As we approach the end of the year, we are sharing our thoughts and opinions on some of the most pressing modern slavery risks and the most important developments in the business and human rights sector.
Please contact us if you have further questions or require guidance on how to mitigate risks.
1. The impact of Covid-19 on workers
It is unclear when the pandemic will end. Hence, it comes as no surprise that Covid-19 will continue to create modern slavery risk to workers in 2021. The cancellation of large orders, heightened demand for certain goods, high unemployment, increased economic pressure and the lack of adequate health and safety measures are putting workers at increased risk of exploitation. The consequences of the pandemic are profound and long-lasting. Even if an effective vaccine is available in 2021, businesses will continue to face losses and challenges which will put workers at risk of exploitation.
Among the people particularly hard hit by the pandemic are women, migrant and refugee workers, and contract and short-term workers. Companies are advised to conduct additional due diligence and implement adequate protection measures to ensure workers are sufficiently protected.
2. The exploitation of Uighurs in China
Throughout the year reports have revealed the systemic detention and exploitation of large numbers of Uighurs and other muslim minority groups in China’s north-west province of Xinjiang. The UN estimates that at least one million Uighurs are currently detained and subject to forced labour. The Australian Strategic Policy Institute (ASPI) identified that many well-known global brands including Apple, BMW, Gap, Huawei, Nike and Volkswagen are involved in the forced labour of Uighurs as many of the products they source are produced in the detention camps. Although most detention camps are located in Xinjiang, the ASPI report revealed that Uighurs have also been transferred to production facilities in different regions of China.
In a first attempt to fight the state imposed exploitation of Uighurs, the US issued several Withhold Release Orders (WRO) banning the import of certain goods produced in Xinjiang on the basis of forced labour allegations (for more information see: US blocks Chinese goods on forced labour grounds. What companies need to know). Investors, consumers and civil society are also increasingly calling for boycotts of products sold by companies doing business in Xinjiang. To ensure the safety of workers, companies doing business in Xinjiang and China more generally are encouraged to implement additional and thorough due diligence.
3. Technology and Human Rights
While supply chain regulations have long required tech companies to identify and assess potential human rights abuses in their supply chains, these requirements did not apply to the potential human rights challenges resulting from the end use (or misuse) of new technology products and/or services.
However, this regulatory vacuum is slowly being filled as new initiatives such as the UN B-Tech Project are exploring mechanisms to prevent and address human rights abuses connected to the development and use of digital technologies. The U.S. Department of State recently published the Guidance on Implementing UN Guiding Principles for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities. Although the guidance is voluntary, it is a clear indicator of increased pressure on tech companies to broaden their human rights due diligence to take risks into consideration at the development stage of new technologies. Technology businesses are advised to conduct thorough due diligence to meet these new expectations.
4. Mandatory human rights due diligence legislation
In 2021 we expect significant legal developments, especially in Europe, which will extend corporate liability for modern slavery in businesses’ supply chains. The most substantial impact is expected to result from the proposed mandatory environmental and human rights due diligence law at EU level. In October, the European Commission issued a public consultation to gather insights on the priorities, scope and requirements of the proposed law.
At the national level, in a referendum on 29 November 2020 the Swiss rejected the Responsible Business Initiative (RBI), a bill that would have introduced greater liability for human rights abuses committed abroad by Swiss companies. With the rejection the government's softer counter-proposal automatically comes into force. The new regulation requires companies to conduct human rights due diligence and report on their effort to mitigate risks.
A mandatory human rights due diligence law is likely to be adopted In Germany. The scope, and enforcement of the new legislation are still under debate. However, a first draft outlining the key elements of the law is expected to be published in 2020.
Following a parliamentary review of Section 54 of the UK Modern Slavery Act (2015) and the Home Office Transparency in Supply Chains Consultation, the UK government set out a plan to tighten reporting requirements. Under the proposed reform the six voluntary reporting areas set out in 54 (5) will become mandatory and potentially new criteria will be added, the scope of the requirement will be extended to apply to the public sector and public sector organisations will have to publish modern slavery statements. We will provide a detailed update and guidance for businesses once the changes have been finalised.
With adapted and new legislation coming into force many more companies will be required to identify and mitigate modern slavery risks in their own operations and supply chains. Companies are advised to engage with the issue proactively and to implement thorough and ongoing human rights due diligence in order to get ahead. Companies already subject to existing human rights due diligence regulations are advised to reassess their legal obligations as they may be subject to new requirements.