Global supply chains are a major perpetrator of modern slavery. With over 16 million victims in the private sector, business involvement is key to sustainable, systems change that eliminates forced labor. In the apparel sector, a lack of transparency between buyers, suppliers, and manufacturers is what often allows modern slavery to go unnoticed.
International apparel brands, particularly those in the ready-made garment (RMG) or “fast fashion” sector, monitor their legally registered Tier 1 suppliers in India. Due to the low pricing and quick turnaround production pressures of the industry, Tier 1 suppliers often sub-contract to unauthorized and unregistered factories that are hidden from brands in order to meet demand. This creates a lack of transparency between buyers (brands) and suppliers, leading to poor monitoring of deeper supply chain operations and allowing forced and child labor to thrive.
To enhance monitoring and make supply chains more visible to buyers, GFEMS and ELEVATE, a business risk and sustainability solutions provider, are creating innovative apparel brand monitoring and remediation systems in India.
ELEVATE has built and tested a predictive analytics tool to detect risks of unauthorized sub-contracting and forced labor practices. The tool uses institutional knowledge, third-party data supply chain data, and new procurement audit data to identify which Tier 1 suppliers are at high risk of using unauthorized contracting to meet their production orders. Along with identifying high-risk suppliers, ELEVATE has also developed remediation processes for brands, Tier 1 suppliers, and informal/unauthorized factories to collaborate to improve labor practices, ensuring that factories are incentivized to participate and remain transparent.
Despite a slowdown in the apparel industry during the COVID-19 pandemic, ELEVATE has already generated significant brand interest in hosting social compliance audits. To date, the project has:
Five monitored suppliers have indicated varying levels of extreme to medium risk of unauthorized sub-contracting. Two of those suppliers have agreed to deliver a remediation plan, including onsite capacity building with suppliers.
By offering both modern slavery risk identification and effective remediation plans for suppliers who are at risk, the tools developed in this project both allows buyers to make smarter decisions about their suppliers, and provides suppliers with plans to improve their practices and continue operating. Both are essential for generating and maintaining systems level change that eliminates forced labor from supply chains.
This project was funded through a grant made by the U.K Foreign, Commonwealth, and Development Office (FCDO). Any opinions in this article do not reflect the opinions of FCDO.
Detecting child and forced labor in today’s global, complex supply chains is a daunting challenge. The complexity, fragmentation and fluidity of most company’s supply chains limit visibility to the raw materials used in their products. Risks of exploitative labor practices, including child and forced labor, increase at the raw material level, such as farming and mining, and are typically excluded from traditional corporate responsible sourcing programs.
The U.S. Department of Labor awarded ELEVATE a $4 million cooperative agreement to enhance tracing of goods made with child, forced labor and other exploitive practices as part of a four-year project. Through this award, ELEVATE is establishing a consortium that includes the Global Fund to End Modern Slavery (GFEMS), Diginex Solutions, RCS Global Group, and the Responsible Minerals Initiative (RMI). The consortium partners will shape the development and publication of a supply chain and industry agnostic commodity traceability protocol and tracing platform to equip business and other stakeholders with tools to trace their supply chains. This enhanced level of supply chain visibility will support the business sector’s human rights due diligence efforts to source materials that are untainted by child and forced labor, as well as other labor exploitative practices.
The consortium will pilot the tools in two strategic sectors and geographies: cotton in Pakistan and cobalt in the Democratic Republic of Congo (DRC). These pilot cases were selected because of their geographic and supply chain differences and to test the transferability of existing conflict minerals traceability best practices to agricultural commodities. The methodologies and tools developed during the project will be applicable for a wide range of consumer goods industries, including information technology, apparel, and automotive.
Globally, cobalt and cotton are two of the most in-demand commodities for producing consumer goods, such as batteries and clothing. Evidence of child and forced labor in the sourcing of these commodities is well-documented, yet there is no existing solution that allows brands in multiple industries to detect the use of forced labor in their commodity supply chains. This leaves brands vulnerable to the risk of unidentified child and forced labor in their upstream supply chains.
“Businesses are facing increased pressure to trace their supply chains to the raw material level. However, efforts to date aren’t scalable, limiting corporate efforts to address increased forced and child labor risks existing at the root of their supply chains. Through this award, we intend to create a protocol and platform to make end-to-end supply chain traceability a standard element of any company’s responsible sourcing program and human rights due diligence efforts. Companies can’t address what they cannot see, which is why we want to make the unseen visible,” says Ian Spaulding, Chief Executive Officer of ELEVATE.
The protocol and platform will equip brands and retailers with actionable tools to expand their supply chain visibility to identify and address labor exploitation associated with the materials essential to making the products they sell.
All inquiries regarding this announcement may be addressed to media@gfems.org.
Funding is provided by the United States Department of Labor under cooperative agreement number IL-35808-20-75-K. One hundred percent of the total costs of the project or program is financed with USG federal funds, for a total of $4 million dollars.
About ELEVATE
ELEVATE is the leading business risk and sustainability solutions provider. We deliver improved organizational performance through sustainability and supply chain assessment and auditing, consulting, program management and analytics. We shape the industry with our innovative solutions to complex problems, by designing and implementing customized programs and technology that provide complete insight into risk and improve supply chain and sustainability performance. ELEVATE is headquartered in Hong Kong, and the company’s 650 employees oversee work in over 100 countries through dedicated offices in Australia, Bangladesh, Brazil, Chile, China, Colombia, Germany, Hong Kong SAR, India, Indonesia, Italy, Mexico, Pakistan, Portugal, Singapore, Spain, Switzerland, Taiwan, Thailand, Turkey, UK, USA and Vietnam.
About GFEMS
The Global Fund to End Modern Slavery (GFEMS) is a bold international fund catalyzing a coherent global strategy to end human trafficking by making it economically unprofitable. With leadership from government and the private sector around the world, the Fund is escalating resources, designing public-private partnerships, funding new tools and methods for sustainable solutions, and evaluating effectiveness to better equip our partners to scale and replicate solutions in new geographies.
About Diginex Solutions
Diginex builds purpose-led technology with a focus on responsible business practices. With workers at the core of our solutions to increase transparency, trust and accountability in global supply chains, we work to ensure that technology sits where it can have the greatest impact. Our team of labor rights specialists and software engineers takes a human-centric approach to develop each solution. With a track record of successfully deploying scalable technology across Asia and South Asia, our objective is to promote fair recruitment, safe migration, and decent work.
About RMI
The Responsible Minerals Initiative (RMI) is an initiative of the Responsible Business Alliance (RBA). The RMI is a multi-industry initiative with more than 400 member companies. Its members contribute to the development and international uptake of a range of tools and resources focused on minerals supply chain due diligence, including independent third-party audit programs for smelters, Minerals Reporting Templates, supply chain risk assessment tools, Country of Origin data, and guidance documents on responsible sourcing of tin, tantalum, tungsten, gold, cobalt, and mica. The RMI runs regular workshops on responsible sourcing issues and contributes to policy development with civil society organizations and governments. For more information, visit ResponsibleMineralsInitiative.org
About RCS Global Group
RCS Global Group is a global leader in the assessment and assurance of responsible sourcing of natural resources and the associated production, trade and transformation processes. With teams working from offices around the world, RCS Global Group also creates positive impact by providing companies with the strategy advice and tools to act responsibly and sustainably. This includes enabling companies to measure, demonstrate and report on their own – and their suppliers’ – positive impact and continuous improvement over time. For further information, please visit: www.rcsglobal.com.
GFEMS is working with Social Accountability International (SAI), with funding from the UK Foreign, Commonwealth & Development Office (FCDO) to disrupt the prevalence of modern slavery in the ready-made garment (RMG) sector in India. As part of the Fund’s Apparel and Manufacturing portfolio, SAI will develop a digital platform to incentivize and support improvements in labor compliance by preferentially linking ethical suppliers with buyers. Ultimately, SAI’s platform will reduce unauthorized subcontracting, a key driver of forced labor.
There are an estimated 12 million workers employed in India’s RMG sector, though that number is likely to be higher due to the uncounted home workers and employees of illegal or unauthorized subcontracting facilities. Factories in India’s RMG sector are known to drive multiple indicators of modern slavery, including mandatory overtime work, unsafe working conditions, and unauthorized subcontracting. These conditions are brought on, in part, by poor understanding of the connection between strong labor practices and the opportunity for factories to be reliable and efficient suppliers.
While these problems are well known, there are few opportunities for buyers to gain full transparency into their supply chains and for suppliers to improve their production planning. Both factors would incentivize and enable better social compliance.
SAI’s project will fill these gaps by developing a digital platform to combine suppliers and buyers and a suite of tools to help both parties improve their labor practices. Aligning with the Fund’s intervention framework, this project addresses the demand for cheap goods and services and aims to transform the corporate environmental norms that allow slavery to persist in the sector.
Leveraging SAI’s existing work in Bangladesh, the project will develop tools and training to improve buyers’ purchasing practices and suppliers’ capacity and production planning. Helping buyers manage their purchasing orders and suppliers plan their production schedules will reduce the risk that suppliers will take on the unrealistic targets that result in unauthorized subcontracting. Unauthorized factories sit outside government regulation and most social audits and therefore present a much higher risk for forced labor violations. SAI’s tool will expand on existing data sets by quantifying the effects of purchasing practices on supplier production capacity—e.g. the effects of unpredictable volumes, last-minute order changes, design changes, long payment periods, etc. This will help buyers and suppliers to better predict supplier capacity and reduce the likelihood of subcontracting.
The project also represents a deepening commitment to the Fund’s work on supply chain management and risk mitigation efforts. GFEMS has also created an award winning Automated Forced Labor Risk Detection tool, which helps buyers to detect risk of forced labor in their supply chain with 84% accuracy. Additionally, GFEMS is funding ELEVATE to develop a predictive model to help brands identify risk of unauthorized subcontracting in their supply chains and take remediation steps.
GFEMS looks forward to sharing learnings from SAI’s work with stakeholders in India’s RMG sector. Learn more about the FCDO partnership, the Fund’s portfolio, and scoping research.
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GFEMS is excited to share that we have won in the “Prosperity” category at the 2020 Society for International Development- Washington Chapter Innovation Competition. Our entry, “Automated Decision Support Tool for Forced Labor Risk Detection” was judged by two separate panels of career nonprofit and international development professionals.
In developing the tool, GFEMS set out to solve the challenge companies, investors, authorities, or other stakeholders face in identifying the location(s) of forced labor in large, complex supply chains. With no existing viable tools developed that are both sustainable and effective, identifying forced labor in global supply chains has been nearly impossible. While numerous supply-chain risk assessment tools exist, the Fund undertook this project because existing tools suffer from one or more of the following shortcomings:
The GFEMS team, led by Senior Data Scientists Shannon Stewart, developed a novel decision support tool that predicts the risk of forced labor at the company level with about 84% accuracy. It uses data that is collected passively by governments and operates without participation of any of the firms on whom data is collected.
The tool is intended as a first-pass screening tool for use by corporate social responsibility and procurement professionals, investors, regulatory enforcers, and other stakeholders like NGO watchdog groups. It is not intended to replace these functions, rather it prioritizes due diligence efforts and stretches the impact of every dollar invested in cleaning up supply chains. It can elevate responsible manufacturing businesses in both access to markets and capital, and, in turn, support sustainable livelihoods for their workforces. Ultimately, the goal is to benefit the estimated 16 million people who are victims of forced labor within private-sector supply chains and to prevent more vulnerable people from becoming victims.
The Fund is currently gathering feedback on the tool from industry experts, and intends to release a refined version as an open source project. GFEMS has successfully demonstrated that there is reliable, detectable signal of forced labor risk in operational data. This proof of concept has encouraged at least one supply chain risk platform to begin development on a tool that operates on public data, combined with data that may be available only to them.
Moving forward, the Fund will work directly with companies who wish to implement a similar process. By opening our thinking to the public, GFEMS aims to inspire companies to take a new look at their data and how it fits with the broader context of industrial operations and to develop analogous tools that work for them.
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