Special feature: Research shows limited enforcement against corporations profiting from exploitation

Analysis from Praeveni Global’s Modern Slavery Prevention Index shows limited government investment in enforcement against corporate perpetrators engaged in and profiting from forced labour, wage theft and other supply chain abuses, with the exception of the United States. Data gathered by the index also shows that, since 2021, there have been no reported corporate prosecutions for abuse in global supply chains by the G20 countries analyzed.

Dedicated investment from the U.S. makes it an outlier, Praeveni notes. Recently, the U.S. Government established and funded the ongoing operations of the Center for Countering Human Trafficking, part of the Department of Homeland Security, which investigates corporate supply chains. It also allocates funding to Customs and Border Protection’s Office of Trade, the agency that enforces federal bans on goods made with forced labour – its Withhold Release Orders allow CBP to detain or block imports when there is reasonable evidence that products were made using coercive or abusive labour practices. In parallel, the Office of the U.S. Trade Representative oversees the Rapid Response Mechanism established under the United States–Mexico–Canada Agreement, which acts as a fast-track enforcement tool, allowing the U.S. to challenge labour rights violations and press for corrective action when those abuses threaten to distort regional trade.

A number of countries, including Australia, Canada and the UK, have chosen to invest in frameworks requiring supply chain disclosure. However, the obligations only apply to a small number of corporations that meet specific criteria, leaving most businesses outside these regulations. Furthermore, there is very limited dedicated investment in the enforcement of the requirements beyond making disclosures publicly available – governments are not checking whether disclosures are accurate or whether they are actually reducing risks, nor are they penalizing companies that fail to comply. Funding does not yet seem to have been applied to regular data gathering activities or research, or to reporting on the effectiveness of the disclosure approach to prevent exploitation or provide remedies for exploited workers.

In recent years, efforts to tackle worker exploitation have focused on tightening the rules that govern how goods are produced and their movement through supply chains. That work has centered on human rights due diligence, a system that requires companies to examine their own operations and supply chains for abuse and take steps to fix any problems they find, Praeveni observes. In practice, however, enforcement remains thin – beyond the relatively strong enforcement tools available in the United States, most governments studied have few institutions with the funding, authority, or expertise to police labour abuses or ensure companies are meeting their human-rights obligations. In many countries, the expectation that corporations will monitor themselves stands in stark contrast to the limited capacity of governments to hold them accountable when they fail to do so.

Conversely, the anti-money laundering and anti-terrorist financing infrastructure which is responsible for monitoring, reporting and disrupting the flow of illicit profits gained from exploitation receives considerable funding from governments, Praeveni notes. All governments analyzed have established and continue to support national financial intelligence units (FIUs), which are tasked with identifying and reporting illicit financial flows, and have money laundering and asset seizure teams in their prosecutors’ offices. Because human trafficking and forced labour qualify as predicate offences for money laundering, they fall within the mandate of FIUs and other enforcement agencies. Many of the FIUs analyzed have produced one or more reports on financial transactions relating to sex trafficking and a few have reported on forced labour. Yet, despite extensive operational infrastructure to monitor and disrupt illicit financial flows, there is very little attention given to monitoring and reporting on those profiting from forced labour in supply chains.

A number of countries refer in their national action plans to the National Contact Points (NCPs) for Responsible Business Conduct, under the OECD Guidelines for Multinational Enterprises, as the means of addressing forced labour. At present, however, there is little global institutional capacity to carry out enforcement activities against corporate perpetrators of exploitation in supply chains, outside of the United States.