The electronics sector supply chain is known to have pervasive modern slavery risks with several well-documented cases of forced labour making headlines. Investment in the global production of electronics has increased dramatically, and developing economies are increasingly manufacturing more electronics products. The electronics sector produces electronic equipment and consumer electronics and manufactures electrical components for a variety of products.
Asia’s proportion of the market for electronics is expected to be approximately half of the global market within the next several decades. The India, Indonesia and Thailand industries are increasingly important segments of the global supply chain for intermediate and finished products. These countries also have high modern slavery prevalence and significant modern slavery numbers. According to the 2018 Global Slavery Index, India has estimated modern slavery prevalence of 6.10 per 1,000 people and an estimated 7,989,000 people living in modern slavery. CSOs in these countries have reported the presence of different key indicators of forced labour.1 In India and Indonesia, there are problems relating to a lack of freedom of association and the right to collective bargaining, as well as excessive working hours. Indian workers are also not likely to receive a living wage. While Thailand has a large migrant worker population that must often pay recruitment fees and experiences other vulnerabilities throughout the migration process and foreign workplaces.
More generally, structural challenges in eradicating forced labour from the sector exist, including the use of temporary, part-time, and sub-contacted labour recruited through labour brokers to meet seasonal demand for products and multi-tiered supply chains located in high-risk jurisdictions with limited labour rights and protection.
Investors have also made some progress in engaging with electronics companies to find, fix and prevent modern slavery in the supply chain but lack visibility into the expansive network of electronics suppliers and access to workers and unions required to create impact at scale.
Notwithstanding, investors need to do a lot more than simply ask companies about their modern slavery initiatives and encourage them to do more. Both companies and investors have been overly reliant on third party auditors to conduct social audits. These have been broadly ineffective as auditors typically have restricted access to workers, an insufficient understanding of local, cultural, and geographic drivers of forced labour, and tend to be unduly influenced by line managers and supervisors during the audit process. While there is no silver bullet when it comes to detecting instances of modern slavery, there are things companies can do to boost the chance of detection. The key for companies is to adopt substantive detection processes rather than a ‘tick-the-box’ compliance approach.
These are also the things investors can ask companies to adopt to find, fix and prevent modern slavery:
In engaging with a company to improve its actions to find, fix and prevent modern slavery, it is important to find the most relevant people in the company to talk to about risk and taking effective action in response. That might be people in the procurement team or the sustainability team. If more needs to be done, the Executive Team or the Board can be approached with examples of best practices and tangible changes that can make a difference.
For investors, one of the biggest challenges is accurately assessing the merits of a company’s approach. Independent analysis can often be needed, and that might require doing meaningful consultation with a wider range of stakeholders than just suppliers and auditors; for instance, international organisations and non-profit organisations (like IAST APAC knowledge partners, Walk Free and FAST), national CSOs, trade unions, former employees, and even other suppliers in the same industry from the same high-risk countries or regions.
For example, IAST APAC knowledge partners, Walk Free and FAST, have organised for investor members to hear presentations from national CSOs that work with victims in the electronics sector in India, Indonesia and Thailand to improve the investor understanding of the risks and actions to take to strengthen engagement with focus companies that brand, export/import or retail electronics products. Organisations such as these national CSOs can play an invaluable role in connecting the perspectives of workers directly with those tasked to oversee and improve their working conditions. They can give workers an additional voice, protect them from various sources of pressure and coercion, and help workers collectivize and negotiate for better rights.
In addition, national CSOs, in concert with other stakeholders mentioned above as appropriate (such as trade unions for local action and international NGOs for regional/global awareness and advocacy), can:
All stakeholders including investors and civil society can play an important role in asking companies and suppliers the right questions about their modern slavery risk, encouraging them to adopt the most effective systems and processes and be transparent in disclosing harm and response, and placing those
who are the most vulnerable to and potentially victims of modern slavery at the heart of investment decision-making, company engagement and stakeholder consultation.