Investing in Decent Work: Forced labour

This briefing paper highlights investor risks associated with forced labour in the steel, cotton and cocoa sectors, and provides recommendations for engaging companies on this core labour issue.

Overview

Forced labour is one of the most pressing workers’ rights challenges of our time. With over 12.3 million workers worldwide forced to work in unacceptable conditions, forced labour is a truly global problem that affects workers in a variety of economic sectors.

Women, migrants, children, ethnic minorities and the poor are often at greater risk of being forced to work. Economic globalization has also raised the vulnerability of workers to exploitative practices like forced labour, as supply chains for goods and services become increasingly complex and businesses and national markets struggle to compete in what many have called a “race to the bottom”. In this environment, companies and their investors face the risk of supporting forced labour.

Investor Risks

Besides threatening a company’s profitability and reputation, investments tied to forced labour face political and legal risks. Forced labour is a criminal offence. Litigation against companies accused of using forced labour could be lengthy, costly, and in some cases, even halt investment projects. Investors of workers’ capital have to be mindful that regulatory shifts in this area are expected. For example, there are calls for the UK government to introduce legislation that will enable overseas workers forced to work for UK companies to seek legal redress in the UK. In addition, exposure of incidences of forced labour in the media, public campaigns and boycotts can affect a company’s share price, brand value and operational performance.