What Businesses Should Know About Modern Slavery, Part 3: A Political Risk Approach to Modern Slavery

This is the third of a series of four articles examining recent trends of modern slavery, the political risks associated with this phenomenon, and the tools available for companies to prevent and address it.

The field of political risk aims to assess the potential negative impacts of phenomena of a political nature (e.g., government policies, social upheaval, structural power dynamics) on the operations of a given organisation. 

Within the context set by this definition, approaching modern slavery through the angle of political risk could imply:

• Evaluating the negative repercussions of modern slavery (as a political phenomenon) on the operations of a given organisation; and/or

• Identifying the political factors that may generate situations of modern slavery, assuming that the latter will necessarily undermine said organisation.

Let’s start by addressing the first point. Is it really worth it for businesses to invest significant resources in ensuring that no segment of their operations involves modern slavery? From a moral point of view, it goes without saying: any form of slavery constitutes a violation of fundamental human rights and, as such, not only affects the victim themselves, but also contributes to undermining the rule of law on a global scale. 

In theory, the human rights argument would suffice to override all other types of considerations. But in a world where financial (dis)incentives can weigh more than morals in decision-making, one must also ask: can businesses realistically benefit from modern slavery? After all, it was essentially greed that drove colonisers to vandalise, plunder and exploit most of the non-Western world. However, a cost-benefit analysis conducted in 2015 suggested that the costs incurred by firms using forced labour tend to outweigh any potential financial benefits. More precisely, on the one hand, companies avoid spending money on wages and various guaranteed benefits for salaried workers, and indentured forced labour can increase resilience in volatile markets. But on the other hand, in addition to the food, accommodation, and elementary healthcare expenses needed to sustain the workforce, companies resorting to forced labour must also invest in coercive capacity and bear the costs of sub-optimal productivity, given the absence of positive incentives for workers. 

Another crucial aspect to consider is the heavy reputational risk associated with modern slavery practices. This can be illustrated by the public outrage surrounding the alleged use of Xinjiang-sourced cotton by some of the world’s biggest retailers; to avoid boycott and other forms of sanctions, a number of companies (including Uniqlo, H&M, Adidas, and Converse) felt compelled to issue statements condemning the use of Uyghur forced labour, and denying all involvement with the latter.

As a business practice, the use of forced labour is thus not only unethical, but also unsustainable. We will now move onto the second point, and seek to identify the political factors behind five recent instances of modern slavery throughout the world. 

Modern slavery in cocoa plantations in Ivory Coast

In February 2021, seven of the world’s biggest chocolate companies (including Nestlé, Mars, and Hershey) were prosecuted in Washington DC for having “knowingly profited” from child labour on cocoa plantations in Ivory Coast. 

This brings us to reflect on the perpetual reactivation of power dynamics inherited from the colonial era - in this instance, between the Global North and a former European colony located on the West African coast, a region historically tied to the transatlantic slave trade. To what extent can current practices of forced labour be correlated to, if not historical slavery itself, at least the structural conditions produced by (neo-)colonialism - such as economic underdevelopment and political instability?

However, these considerations should not lead to over-simplistic, misleading and counterproductive conclusions (e.g., “All former colonies have weak governance and alarming human rights records”). In this case, it is worth mentioning that the government of Ivory Coast has been involved in the fight against child labour - and human trafficking more generally - for at least a decade.

Modern slavery on sugarcane fields in the Dominican Republic

In November 2022, upon investigation by the Customs and Border Protection unit, the US Government announced that it would detain all sugar products imported by Central Romana Corporation Ltd. from the Dominican Republic, where it allegedly uses forced labour.

The victims are primarily Haitian migrants and their descendants, customarily employed on Dominican sugar plantations since the mid-20th century, and whose working conditions have continuously deteriorated since the privatisation of most of the latter in 1999. This dynamic both stems from and exacerbates the longstanding tensions between the two countries, which are largely due to a stark contrast in economic development and living conditions. 

Modern slavery in Malaysian rubber glove factories 

In July 2020, the US Customs and Border Protection unit banned products from Top Glove, one of the world’s largest producers of rubber gloves, on grounds of forced labour and debt bondage.

The victims are immigrant workers - essentially from Nepal and Bangladesh, but also from Myanmar, Indonesia and Vietnam - driven to Malaysia by unfavourable job markets in their home countries. The governments on both sides are to blame: those of the immigrants’ countries of origin, for failing to provide viable employment opportunities to their citizens; and the government of Malaysia, for failing to protect immigrant workers’ rights. The company also seems to have exploited the sense of emergency generated by the COVID-19 pandemic to justify further toughening their working conditions.

Modern slavery in penal colonies in Belarus

According to an investigation released by the French NPO Disclose in November 2022, at least ten of IKEA’s subcontractors in Belarus have resorted to penal forced labour within the past decade. 

The main political factor behind this instance of modern slavery is the authoritarian nature of the Belarusian regime. President Alexander Lukashenko, in power since 1994, is not recognised as a legitimate leader by several other governments, including those of the US, UK, and EU. Civil liberties are drastically restricted and many political opponents are sent to penal colonies, where they are subjected to various human rights abuses, including torture and forced labour. Since the late 1990s, IKEA has partnered with Lukashenko’s regime to take advantage of the large supplies of timber from the state-owned forests.

Modern slavery in the Australian renewable energy sector

A November 2022 report from the Clean Energy Council revealed the use of forced labour at various stages of Australian renewable energy supply chains - more specifically, regarding the mineral extraction and manufacturing processes that take place in China, Africa, and South America, in order to produce solar panels, wind turbines, and lithium-ion batteries.

The identification of the political factors behind this instance of modern slavery is less straightforward than in previous examples. One is tempted to question Australia’s overall relationship with source countries, particularly China - which leads us to address the global renewable energy sector’s reliance on Chinese manufacturing (and, as its potential corollary, the failure of other governments to foster the development of national renewable industries). However, the larger political issue here (insofar as we are talking about the clean energy sector) seems to be an incomplete vision of sustainability, that neglects the Social and Governance dimensions of ESG.

This small selection of examples illustrates the variety of political factors involved in situations of forced labour, often with complex economic and historical ramifications. To fully understand the phenomenon of modern slavery and, ultimately, tackle it with efficiency and relevance, it is therefore necessary to address its structural causes.