Breaking Chains With Blockchain: Blockchain in Combating Modern Day Slavery
The difficulty of tracing intricate supply chains has posed a major hurdle in the fight against modern-day slavery. However, blockchain technology emerges as a promising solution by offering an immutable and decentralised ledger. With its transparent and traceable nature, blockchain enables enhanced visibility and accountability throughout the supply chain, facilitating the identification and prevention of instances of exploitation. By harnessing blockchain's capabilities, we can more effectively combat modern-day slavery and ensure greater integrity in global supply chains.
In the realm of political risk, blockchain technology has the potential to significantly improve due diligence processes, thereby mitigating reputational risks and ensuring compliance with evolving regulatory frameworks. As governments around the world tighten regulations to combat modern-day slavery, leveraging blockchain can aid in identifying and addressing ongoing risks that pose substantial legal, financial, and operational consequences.
Overview
Enhancing transparency, trackability, accountability, and integrity within supply chains is a common challenge faced by businesses. Proponents of blockchain technology argue that it has the potential to address these challenges effectively. In the retail sector, implementing blockchain throughout the supply chain enables all involved parties to have visibility into relevant cargo transactions and track the journey of goods on an unchangeable shared ledger. This heightened transparency helps combat fraud and errors, while enabling real-time information tracking.
By leveraging blockchain, companies can significantly improve supply chain efficiency and reliability. Elements in which it can be used in can include:
Purchase orders and agreements: Blockchain can facilitate secure and transparent recording of purchase orders and agreements, ensuring clarity on shipment terms between buyers and suppliers.
Financial documentation: Blockchain technology can streamline financial processes by securely recording invoices and receipts, enhancing transparency and traceability in financial transactions.
Cargo tracking: Utilising blockchain, the movement of shipments can be accurately tracked, certifying that the correct goods are in the right location at the designated time, minimising the risk of errors or discrepancies.
Product origin identification: Blockchain's immutable ledger enables the identification and verification of a product's origin, providing consumers and businesses with reliable information about the source and authenticity of goods.
Fraud and counterfeit detection: Blockchain's transparent and tamper-proof nature can help identify and mitigate instances of fraudulent or counterfeit products, providing assurance and trust to consumers and supply chain stakeholders.
Among the notable initiatives involved the creation of a blockchain-enabled supply chain for T-shirts, allowing workers to provide verifiable evidence of their labour rights being respected throughout the entire process, from cotton harvest to garment production. By leveraging blockchain technology, these initiatives aimed to enhance transparency and accountability, empowering workers to assert their rights and promoting responsible practices within the supply chain.
In a pilot project, WWF Australia, in collaboration with ConsenSys, TraSeable, and Sea Quest Fiji Ltd, launched a blockchain to track tuna from catch to consumption. The project aims to combat fishing-related human rights abuses by verifying that tuna is sourced from boats free of modern slavery. Through RFID tags, QR codes, and blockchain recording, consumers can verify the origin of their fish and ensure it is ethically sourced.
The Kafala system and blockchain
Taking the Kafala system in the Middle East for example, among the issues that arise from the system is that it creates a significant power imbalance between employers and migrant workers. Employers hold considerable control over workers' visas, employment terms, wages, and living conditions. This power dynamic makes it difficult for migrant workers to assert their rights or seek redress for abuses, leaving them vulnerable to exploitation. However, Blockchain-stored employment contracts can offer secure, immutable records, enhancing legal accountability for fair treatment of workers. Companies using subcontractors can verify hiring practices and avoid forced labour by storing legal documentation on a shared blockchain. Furthermore, Blockchain can aid the unbanked and underbanked populations by offering access to financial services. Fintech firms cater to individuals lacking traditional bank accounts, helping them establish online identities and access credit. Furthermore, companies utilising blockchain for payments can ensure transparent payment practices and provide immutable records visible across the supply chain.
Limitations
One limitation is that blockchain alone cannot guarantee products are free from slave labour; it relies on trustworthy initial data input. Due diligence and checks remain essential to ensure data integrity. There is also debate on the vulnerability of QR codes to tampering or duplication, requiring robust systems to detect fakes. Successful implementation of blockchain relies on universal adoption within the supply chain to fill gaps in information about product source and ethical labour practices.
Blockchain is not a standalone solution to the complex root causes of modern-day slavery. For instance, the Kafala system in the Middle East presents challenges due to its intersection with economic and political factors. Political considerations, such as national security concerns and social stability, can also complicate efforts in combating the issues that arise from this. Its complexities extend beyond national boundaries. Migrant workers often come from different countries and are subject to both the laws of their home countries and the host countries. Addressing these issues necessitates regional and international cooperation, including harmonising labour standards, strengthening cross-border protections, and sharing best practices. The multifaceted nature of the Kafala system requires comprehensive approaches that encompass legal frameworks, enforcement mechanisms, labour rights advocacy, and social attitudes. Governments, international organisations, civil society, and stakeholders must sustain efforts to promote reforms that protect migrant workers' rights and ensure stability and development in host countries.