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New ABA principles provide starting point for businesses to eliminate forced and child labor

By Steven Seidenberg

July 1, 2014, 7:19 am CDT

The problem is so widespread that it nearly evades notice. But the reality is that the economies of the United States and many other nations are tainted by the widespread use of child labor and forced labor of adults. The problem seeps into most major segments of economic production, including consumer goods, construction, mining, agriculture and domestic work.

The International Labour Organization estimates that 20.9 million men, women and children are subjected to forced labor around the world. Of that total, 90 percent—or 18.7 million people—are subjected to forced labor in the private economy, exploited by either individuals or enterprises. Women and girls make up the largest share of forced labor victims—55 percent, or 11.4 million. The ILO reports that while the occurrence of child labor has declined by about a third since 2000, the number of children forced to work, often in hazardous jobs, still stands at some 168 million—the equivalent of about half the total population of the United States.

Increasingly, businesses are joining with government bodies and nongovernmental organizations to put a sharper focus on efforts to eliminate forced labor and child labor from production and supply chains. At the international level, the U.N. Guiding Principles on Business and Human Rights outline the need for businesses to respond to the problem. The principles recognize that business enterprises must comply with applicable human rights laws. (The ABA’s policymaking House of Delegates endorsed them in 2012.)

So far, there are no standard business conduct codes that have been widely adopted by businesses formed under the laws of the United States, although states have begun to legislate more actively in this area.

In February, however, the ABA took a significant step toward filling this gap when the House of Delegates adopted a set of model principles that businesses may follow in developing policies aimed at eliminating child labor and forced labor from their production and supply chains. The model principles were developed by the Section of Business Law.

The section’s recommendation was adopted in a revised and abbreviated form as the Model Principles of the ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor (PDF). The revised version eliminated a series of specific policies recommended for implementation by businesses while focusing instead on four broad principles that businesses may use to develop their own policies.

The recommendation adopted by the House urges that businesses, including suppliers, follow these principles:

• Prohibit forced labor and child labor in their operations.

• Carry out risk assessments to determine where in operations forced labor or child labor is most likely to be used.

• Train relevant employees on issues relating to forced labor and child labor, and engage in continuous efforts to improve and maintain effective communication with suppliers.

• Devise policies and plans to remedy any forced labor or child labor in their operations.

THE SEARCH FOR CONSENSUS

Advocates of the recommendation, including the Business Law Section and the Task Force on Human Trafficking, acknowledge that it could have gone further. But they also emphasize that tougher policies would not have gained consensus in the House.

“We needed to start someplace where we could gain the support of corporations,” says the ABA’s immediate-past president, Laurel G. Bellows, who tackled human slavery as a policy priority during her one-year term as president that ended in August. “We want to encourage them to act, rather than discourage them from acting for fear of incurring additional liability,” says Bellows, who is principal at the Bellows Law Group in Chicago.

Bellows’ assessment is echoed by two of the people who played key roles in drafting the Business Law Section’s recommendation to the House.

“It was clear that the model policies wouldn’t satisfy everyone. Some business groups would say the policies were too restrictive, and some NGOs would say it wasn’t restrictive enough,” says William D. Johnston, a partner at Young Conaway Stargatt & Taylor in Wilmington, Delaware, who chaired the committee that drafted the section’s recommendation. Johnston also is the section’s secretary.

“We found the principles were at a high enough level that we could get broad-based agreement,” says E. Christopher Johnson Jr., an adjunct professor at the Thomas M. Cooley Law School in Lansing, Michigan, who was the chief drafter of the model principles and policies. “The principles,” he adds, “are almost no-brainers. Who could disagree with them?”

But even in a broadly general form, the principles can play an important role in guiding companies toward more—and more effective—policies for eliminating forced labor and child labor.

For one, the principles set forth an outline for dealing with the problem that might foster a more uniform approach among companies. “The quality of companies’ existing policies varies wildly,” Johnston says. “Some companies have highly developed policies, while other companies have virtually nothing. We thought we should at least show people how they could take the principles and create a policy.”

The ABA also will provide additional resources to help companies craft and implement policies against forced labor and child labor. “We will be developing a database of resources that would encompass different views, so if a business wanted to adopt a broader approach, it could. If it wanted to adopt a narrower approach, it could,” Johnston says.

The ABA will soon launch a big outreach effort, urging the business community to adopt and implement the model principles. “We presumably will start by contacting CEOs and chief legal officers,” says Johnston. “We’ll continue to work with the U.S. Chamber of Commerce, the U.S. Council for International Business and other business groups. We will also likely work with local, state and specialty bar associations, and maybe with the Association of Corporate Counsel. Then we will get feedback from the businesses and organizations we contact and see what additional information will be most helpful to them.”

MAKING A BUSINESS CASE

Some businesses already have responded positively by adopting the model principles and refining their policies in order to implement them. Other companies, however, may be a tougher sell.

“Some companies will want to be more proactive in this area. Others will be reactive and do only what the law requires,” says Johnson, the Cooley law professor. “Those companies will say, ‘The law doesn’t require me to do this,’ and until the law changes, they won’t act.”

There are, however, plenty of reasons for businesses to act, starting with the imperative of business ethics. Simply stated, Johnson says, “slavery is wrong. It is an affront to human dignity.”

As the U.N. Guiding Principles on Business and Human Rights put it: “The responsibility to protect human rights is a global standard of expected conduct for all business enterprises wherever they operate. It exists independently of states’ abilities and/or willingness to fulfill their own human rights obligations, and does not diminish those obligations. And it exists over and above compliance with national laws and regulations protecting human rights.”

There also is a strong business case for developing policies that address forced labor and child labor, Johnson says. “If children and slaves work in your supply chain, there is the possibility of worker unrest, inferior quality products and reduced productivity linked to adverse working conditions,” he says.

And there is a reputational risk. “More and more consumers are becoming socially conscious, and you will have a problem growing your market. You could even face consumer boycotts,” Johnson says. Such negative consumer reactions could linger long after a supply chain problem is remedied. “People still talk about Nike, and that was fixed years ago,” he adds.

A tainted supply chain could drive away consumers, as well as many investors, he suggests. “It might be hard for a company to maintain its stock price among socially conscious investors, and there is a growing number of such investors.”

More states are putting pressure on companies to stop using forced labor. “All states now have laws against human trafficking, and a lot of them are tightening these laws,” Johnson says. As a result, companies that directly use forced labor risk both civil and criminal penalties.

California has gone even further. The state’s Transparency in Supply Chains Act, which went into effect Jan. 1, 2012, requires large retailers and manufacturers—defined as companies with global revenues exceeding $100 million a year—doing business in California to disclose their efforts to eradicate forced labor from their supply chains. Every company covered by the law must post a “conspicuous link” on its main website that details its efforts to address risks related to forced labor in its supply chains. The statute does not require companies to act against forced labor in their supply chains, but the law’s proponents expect it will shame companies into doing so.

Companies doing business with the federal government also may soon face a tough new requirement. If implemented, the Federal Acquisition Regulation on ending human trafficking would require federal contractors to remove forced labor from their supply chains. Before receiving a contract, and annually thereafter, a contractor would have to certify that it and its subcontractors have not used forced labor—or, if forced labor has been discovered, that appropriate remedial measures have been taken. The regulation was originally published in the Federal Register on Sept. 26 for public comment, and the comment period closed Dec. 20. A final version of the regulation is expected to be issued before the end of the year.

“There is going to be increased legislation in this area,” Johnson predicts. “When you have millions of slaves around the world—almost 200 million in child labor—it is only so long before countries will decide they have to do something.” It is thus in the business community’s self-interest to get out in front on the issue, he maintains. “As a business community, let’s demonstrate to our country and the world that we can do something about this on a voluntary basis and maybe stave off the difficult regulations that can sometimes come from government,” he says.

If companies make determined efforts to eliminate forced labor and child labor from their supply chains, many of the criminals who profit from those practices would be forced out of business, Bellows says. “The corporate community could play a tremendous role in getting rid of slave labor,” she says. “They have the power to reduce slavery in the U.S. and all around the world.”

Related info:

Model Principles of the ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor (PDF)

This article originally appeared in the July 2014 issue of the ABA Journal with this headline: “Work Toward Progress: New ABA principles provide starting point for businesses to eliminate forced and child labor in their production, supply chains.”