Tech firms failing to address forced labour in supply chains

The tech sector has “abjectly failed” to address the risks and impacts of forced labour throughout its supply chains despite soaring profits, according to the latest analysis of IT firms’ efforts globally.

In its fourth benchmark report, KnowTheChain (KTC), an organisation attempting to drive awareness and corporate action on the issue of forced labour, assessed the world’s largest technology companies on their efforts to combat forced labour in their supply chains, scoring each company out of 100.

With a median score of just 14, KTC found the vast majority of tech firms are still not conducting adequate due diligence on their suppliers or providing appropriate remedy to workers suffering abuses, creating a “breach” between companies’ stated policies and their actual practices.

Out of the 60 tech firms analysed by KTC, for example, only one in five disclosed forced labour risks in their supply chains and just under a third (32%) disclosed actual violations. Nearly half (45%), however, did not disclose any information about whether they had conducted a human rights impact assessment on their supply chains.

Only four companies (Hewlett Packard Enterprise, Intel, Cisco and Apple) scored above 50, while three (BOE Technology, Naura and Hikvision) scored zero after providing no relevant information on how they are working to identify and mitigate forced labour.

KTC also found that, despite clear links between the suppression of worker voice and the risk of forced labour, only two companies disclosed the percentage of their supply chain workers covered by collective bargaining agreements, and only one reported working with a union to resolve a grievance.

Just three companies (Apple, Intel, and Hewlett Packard Enterprise) provided any information on how they support collective worker empowerment through limited engagement with unions or providing data on collective bargaining in their supply chains.

Further, despite 83% of firms disclosing the availability of grievance mechanisms, only 12% disclosed any information about their efficacy.

KTC added that purchasing practices were particularly poor, with the 60 companies receiving an average score of two due to the prevalence of firms making last-minute order changes, pricing products below the cost of production, and making unilateral changes to payment terms.

“While ICT hardware profits are over £100bn per year, efforts by these companies to protect their supply chain workers from forced labour remain dismal,” said Áine Clarke, head of KTC and investor strategy at the Business & Human Rights Resource Centre.

“With regulatory and ESG risks ballooning, companies must urgently ramp up efforts to tackle forced labour risks. They must now go beyond policy commitments and tick-box due diligence to demonstrate they know where their risks are and have taken effective action to address them by working with rightsholders – workers and their organisations.

“The ICT sector has perhaps faced less scrutiny for its negative human rights impacts than other sectors over the years. But KnowTheChain’s research shows that its potential for abuse is far reaching, with actual material risks to business increasing as a result of newer legislation on forced labour and upcoming laws in the European Union.”

Commenting on the progress since KTC’s last benchmark report from 2020, the report said while there has been improvements in general governance and recruitment practices, as well as a slightly higher number of firms disclosing risks, change is completely stagnant when it comes to purchasing practices and workers’ right to organise.

The last benchmark found that the majority of technology companies remain “negligent in their efforts to address forced labour”, lacking the essential processes and tools needed to tackle, let alone eliminate, abuses in their supply chains. KTC’s 2016 and 2018 benchmark reports identified similar issues.

In its latest set of recommendations, KTC said companies should actively promote freedom of association and provide evidence of improvements to collective bargaining across supply chain contexts; and ensuring that workers play a central role in the design, implementation, and monitoring of key due diligence processes, including risk assessments, grievance mechanisms and supplier monitoring.

In terms of improving purchasing practices, KTC said firms should plan and forecast with their first-tier suppliers, as well as ring-fence costs for people’s labour. They should also seek to pay supply chain workers a proper living wage to reduce the knock-on effects poor purchasing practices can have on their standard of living.

It said they should also lend public support for the development of mandatory human rights and environmental due diligence regimes which explicitly encompass the ICT sector and help level the playing field for company reporting and practice across jurisdictions.

Speaking with Computer Weekly in July 2022, KTC and other technology supply chain experts said that enterprises continue to rely largely on voluntary reporting measures and static audit processes to deal with forced labour and slavery – something that is exacerbated by a culture of corporate and governmental inaction.