Modern slavery risk rises in EU

Modern slavery risk has risen in 20 of the 28 European Union member states over the last year with the bloc recording the highest rise of any region in the world, according to new research from Verisk Maplecroft. Verisk Maplecroft’s second annual Modern Slavery Index (MSI) suggests that European business must do more to tackle modern slavery and pay closer attention to home markets or EU supply chains, rather than simply focus on well-known slavery hotspots. Risk managers are advised to ensure their organisations have standards in place to help reduce modern slavery, carry out risk assessments to ascertain where the real threats lie and work in collaboration with others to mitigate the risk. The new research – which assesses 198 countries on the strength of their modern slavery laws, the effectiveness of their enforcement and the severity of violations – shows drops in the scores for 20 countries across the EU, mainly due to the exploitation of growing migrant populations. The International Organisation for Migration estimates that over 100,000 migrants have entered Europe by sea in 2017. It says that 85% of these have landed in Italy. According to Verisk Maplecroft, the presence of these vulnerable migrant populations has contributed to the increases in slavery across multiple European sectors, such as agriculture, construction and services. This year’s MSI finds that Italy, Romania, Greece, Cyprus and Bulgaria – key entry points for migrants into Europe who are extremely vulnerable to exploitation – pose the highest risk of modern slavery. Italy has moved into the top five since the index was first produced last year. The EU countries showing the biggest increase in risk include Romania, Czech Republic, Malta, Portugal, Italy and Hungary. The risk of modern slavery has increased more in Romania than in any other country globally, with the country falling 56 places in the ranking to 66th highest risk. Romania and Italy, ranked 133rd after falling 17 places, have the worst reported modern slavery violations in the EU, including severe forms of forced labour, such as servitude and trafficking. Even the EU’s biggest economies are not immune to the rise in slavery risk. Germany and the UK have seen slight negative shifts in their scores, taking them just over the low risk threshold into medium risk. New data has revealed gaps in the UK’s labour inspectorate, while Germany has experienced an uptick in recorded trafficking and servitude violations. The other European countries where modern slavery risks have increased over the last year are Greece, Ireland, Croatia, Sweden, Slovakia, Denmark, Finland, Estonia, Poland, Luxembourg, Slovenia and Belgium. According to Verisk Maplecroft experts, the rise in modern slavery risk across much of Europe means risk managers and their companies should pay closer attention to threats on their doorstep. “The migrant crisis has increased the risk of slavery incidents appearing in company supply chains across Europe,” stated Sam Haynes, senior human rights analyst at Verisk Maplecroft. “It is no longer just the traditional sourcing hotspots in the emerging economies that businesses should pay attention to when risk assessing their suppliers and the commodities they source,” he added. Principal human rights analyst at Maplecroft, Dr Alex Channer, told Commercial Risk Europe that European businesses should reevaluate their modern slavery risk in light of the index’s findings. “A lot of companies have become very aware of the risk deep in their supply chains, and they should remain so given that 60% of the 198 countries we analyse are extreme or high risk, and that includes some of the biggest sourcing economies in the world in Asia and the like. But European companies are less aware or less focused on what is happening at, or nearer to, home. Our index shows that companies in Europe need to look at the risk of modern slavery in their home markets, or local ones in which they operate or have supply chains,” said Dr Channer. Despite an influx of migrants and new and emerging legislation on modern slavery and human rights appearing in Europe, Maplecroft’s research shows that top sourcing locations in emerging markets remain the biggest concern. The chief Asian manufacturing hubs of Bangladesh, China, India, Indonesia, Malaysia, Myanmar, the Philippines and Thailand all feature in the extreme or high risk categories. China, ranked 21st in the index, remains firmly entrenched among the worst performing countries in the extreme risk category. North Korea, Syria, South Sudan, Yemen, DR Congo, Sudan, Iran, Libya, Eritrea and Turkmenistan are rated as posing the highest risk of all countries measured by the MSI. Dr Channer said there are concrete steps that risk managers can take to reduce modern slavery risks in Europe, or further afield as they grapple with increasingly complex supply chains. Although it is a hugely complex task, there are ways to improve risk management in this area and make the process simpler, she continued. “The first step would be to have clear standards that you apply to your operations and all your suppliers. You need a really good framework in place that explains your commitment to reducing modern slavery. You need to make your workers and staff aware of that through training and you need leadership from the top of your business. Then you need to check practice on the ground through audit to ensure your business, operations and suppliers are actually abiding by those standards,” advised Dr Channer. Key areas of focus should include making sure wages are paid on time, documents aren’t being withheld and that workers are being recruited fairly, especially if they are being recruited through a labour provider, she said. Risk assessments are also a crucial tool, continued the expert. “They allow you to compare risks across countries, prioritise where you have your greatest risk and really focus resources on particular areas,” she said. Although risk assessments allow companies to simplify processes, prioritise points of focus and decide what steps to take, collaboration is needed to fully address modern slavery risk, she added. “Individual risk managers cannot do everything on their own,” Dr Channer stressed. She advised companies to combine with partners, NGOs, industry associations and other business operating in the same country or industry to help address the root cause of the problem. She believes companies are getting better at managing modern slavery risk but the fact that violations continue to take place proves more needs to be done. “Business definitely needs to be more rigorous in checking that their workers’ rights are being respected, and also support their suppliers. If a company has big supply chains it is about helping suppliers understand what the issues are and how they can prevent modern slavery,” said Dr Channer. She said moves to force top manage-ment to sign off on steps their company is taking to eradicate modern slavery and other human rights violations can help risk managers get this topic on the boardroom agenda. Such rules – currently seen in the UK, US and Australia – are likely to spread throughout Europe, she added. “Increasingly we are going to see companies having to report annually either on modern slavery, or on a wider basis on human rights due diligence. It is going to increasingly become the norm and companies are going to have to recognise this is coming and get ahead of the curve,” said Dr Channer. Adding: “If we look at the impact of the Modern Slavery Act in the UK, and where similar laws have been introduced elsewhere, risk managers and those responsible for sourcing say that disclosure requirements have helped them to get this issue further up the agenda. Where directors must now put their name to the annual statement this has made this a much more sensitive issue, because it is not just business reputation on the line but also the reputation of the CEO or director who is on the statement.”

Modern slavery risk rises in EU

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