Poverty and climate change are driving an increase in forced labour and trafficking, with 80% of the global population living in areas classed as high or extreme risk for modern slavery violations, a new report finds.
According to this year’s Modern Slavery Index (MSI), published by risk intelligence company Verisk Maplecroft, those in developing countries are most at risk but workers in developed countries like Turkey, South Africa and China are becoming increasingly vulnerable.
The MSI assesses the risk to businesses of association with or exposure to modern slavery in supply chains. It measures the frequency and severity of modern slavery incidents, the strength of the applicable legal frameworks and the capacity to enforce those laws.
Poverty is frequently linked to cases of modern slavery, as workers are more likely to rely on the informal economy for employment, the report explains. 17 of the 24 countries rated extreme risk are low and lower-middle income economies, including Myanmar and Pakistan, which are also leading exporters of clothing, cotton and rice. However, the number of high and upper-middle income economies rated ‘high’ or ‘extreme’ in terms of risk has risen to 44, up from 39 when the MSI launched in 2016.
Turkey, for instance, dropped 46 places in the index’s rankings due to “an increase in reported cases of forced labour involving Syrian migrants, including children, within the garment industry and the agricultural sector”, the report says.
Meanwhile, the UK fell 17 places, leaving the country in the MSI’s ‘medium’ risk category. The report adds that the UK could fall further as the government recently reclassified modern slavery as an illegal immigration issue, listing it under the ‘illegal migration and asylum’ section of the responsibilities of the minister of state for immigration.
The report also warns of the “cascading risks triggered by climate change”, which will hit developing countries hardest. Climate migrants seeking refuge in the US and Europe are at risk as well, with developed countries like the US, France, Italy and the UK all receiving a ‘high’ risk score for modern slavery in agriculture, a sector where exploitation is particularly rife.
Speaking to GTR, Rupert Cutler, director and principal of specialist risk and insurance consultancy Holtarka, explains that to mitigate risks, businesses need to visit the countries they conduct business in to carry out due diligence in person, rather than relying on third-party agents alone.
“Environmental social and governance (ESG) requires continuous review of risk and mitigation,” he says. “It is broader than the usual trade finance or project risk. Companies have to prove that they couldn’t have done more.”
James Sinclair, Verisk Maplecroft’s director of human rights, explains that increasing “reputational and regulatory scrutiny” means that companies need to take tangible action to tackle human rights violations.
“This is easier said than done, particularly for organisations with poor visibility over their supply chains,” Sinclair adds.
While the region of Xinjiang in China – a country rated as being at ‘extreme’ risk – has received most attention for serious human rights abuses, including forced labour, the report says that other areas in China also merit further scrutiny, including Yunnan, which produces tin and zinc, and Tibet, whose key exports are rubber and natural gas.
Earlier this year, the US introduced the Uyghur Forced Labor Prevention Act, which blocks importers from buying goods with links to Xinjiang unless they can prove products were not made with forced labour.
Calls for the EU to follow the US’ lead and introduce stricter measures to stop domestic companies importing products made using forced labour have intensified in recent months.
“Regulators, investors, shareholders and consumers are all becoming acutely aware of the modern slavery risks that have been evident for years to NGOs, activists and exploited people,” says Sinclair, adding that organisations had to work harder to make sure their supply chains were not “tainted by forced labour”.