Suppliers and buyers from global supply chains are exposed to the risks of getting involved with slave labor. To solve this problem, many efforts are necessary to increase awareness in the business sector and to improve risk mitigation practices.
Brazil has developed important tools to face forced labor. The “Dirty List” is one of them, which is a public database – created in 2003 and maintained by the Labor Ministry and the Human Rights Secretariat – that publicizes the names of employers who have been caught, by labor inspectors, using labor force in slave-like conditions. These names only appear on the List at the end of an administrative process that gives the employer a chance to defend itself. Once the employer’s name is included, it remains listed for two years. The Dirty List is updated every semester, and, each time, new names are added.
In 2004, the Human Rights Secretariat solicited funds to the ILO Brazil to study supply chains in order to identify economic sectors affected by slave labor. Using the Dirty List as basis, researchers from the Reporter Brasil NGO mapped the commercial relations of 100 employers. The results revealed a network of 200 national and international companies that traded products and services coming from employers mentioned in the Dirty List.
With this information in hands, the ILO supported the Instituto Ethos de Empresas e Responsabilidade Social (Ethos Institute for Business and Social Responsibility) in conducting meetings with the companies identified in the research. The dialogue resulted in the launching of the National Pact for the Eradication of Slave Labour, in May 19th, 2005. The Pact shed light into the business sector’s commitment to combat the issue, adopting measures that involve commercial restrictions to suppliers that might use slave labor.
The Pact has become an innovative experience in its vision to share the responsibilities in preventing and fighting slave labor, and for the first time the business sector was involved in this plea. It was recognized by the UN as an international benchmark and as an important mechanism for facing this severe human rights violation.
Using the Dirty List as a database for research on supply chains works because companies are confronted with concrete evidence of their involvement – direct or indirect – with slave labor. They are, then, given the opportunity to act and face the situation, either ending commercial relations with involved suppliers, or transforming their chain to have it free of slave-like labor.
Economic punishment has been an effective ally in the fight against forced labor and decisive for Brazil to reach positive results in facing this problem.
Since 2008, the National Bank for Social and Economic Development (BNDES, in Portuguese) includes clauses in its contracts that forbid financing for employers or companies that show up in the Dirty List. Other public and private banks have also joined in, making slave labor bad for business. Large corporations have also become signatories to the Pact, imposing economic restraints on suppliers involved with the crime.
A key distinguishing aspect of the Pact is that its signatories bind themselves in fulfilling the so-called 10 commitments, which are action areas that companies must develop to confront slave labor in their supply chain. These commitments are monitored annually and, depending on the level of commitment of a member, they continue, are suspended or are excluded from the Pact.
As the Pact gained more and more signatories, it became necessary to establish a Management Committee of the Pact, with ILO, Ethos Institute, Reporter Brasil and Instituto Observatório Social. These institutions were responsible for managing the Pact and its commitments, and also for answering demands from members.
In the beginning of 2014, the Pact had more than 400 signatures that, together, represented more than 35% of the Brazilian GDP. The Management Committee decided to create an Institute to manage and provide sustainability for the Pact, with an eye to improve its operations and promote its strengthening and expansion. Thus, it was born, in May 2014, InPACTO – the Institute of the National Pact for the Eradication of Slave Labor.