to define it. Isn’t it? 

Michael: It is very tricky to define it. And, um, when this goes out, Uh, online, you’re likely to get people, uh, arguing with whatever I say in the next 30 seconds. It is not only hard to define it’s quite a controversial topic generally and broadly encompasses aspects of forced labor, child labour, debt, bondage, or any denial of. Individual rights, usually for exploitation, for labour purposes, but it also, um, encompasses things like forced marriage and human trafficking, depending on how you choose to frame it and what boundaries you choose to put around it.

I tend to look at the forced and child labor aspects and debt bondage because they’re the supply chain factors that are relevant to my research, but it is, it can be a lot broader than that. And this is one of the reasons why it’s so hard to define because rather than it being a set concept that has a definition that everyone can work from, everyone’s definition or sub definition of it will generally depend on what they’re looking at it for, the perspective they’re looking at it from, and who they’re talking to when they’re looking at it.

Denise: So maybe we can, um, find a couple of, sort of recent examples in the media to illustrate that. I mean, I did a quick search for modern slavery in the Financial Times, and the first thing that pops up is Booboo. 

Michael: Um, so Boohoo is a highly contested example of modern slavery because there are elements that suggest that work was not freely undertaken. So maybe just, if you could say a quick, um, you know, for those who aren’t familiar with the Boohoo case, what that was all about.

Okay. So Boohoo is a UK fashion retailer that has a number of suppliers in and around Leicester where a lot of the UK’s apparel manufacturing is done. And it was discovered, um, By, I believe by the police earlier this year, that many of the people working in factories that supplied Boohoo weren’t being paid for the hours they were working and the laws around minimum wage, were being got around in this case by workers being forced to work, assigned a certain number of hours before they could clock in.

So they effectively got paid for around half of the hours that they worked. from what I’m aware. Um, and this, this is why it’s contested as a case of modern slavery, because they were there by choice broadly speaking. Um, and although there are arguments around whether minimum wage issues should be included within modern slavery definitions.

And I believe that they probably should. it’s at the, at the, not at the best at the worst. It’s. Uh, fringe issue to some of the more serious examples that we come across. So for example, if we look at another current case of forced labor in Western China among the Uighur population, uh, there’s a report out yesterday.

The estimates that there are over half a million Uighur Muslims living in Western China, who’ve been forced to farm cotton. And to work in factories that refine and turn cotton into garments. And these are forced unpaid, unable to leave working in what are effectively, concentration camps. Um, I think the euphemism that’s used, which has echoes of Soviet forced labor camps is that they are re-education camps, but there’s forced workforce labor going on there that can’t be turned down by an individual and they can’t leave and they’re not paid.

So I think the Uighur example is probably a better one, but I personally would inclu  de Booboo in conversations around modern slavery.

Denise: And then how about debt bondage? Can you give me, um, You know, uh, some well-known example debt bondage in our societies. 

Michael: So debt bondage is, uh, is an interesting case for me because it’s, it was kind of my entry point to research on modern slavery. A lot of the work that goes on in the middle East is done by people who choose to be there and.

Although there may be legal issues with them leaving their place of work. They are to a large extent, most of the time able to leave the problem that many particularly South and Southeast Asian workers working in the middle East and North Africa have is that they have paid a recruitment agent to find them a job.

And then the recruitment agent. Uh, sells that debt to a contractor. And so the individual is not free to do as they please to leave the job that they’re in, for example, until the debt is paid off. And what happens quite often, particularly in middle East construction, is that. The owner in inverted commerce of that debt will sell the debt to another individual or another company at a higher price than they bought it for obviously.

And that cost of that debt is then put it on the individual. And again, so whereas they may have paid for example, 500 pounds or the local equivalent to, to a local recruitment consultant to find them a job. And expect to have to pay back this 500 pounds. If the debt is then sold for a thousand pounds later, it’s considered by the debt holder who holds their right to work papers.

And probably they’re possible that the debt is now a thousand pounds. And if it’s later sold on for 2000 pounds, the debt becomes 2000 pounds. So the debt can become increasingly hard for an individual labor to pay off. And at the same time, What we find quite often is that the conditions that these workers were promised when they were in their own countries, don’t materialize when they arrive.

So then not paid what they were promised, because deductions are made for accommodation and food and legal expenses and living conditions are often very poor. And this is become particularly acute this year as. Corona virus is spread around the world because there have been shut downs of economies and furrowing of construction sites, which mean that these people have been forced to live in abject conditions while also not even being able to earn money, that they can send home to populations that are quite desperate themselves.

And also, and at the same time, not able to pay off any of the debt, which often can accrue interest. 

Denise: Um, are you seeing that, um, the numbers of people who fall into the category of modern slavery, um, have they been increasing or decreasing in the last decade?

That’s a good question. It’s really hard to tell. What we do know is that prosecutions and the successful prosecutions have been going up. But I think we probably expect that given that the laws specifically against modern slavery, so the modern slavery act in the UK, the modern slavery act in Australia, for example, are new, relatively new, uh, public awareness of these issues is relatively new.

How the police are learning to deal with them is evolving. And so I think it was always likely that cases and prosecutions were going to rise and they have been rising in the UK between 50 and 90% a year, whether or not the number of people forced into conditions that we might call modern slavery is increasing or not, is very much open to question.

There are quite a number of estimates on the number of people who are modern slaves. They  fall into all of the sub categories that I mentioned earlier on in terms of forced and child labor debt bondage, trafficking, and forced marriage, but because of the nature of the problem, it’s extremely hard to come up with anything that will get a consensus in terms of what the number is. And some of the numbers are exceptionally high in the tens of millions, which given that reportedly 4 million. Uh, Africans were transported to the Caribbean and North America during the transatlantic slave trade means that there are multiples of that number likely to be modern slaves today, but to put an exact number on it is hard and to put, and to be able to say whether there are more or less becomes even harder.

Where we do have some data is for specific geographic regions where there’s been a concentration of research over a number of years, particularly around specific industries. 

So there’s some very good research on the number of child laborers working on cocoa plantations in West Africa, for example. And about 10 years ago, the cocoa industry or the chocolate industry, I should probably say argued against regulation and legislation of it eight and its supply chains on the basis that it could self-regulate. And then we know that in those 10 years, the problem has become much worse. Uh there’s numbers out recently, the suggest up to 2.2 million child laborers working in West Africa on cocoa farms and the cocoa industry has proven almost entirely incapable of dealing with the problem.

Denise: So if the numbers of prosecutions are going up, um, does it mean that there’s more, there are more, you know, avenues, um, to address this more, more solutions as it were? 

Michael: I think that the increased. Public awareness, which we can see just through the number of documentaries that we get on the BBC, for example, and ITV recently, and through column inches that we see in newspapers on, on news websites means that there’s an awareness of the issue that is being followed by an awareness of the conditions and how to spot the conditions.

But I think this is like any other area of criminality in, in one respect at least. As techniques for identifying where crimes are being committed, develop, so to do how criminals operate. So I’ve been doing some research recently with, uh, another PhD student at the University of Bristol who has found that even right to work documentation, which is checked on some of the really big construction sites in the UK, can be falsified. And that includes things like the passports. So there are cases where people are using biometric passports which are counterfeit to get people onto sites. And he’s come across instances where a van arrives outside a construction site gate at 8:30 in the morning when people are starting work and the driver has seen people carrying out audits on the gate of people, of workers going on to site and the van has disappeared. And the people in it, I’ve never been seen again, they’ll likely head off to another site that doesn’t have as much oversight on it.

Criminals are aware of many of the means through which both organizations in terms of construction firms and other employers, and the police are trying to identify these problems and coming up with increasingly sophisticated ways to evade identification. 

Denise: So, I guess, um, I want to ask, you know, what the root cause of all of this is, what is driving this and then yeah. 

Michael: Yeah, this is the, this is the big question. I think it would be too simplistic and a little bit glib to say, capitalism is the root of this, but capitalism is, is the roots of this. To define that a bit better, the need that the public has for consumption and the need that our economic model has for consumption of goods and services drives a requirement for companies to produce things more and more cheaply in order to compete. 

And there’s only a certain depth to which you can drive prices for, for example, some materials, inputs, and some of that price limit is determined by the labor that goes into them. So if you have an entirely well-treated workforce that is looked after in terms of conditions and pay and all of the kind of employment factors that we take for granted in the Western world with people working in cobalt mines, for example.

And this is true of any employment. I choose cobalt because it’s, it’s topical at the moment. It goes into the batteries in electronic vehicles, for example, which highlights where attempts to become more environmentally friendly, can conflict with what is broadly defined as social sustainability, which modern slavery falls within. 

And so if cobalt becomes more expensive to get out of the ground, because we’re paying our workers more and they’re living in better conditions, that will be somewhere someone somewhere producing it cheaper because they won’t be offering those conditions.

And we can see this, for example, with the diamond trade. So there are very few countries in the world that produce diamonds and those that have strong institutions and strong rule of law. For example, Canada, do what they can to demonstrate that the diamonds that are mined in jurisdictions under Canadian law are labeled as such. And part of my research has been looking at how we can use blockchain technology to trace and offer visibility in supply chains.

So trace products all the way along the supply chain and offer visibility into what happens at the different stages of the supply chain. But those Canadian diamonds will be undercut by people mining diamonds in Zimbabwe or Congo, or other conflict mineral areas. And that means  responsible corporate behavior is punished because the consumer, although they may be aware broadly of some of the issues around forced labor and in the case of diamonds or cobalt, conflict minerals, can’t really be expected to keep abreast of all of the issues and all of the news about this, and then make informed decisions. Which is why we’ve ended up with modern slavery disclosure laws in the UK and Australia, attempting to force corporations to disclose what they’re doing in order to inform the consumer so that consumers and other stakeholders can make informed choices. 

So hopefully that answers the question. I know, I know that the capitalism and the need for cheap stuff is, as I said, a bit of a simplistic answer, but that is the root cause. It’s the competition between firms for cheaper and cheaper inputs and the demand of the consumer for cheaper and cheaper products.

Denise: Yeah. And I guess a followup question there would be because, um, this is where we should try and get into, you know, what needs to happen for the situation to improve.

Michael: I think that modern slavery is to a large extent and more difficult to combat than for example, some environmental issues, because we can measure our environmental impact.

We can measure very accurately what the carbon emissions of products and materials are. And we can measure the extent to which rivers are being polluted. And land is being degraded. We can measure how now the extent and how quickly rain forest are being chopped down, but we can’t as easily measure modern slavery yet.

And I think there are ways of measuring important indicators of modern slavery or at least important efforts to combat modern slavery. That could be done more because if we think about measuring environmental damage, that’s such a broad area that it’s very difficult to know where to start. And the same is true of modern slavery.

It’s beyond fairly crude attempts to, to measure how many modern slaves there might be in the world. It, it can seem very difficult to know what to measure, but there are, um, activities carried out by organizations that can be measured. So I’ve been advising a group of UK universities since I, I published a paper earlier this year on how UK universities have responded to the UK modern slavery act.

And. Training of staff is an area that was highlighted in the research as important. So what percentage of staff are trained? How many of those staff are trained when they’re hired and how much ongoing training is occurring? What percentage of suppliers are compliant with the modern slavery act? What percentage of suppliers are compliant and are within the scope of the legislation?

Because we know for example that approximately one sixth of organizations which are within scope of the legislation have not responded to it. Have any of your suppliers complied, voluntarily? How many are over compliant? Um, how many, how many employees have been checked? So a university, for example, and this will be broadly the case for.

Construction sites and many other workplaces, how many of the non-direct of the indirectly contracted individuals have had their right to work? Papers checked have gone through, um, some kind of survey after they’ve begun work on your premises to establish that the work is freely chosen and that they’re being paid the legal minimum wage or above.

So, so it is hard to measure. Hope is coming from broadly some organizations that are taking this very seriously and also doing a lot, not only in terms of their own operations, but actually educate other organizations on what they could be doing.

So Marks and Spencer is very good at this. The John Lewis partnership is very good at this. The Co-operative is also very good. They’ve been helping us at the University of Bath with how we can improve measuring our impact in this respect. 

But what we really need is legislation. And we have the UK Modern Slavery act here, and Australia has its own Modern Slavery act on Australia.

Denise: So I wanted to ask about those two acts, um, that they are quite toothless for the moment aren’t they? 

Michael: Absolutely. Yes. So the Australian modern slavery act, which came into force, I believe last year, um, I think this year is the first year that organizations are obliged to report. Both of these pieces of legislation effectively, they are what one interviewee I spoke to recently for some research described as legislated self regulation.

The UK Modern Slavery act, obligers organizations to publish a statement annually on what they’re doing to mitigate against the risks of modern slavery in their supply chains.

But it doesn’t actually apply to organizations to publish anything on what they’re doing to mitigate risks in their supply chains. It simply says that they need to publish a statement. In response to the Modern Slavery Act, which has been agreed by the board, signed by a board member and is prominently displayed or a link is prominently displayed on the organization’s homepage of their website.

It’s been strengthened or it’s in the process of being strengthened. I should say, following an independent review in 2018/19 conducted by three MPS. And there were some good recommendations that came from that independent review, but the ones that would have given the act teeth have been ignored. And what we now have is slightly more, uh, advice on what is expected.

So yeah, the update to the act, which is likely to come into force next year, suggests that organizations will have to publish what their supply chains are at a very high level, how their organization is structured and other quite high level, not particularly meaningful, factors that don’t really dig into supply chains or force action.

And what’s really frustrating about that is that the modern slavery act was fairly poorly designed, but did at its heart have a kind of race to the top, in that the intention of the act was for best practice to come out over time. 

And for all organizations to identify best practice either in their geography or their industry or the geography of their supply chains and having identified that, that best practice to then go and add to it so that there was this constant virtuous cycle of good work being done and development of how organizations work. So that stakeholders, be they investors or consumers, or. Civil society. Activists could see how well some organizations were doing and favor those organizations or criticize organizations that weren’t keeping up in a way.

Denise: It sounds like it worked for those companies that you mentioned earlier, such as marks and Spencer and John Lewis who are modeling best practice. Right? Presumably there’s a link between.intention and the existence of that legislation and those companies, however, on the punitive end, then there’s nothing happening.

Michael: No, and those organizations are like several others.

 So BT is another good example. Rentokil initial, who I advised, uh, last year is another good example. These are the companies that were doing good. Anyway, these other companies that had a solid track record of. Corporate citizenship of taking sustainability seriously.

And to some extent that makes the modern slavery act worse because it means that I’m not denigrating these companies’ efforts at all. Because as I’ve said, they do a great job, but it means that the Modern Slavery Act is another marketing tool for companies that take it seriously. It’s not, it is in no way a stick.

There has been no corporate prosecution. 

Denise: Right. So I want to talk about the stick. I mean, I want to just, um, briefly talk about Amazon, which is, I mean, the biggest, the most well-known I think, um, you know, case of a company that no one can do without, uh, in which they have this extremely undesirable labor practices.

And, uh, every now and again, there’s a, a bad PR blip in the media, but. Ultimately, it seems to have no consequence. 

Michael: Yeah. I think that’s one of the, the other big problems is that public awareness has grown of modern slavery, but it’s grown slowly and doesn’t appear to be affecting the bottom line for companies that are found to have problems.

So. And this is, this is true, not only of the bottom line in terms of how consumers have responded, but also investors. So if we go back seven years to the, to the Rhino Plaza, factory collapse, for example, Primark was heavily implicated in that and suffered a day or two of reduced sales. 

To give a little bit of background was a factory that collapsed in Dhaka in Bangladesh, killing over 1,100 people, um, who had been working in conditions of modern slavery and had highlighted that this was a poorly constructed building that they shouldn’t have been forced to work in. And it supplied many Western brands, particularly apparel brands.

And when it collapsed measures were put in place to ensure that this didn’t happen again, but the impact on the bottom line for the companies that were part of this was minimal because investors at the time, at least didn’t show much interest and nor did consumers.

If we go forwards a bit too, to earlier this year, to the case that you mentioned earlier on of Booboo which suffered a substantial drop in share price in the 10 days after it was found that there were cases of modern slavery with its suppliers in the UK. 

But over the course of the few months since, the share price just rebounded and it’s almost to some extent, a case of, well, one investor in one large investor chose to sell it stake in Boohoo as a result of this, but that, to some extent, suppressed the price and created a buying opportunity. So the market adjusted, knowing that there wouldn’t be, uh, an effect on the bottom line.

If we go to Amazon, which is one of the best examples of this, there seems to be no depths that Amazon won’t plumb in terms of poor corporate behavior. They in the US at least have had reports of queues of ambulances waiting outside Amazon distribution centers because of the dreadful working conditions inside, and the likelihood of accidents.

Amazon represents the heart of the problem. Amazon represents the consumption that we discussed earlier in terms of the root of the causes of modern slavery and the cheapness that comes along with that. It’s hard to say whether Amazon sells products that have modern slavery in their supply chains, they sell clothing.

So it’s very likely that they have modern slavery in their supply chains. Um, They sell consumer electronics. So again, it’s, it’s very likely because modern slavery is common in the supply chains of apparel, electronics and some food items. Amazon’s bad behavior has zero impact whatsoever because of the scale, I guess, of the business, on it’s bottom line. 

Um, so I won’t buy anything at all from them, but there are so few people that will make an outright, um, decision like that, that they can continue doing what they’re doing. And as long as they deliver things cheaply, and as long as they deliver things quickly, it seems that they will continue to exist a market for those products.

Denise: What do you see as sources of hope and where change is coming from? Uh, when we spoke earlier, you mentioned that there is a piece of legislation, uh, that’s coming up in 2021, um, in the EU too. Would you, could you talk a little bit about that?

Michael: Yeah, certainly. So the European union has been toying with the notion of a human rights due diligence at all for several years now. And several countries within the European union have enacted their own laws aimed in some way at addressing modern slavery in their, in their countries. Supply chain, organization, supply chains.

These have taken a number of forms. So as we’ve talked about, the UK has a modern slavery act the Dutch have a law on child labor. Uh, the French have a duty of care or a duty of vigilance law. Uh, and Switzerland has also discussed, uh, human rights legislation, unfortunately, very recently because of the way that the Swiss enact laws on subjects, such as this, it went to a referendum where it was narrowly defeated and the Swiss will end up with a law that looks very much like the UK modern slavery act, but Germany told its companies two or three years ago that if they didn’t demonstrate that they could do this without legislation, then the government would legislate.

And the European Union seems to have used this as very good motivation for pushing through the legislation that it wants to enact. And what that will do is rather than just asking companies to disclose what they’re doing around modern slavery, but not actually ask them or force them to take any action.

The EU law looks likely to force companies which have suspicions of modern slavery or human rights abuses as the data in their supply chains to conduct due diligence. To identify whether or not there are human rights abuses in those supply chains, the extent to which there are human rights in supply chains and to, uh, rectify those abuses.

Denise: And so would fines be attached? 

Michael: Hopefully. It’s hard to know because the first draft of potential legislation has only very recently been published. It’s hard to know the full, the final form that the legislation will take. But I think we already have enough examples in terms of California also has a transparency and supply chain act.

So California’s act the UK act, the Australian act, the French law and the Dutch law have had very, very little impact on levels of modern slavery in any product. And so my hope is that looking at the legislative landscape that exists in and around the EU, the European legislators will note that the two big omissions are, one, forcing firms to take action. And two, those firms that don’t take action, uh, are subject to penalties and quite severe penalties. 

So if we think about a few years ago, GDPR being passed, struggling to remember what the acronym means, but it’s effectively the, um, data protection regulation, general data protection regulation. So that forces firms to protect consumer data, to inform the consumer about what they’re doing with the data and makes it illegal, as far as I’m aware, at least to, to send data outside of the jurisdiction in which it was collected. 

Denise: GDPR was game-changing 

Michael: it was absolutely. And the maximum fine for, um, breaching GDPR is 10% of your global turnover. If you’re a company making, even for example, even in inverted commas, a billion euros a year, you’re likely to be turning over 10 billion euros a year. So you could be, you could effectively be, fined your entire year’s profit. And when we think about some of the companies that, uh, repeatedly criticized for violations of human rights and, and people working in modern slavery and supply chain. So Nestle is a fantastic example. Nestle has been at the sharp end of civil society criticism for three decades, possibly longer, is repeatedly linked to child labor in its cocoa supply chains. And in it’s palm oil supply chains where environmental damage is done.

And there are issues around the sugar, uh, supply chains that it relies on as well. So three of the main ingredients that go into the company’s flagship products are known to have issues with modern slavery, and yet it has done comparatively little compared to the size of the problem to combat those issues.

And an EU law that forced it, because it does business in the EU to conduct due diligence and to rectify problems where it found them, particularly because in some seconds, in some situations, all right, we know where they’re found because other people have gone and done the research where companies have refused to, that would absolutely be a game changer.

One of the complaints that, that we hear repeatedly from the chocolate industry is that these are really small farms in hard to reach areas. And we don’t know exactly where the cocoa comes from. 

Now I’m right at the end of a research project. With a PhD student at the university of the West of England in Bristol and with a professor at the university of Surrey.

And we have discovered that cocoa is entirely traceable from bar to bean. So backwards along the supply chain, if you have samples of DNA of cocoa grown on the farms from which you buy. So these companies could at relatively little cost. If they chose to put together a database of DNA from, from farms all over West Africa, track the beans through the supply chain, into a bar.

Once it’s manufactured, once it’s produced. And then reverse track the cocoa in individual bars, back to farms using DNA testing of cocoa plants. And, and the cocoa beans and that the end chocolate product. So there are techniques now that make claims that corporates consistently refer us back to entirely obsolete and some of the science around this in terms of DNA testing and some of the technology technological advances that we’ve had in terms of blockchain and other technologies are making claims that the corporates repeatedly make completely obsolete. The area in which they can hide from what’s going on in their own supply chains is getting increasingly small. 

Denise: So I guess my last question is about how to be an ethical consumer. and to be able to have, uh, an impact on the, on, on, on the transparency and the, and the accountability of some of these companies. 

Michael: That’s a really good question. And there are no simple answers to it in the same way that asking folks how modern slavery can be measured or defined is also difficult.

But there are, if we look at the causes that we outlined earlier on. The antidote to the issue is partly to reduce the factors that we create in causing it. So if consumption is a big factor in causing it, then a reduction in consumption ihas to be the first action that we take. For example, it might be nice to have a brand new mobile phone every time a new iPhone for example, is released. But every stage of the supply chain of that iPhone is likely to have labor abuses in it from the mining of metals in extremely deprived parts of Africa, right through to Foxconn factories in China, which make Apple electronics.  

The UK throws away. Dozens of tons of apparel every year and buy throws away. I don’t mean sentence to charity shops. I mean, literally dozens of thousands of tons of clothing is thrown into landfill every year in the UK. Some of it couldn’t have been recycled anyway. There are retailers who sell, which sell products for three, four, five pounds. That clothing specifically, there is no way those goods can be produced for those prices.

And that leaves us to draw one of two conclusions. Either of these companies are out to make enormous losses, or there are labor abuses in those supply chains. 

Denise: this has been a really interesting discussion. Uh, and um, I just want to ask you if people want to, uh, read more on this topic to learn about your work, where should they go?

Michael: So broadly on the topic, there is a website called the business and human rights resource center, which is excellent on this, my work. So I tweet at CSR underscore Michael, um, and I, I tweet on a wide variety of topics, but a lot of my work is on labor rights. Uh, I have a research. Uh, portal page at the University of Bath, which can be found.

And I am as of this week, a visiting researcher at the decade center for digital, what’s it called the Center for Digital Economic Decentralization at the University of Surrey. So that has its own dedicated website, but I would encourage people to, to, to look. In specialist, places like the Business Human Rights resources centre. But also there will be stories in the newspapers that most people read.

Online or in, in published in paper. And, um, I would just encourage people to read those stories and to engage with the issues so that we can all do our little bit, even if we do also rely on, um, some hefty legislation to back up our efforts. 

Denise: Terrific. Thank you very much. 

Michael: Thank you very much, Denise.

Denise: That’s it for this episode, thanks for listening to New Climate Capitalism If you’d like to hear more from Michael, you can find him on Twitter @CSR_Michael, and also go to the shownotes for this episode on our website, climatenarratives.co.

If you’re enjoying this season of the podcast, I’d like to remind you to sign up for our newsletter, climate narratives annotated. It goes deeper on some of the issues we cover in the podcast, and provides monthly highlights from green and sustainable finance. You can find the link to subscribe in the bio of our Twitter account @NewClimateCap.

A big thanks to Valentine Scherer and Victoria Yates for their help producing this episode, and to Lucas Laufen for the theme music.