Forced labor continues to be a major global issue, affecting nearly 28m people and generating approximately $236bn in illegal profits annually, according to the International Labour Organization (ILO).
This encompasses various forms of exploitation such as human trafficking, domestic servitude, and child labor, which not only violate basic human rights but also pose serious risks to businesses in terms of compliance and reputation, according to Moody’s.
The complex nature of forced labor, coupled with savvy criminal networks and varying global regulations, makes it difficult for organizations to detect and address these practices in their supply chains and business networks. Criminals adept at masking their illicit activities are a significant challenge, as they exploit workers through deeply integrated networks involving bribery, money laundering, and other forms of corruption.
To effectively combat these challenges, it’s crucial to understand the multifaceted nature of forced labor. The ILO defines it as work exacted under the threat of a penalty, which the individual has not offered voluntarily. Recognizing the different forms and the vast network through which forced labor operates is the first step towards mitigating risks.
Internationally, there’s a robust framework of legislation aimed at curbing forced labor. Notable examples include the UK’s Modern Slavery Act, the French Vigilance Act, and the US Trade Facilitation and Trade Enforcement Act, each designed to target and dismantle the structures supporting forced labor. These laws are complemented by multi-layered sanctions targeting the broader aspects of human trafficking and related offenses.
Despite global efforts, the prevalence of forced labor and related risks are on the rise. Moody’s reported a 39% increase in the number of unique risk events related to modern slavery in 2024 compared to the previous year. This underscores the critical need for organizations to enhance their due diligence and risk management processes.
In the fight against forced labor, leveraging data and technology plays a pivotal role. Enhanced due diligence, including screening and monitoring of third-party networks, helps identify high-risk areas and entities. Effective risk management involves understanding the operational footprint, ownership, and potential compliance lapses within supply chains and business networks.
Moreover, addressing forced labor is not just about compliance—it’s also about ethical business practices and maintaining corporate integrity. Organizations can leverage AI-powered technology to unify risk indicators, which aids in reducing false positives and increasing transparency in complex supply chains.
Ultimately, mitigating the risks associated with forced labor requires a sustained commitment to ethical practices, rigorous due diligence, and the strategic use of data and technology. Through comprehensive risk management strategies, businesses can not only comply with international regulations but also protect their brand reputation and contribute to the global fight against forced labor.
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