Corporate accountability

As employers and providers of goods and services, corporations are part of the daily lives of millions of workers and consumers across the world. While globalization has brought increased profits to corporations and made a wide range of products available to consumers at lower prices, it has also increased the pressure on corporations and suppliers to reduce costs and increase their flexibility in order to remain competitive.

Some suppliers have achieved this ‘competitive advantage’ by exploiting workers, violating the human rights of their employees and breaching national and international labour standards. Forced labour, child labour, debt bondage and human trafficking have been found time and again in the supply chains of global brands. Excessive working hours, wages below the statutory minimum, wage manipulation and inadequate health and safety measures are widespread in a number of industries.

Whilst efforts have been made to improve compliance with labour and human rights through Corporate Social Responsibility initiatives such as codes of conduct, these non-binding, voluntary schemes have proved insufficient to ensure that companies respect minimum labour standards throughout their supply chains. Promoting transparency and building accountability through the development and enforcement of strong legal and regulatory frameworks is therefore central to effectively addressing labour exploitation in complex global supply chains. 

Promoting Transparency 

Corporations coordinate global supply chains through complex networks of suppliers and different relationship models: from direct ownership of affiliates, to contractual relationships, to arms’ length transactions. 

Under the UN Guiding Principles on Business and Human Rights, companies are expected not only to ‘avoid causing or contributing to adverse human rights impacts through their own activities’, but also to address and prevent ‘human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts’. Greater transparency in supply chains can play a pivotal role by improving access to information about how these responsibilities are being met. Transparency allows companies and civil society to better identify and address failures and to recognize and develop models for good practice.

Transparency in supply chains in the UK Modern Slavery Act

Advocacy by FLEX and its allies led to the UK Government introducing a “Transparency in Supply Chains” provision into the Modern Slavery Act 2015. This provision requires companies operating in the UK to report on what steps they are taking to address modern slavery in their supply chains. This follows other recent positive steps in the development of transparency legislation include the 2010 Californian Transparency in Supply Chains (TISC) Act and the proposed U.S. federal Business Supply Chain Transparency on Trafficking and Slavery Act 2015.

Building Accountability

FLEX works to ensure that companies are held to account for the ethical impact of their activities, particularly where poor business practices directly contribute to the severe exploitation of workers. 

States have an obligation to ensure an adequate legal framework regulating business and corporate activity in line with international human rights legislation, and furthermore, to enforce these provisions effectively. Yet currently corporations are rarely held criminally liable for human trafficking, forced labour and other forms of labour exploitation. While a number of countries’ national legislation does enable corporate criminal liability, in reality there have been very few successful prosecutions of corporate bodies, partly due to a lack of awareness of the applicable national frameworks and mechanisms on accountability for these crimes.

Improving accountability relies on State and private actors, as well as the advocates who hold them to account, having awareness and understanding of their respective obligations. Knowledge is therefore the key to accountability for labour exploitation.

The FLEX Labour Exploitation Accountability Hub

FLEX has developed the Labour Exploitation Accountability Hub, which aims to improve both government and corporate accountability for human trafficking, forced labour and slavery in national and global business supply chains. The Hub does this by providing the basic legal information needed to impose accountability on both companies and governments, and seeking to generate a broader discussion about how corporate accountability can be achieved. The Hub also provides a platform for further research and advocacy on accountability issues, including by fostering connections and information sharing among key stakeholders from different parts of the world. The Hub can be accessed via www.accountabilityhub.org.

The main feature of the Hub is the publicly accessible Labour Exploitation Accountability Database, which provides a broad inventory of national laws and regulations addressing corporate accountability for severe labour exploitation in supply chains. Country summary pages provide an overview of the national context and legal framework, while the Hub’s blog raises awareness of, and stimulates debate around accountability issues. The Hub’s repository of resources on accountability for human trafficking for labour exploitation, forced labour, and slavery, categorised by country and by topic, also provides the tools for further research and discussion.  

The Labour Exploitation Accountability Hub seeks to complement and enhance civil society initiatives and provide the tools for advocating greater government effort in this regard, by delivering easily accessible information on national frameworks for individual and corporate accountability. The database provides a basis for accountability actions, by identifying the obligations of governments and corporations, while also providing models for good practice in legislative development.

Effective legal remedies are vital in order to prevent corporate abuse and to ensure access to justice for victims of labour rights violations. The strategic use of legal remedies through litigation and collective bargaining can also serve to mitigate the highly unbalanced power relationship in the Global South between companies on one side, and workers and their union representatives on the other. Through the Labour Exploitation Accountability Hub, and through strategic litigation research, FLEX works to clarify and highlight the legal obligations of governments and companies, and to promote their enforcement in ways that empower exploited workers worldwide.