An Introduction to the Fair Hiring Toolkit for Investors

Analyze the Financial Risks

Companies operating with forced labor and human trafficking affect public opinion.

In this Fair Hiring Toolkit, investors will find material that can be used to support investor campaigns, corporate advocacy, shareholder dialogue and investment analysis. You will find material relating to corporate codes of conduct, training and capacity building, reporting and transparency, and social auditing, with each focused on preventing the risks of recruiter-led forced labor and protecting migrant workers. These tools can help you evaluate a company’s level of risk and commitment; and support advocacy to improve corporate policies, programs and performance against exploitation in the supply chain.

Verité also offers the following questions that investors can consider in evaluating their own approaches to issues of forced labor and human trafficking in global supply chains.

Key Questions for Investors
The investor community is well-positioned to take a leadership role in addressing trafficking and modern-day slavery among migrant worker populations, and to use its leverage to shape company policies so that migrants are treated fairly not only at work, but also in recruitment and hiring. Companies should be encouraged to look at the conditions of work at suppliers below their first and second tiers, as well as at raw or primary material suppliers. The investor community can help push advocacy and dialogue to this level by asking:
1. How do you as an investor ensure that a company does not engage in forced labor?

2. Do you know that improper recruitment and hiring practices among migrant populations can be a root cause of many common compliance issues in the workplace?

3. As an investor, does your advocacy on forced labor include discussions of fair recruitment and hiring practices, to counter the presence of unscrupulous labor recruiters in supply chains?

4. Are you aware of the ways in which debt can lead to workers becoming trapped and/or exploited in their jobs? Do you know that recruitment debt incurred by migrant workers can be leveraged either intentionally or unintentionally by employers or recruiters to force migrant workers to "accept" a range of workplace abuses, such as lower pay, excessive deductions and withholdings, passport confiscation and restrictions on freedom of movement?

5. Are you aware that labor recruiters often have ongoing management/control of workers in factories?

Below is a list of tools within the Fair Hiring Toolkit that we gathered for their relevance to Investors

BRANDS AND SUPPLIERS – IMPROVING CODES OF CONDUCT AND COMPANY POLICIES

High level corporate policies or code-of-conduct language on forced labor, human trafficking and the vulnerabilities of migrant workers is a critical first step in addressing these risks in global supply chains. However, most codes of conduct – including those developed by multi-stakeholder initiatives – do not address these risks in detail.

To address this weakness, the Fair Hiring Toolkit provides guidance material for both brands and suppliers on improving codes of conduct and strengthening supply chain policies. Investors groups can use these tools – which are based on the principles of internationally agreed standards adopted by the ILO and UN – to assess corporate policies and advocate for their improvement.

Sample Code of Conduct Provisions
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This tool provides companies with sample code-of-conduct language to develop, revise and strengthen corporate and supply chain policies prohibiting forced labor and human trafficking, and setting out clear protections for migrant workers. It recommends strong, comprehensive and explicit provisions on issues ranging from recruitment fees and document retention to freedom of movement and deception in wage payment.

 

Sample Benchmarks of Good Practice in Recruitment and Hiring
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These benchmarks are aligned with the sample code provisions developed for companies. They can be used as key indicators to measure and evaluate performance against policy provisions or integrated into assessment and improvement programs to establish a framework to ensure good practice.

 

BRANDS AND SUPPLIERS – RAISING AWARENESS AND BUILDING CAPACITY

Company policies and supply chain codes cannot be effectively implemented unless the issues they address are fully understood by management and staff. A company that is well-trained and informed will be in a strong position to successfully translate new policies into effective and sustainable practice.

Training and awareness raising are among the key strategies used by companies to implement their codes of conduct. The Fair Hiring Toolkit supports these efforts by providing tools that help brands and suppliers better understand the risks they face and the vulnerabilities of migrant workers.

The first tool in this section is a set of indicators or “red flags” that identify common forms of abuse and deception in the recruitment and management of migrant workers. It is a good place to start for investor groups that want to know more about what forced labor and human trafficking look like in the global economy and the risks they present to brands and their shareholders.

What Should You Look For? Identifying Brand Risk and Vulnerability to Human Trafficking and Forced Labor of Migrant Workers
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This tool provides a complete set of “red flags” of recruiter-induced forced labor. It translates Verité’s global research on human trafficking into a clearly defined set of problems that brands should be aware of and investors should be on the look out for. These are common forms of abuse that face migrant workers in the global economy and that may indicate or enable conditions of trafficking for forced labor.

 

BRANDS – STRENGTHENING ASSESSMENTS AND SOCIAL AUDITS

Social audits are the main tool used by brands today to assess supply chain compliance, and to detect violations and abuse. Many social auditors, however, are not properly equipped or trained to identify forced labor or to facilitate the corrective action needed to deal with it effectively, thus leaving the company open to ongoing risk.

The Fair Hiring Toolkit addresses this challenge by providing five critical tools for social auditors, including:
• A guide to auditing forced labor and the trafficking of migrant workers;
• Sample management, worker and recruiter interviews; and
• Guidance for reviewing supplier and recruiter documentation.

Investors can point to this material in their campaigns and advocacy, and in direct dialogue with companies. They can also take the key messages of these tools and use them to evaluate brand compliance programs during due diligence procedures.

Guidance for the Social Auditing of Forced Labor and Human Trafficking of Migrant Workers
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Auditing forced labor can present a number of challenges to brands and third party auditors, not least the fact that abuse of this kind is often hidden and deception is its key feature. This tool provides brands with general tips on improving the effectiveness of social auditing, including technical guidance on interviewing managers, workers and recruiters, and reviewing company documentation. The tool acts as a general framework for the others provided in this section. Click here to access the other tools.

 

BRANDS – REPORTING AND TRANSPARENCY

Brands are facing growing expectations from key stakeholders such as investors, consumers and public policy actors to disclose information about their supply chain engagement. In some cases, this pressure is the result of new regulatory requirements, for example in the US State of California (the California Transparency in Supply Chains Act), that oblige companies to describe and demonstrate their efforts to eradicate slavery and human trafficking.

To support improvements to corporate reporting, the Fair Hiring Toolkit provides a guide to integrating indicators of forced labor and human trafficking into reporting mechanisms. This tool supports broader investor campaigns for more and better reporting on corporate policy and performance on human and labor rights issues.

Reporting and Transparency: Integrating Indicators of Forced Labor and Human Trafficking
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To meet the growing expectations of transparency from governments and other stakeholders, brands need to improve their reporting on core issues like forced labor. To help them with this task, this tool provides examples of good practice in disclosure and guidance on improving the quality of reported information. It also introduces the recent California Transparency in Supply Chains Act, which requires retailers and manufacturers doing business in the state with annual revenues of over $100 million to disclose information about their efforts to eradicate slavery and human trafficking from their supply chain.

Corporate reporting on forced labor and human trafficking is often characterized as superficial. Many reports are qualitative and provide only a snapshot of particular incidents or actions taken, while others are similarly partial and focus only on policy to the neglect of implementation, programs and performance. To strengthen these reports, this tool also provides companies with a series of recommendations, covering what and how to report on forced labor and suggestions on the means and topics of communication, including policy development, awareness raising and training, auditing procedures, corrective and preventive action, and multi-stakeholder engagement.