Child Labour: Poison to the Ethical Supply Chain

For children, school is the best place to work.

According to the International Labour Organisation, there are over 215 million children working across the world and of these 115 million are thought to be involved in hazardous work. The number of those between the ages of 5-14 and engaged in child labour is estimated by UNICEF at around 150 million.

World Day Against Child Labour came and went on June 12, 2012. This wonderful initiative, championed by hundreds of selfless individuals, undoubtedly passed by, unnoticed and unmarked  by too many of us, otherwise absorbed in the busy-ness of our lives.

Child labour is considered to be the hiring or employment of anyone below the national minimum working age or the age of 15 – whichever is highest. It is a scourge to every supply chain that considers itself to be ethical.

In transgression, however, there is opportunity. Eradication of child labour is a chance for supply chain practitioners to shine.

We can be the agents of change that the world demands, and that our children deserve. But such initiatives are not exclusively altruistic. They make business sense. By taking the necessary steps to ensure toxins like child labour do not impact the supply chain, businesses are protecting their brand, and developing competitive advantage.

It is usually assumed that for most people in the developed world, a child’s right to an education is a self-evident truth. Sending the child off to the factory or to the fields (or even worse, to the army or to the brothels) is a deprivation a fundamental human right in the 21st century.

The stark reality is, that while many less-developed countries are categorized being at extreme risk of transgression, even the planet’s economic powerhouses are not completely faultless.

Here is a graphic that was prepared earlier this year by risk analysis firm Maplecroft, that reveals the results of its Child Labour Index 2012. I find it stunning:

Child labour transgressions can fall into two broad classifications: direct (when a country or organization engages willfully in, or otherwise sanctions child labour practices) and indirect (when a country or organization turns a ‘blind eye’ to the practice either at home or in other jurisdictions with whom they interact). The first is the object of metrics. Sadly, most of us are guilty of the latter.

This past week, I entered into some interesting conversations about the insecure supply chain. This is a systemic condition where the supply chain becomes open to abuse by any number of detrimental influences. The article that motivated these conversations was my post titled Supply Chain Risk Management: A Matter of Life and Death.  In that submission, I wrote about poisons that can creep into the food supply chain. Toxic labour practices, including child labor, are no less critical, although the damage done is far less obvious to the consumer.

Complicating matters are the difficult economic conditions that plague many countries of the world, that have cascaded from the 2008 global financial crisis. Many more children are being forced to work to supplement family incomes. Child labour, though, has been with us through good times and bad, for centuries, and has become a cultural norm in many regions.

In the 21st Century, supply chain practitioners will play a critical role in eradicating this problem, through engagement of ethical and sustainable business practices.

Eliminating child labour from the supply chain

Carmel Giblin, general manager at Sedex, crafted a compelling article in The Guardian newspaper earlier this week, in recognition of World Day Against Child Labour. Sedex, the Supplier Ethical Data Exchange, is a not for profit membership organisation dedicated to driving improvements in responsible and ethical business practices in global supply chains.

As the largest collaborative platform for sharing ethical supply chain data, Sedex is an innovative and effective supply chain management solution, helping firms to reduce risk, protect reputation and improve supply chain practices.

Giblin writes:

So, why is child labour such an important issue for businesses? We all know that child labour deprives children of their basic rights, including their right to education, but ensuring that your supply chain is free of child labour can also bring important business benefits. The ethical performance of companies is under increasing scrutiny from customers, the media, investors and other stakeholders. Revelations of child labour in the supply chain can damage a company’s reputation and lead to a loss of revenue. Conversely, a child labour free supply chain can help protect your company’s reputation and ensure you have an educated and capable workforce for the long-term.

Sedex’s work with stakeholders has identified some of the most common reasons why children work: In countries or sectors where wages are low, families often rely on the additional income to buy food; some agricultural jobs pay workers based on the amount of produce picked, which can encourage parents to bring their children into the field to help them; others are unfamiliar with the rights of children and deem it acceptable to allow children to work. Understanding the root cause of the issue can help companies to develop suitable mechanisms for effectively remediating child labour.

To resolve the issue of child labour, businesses must first identify where this issue occurs. Gaining complete visibility throughout the supply chain is vital if companies are to identify high risk areas and spot potential issues. By increasing visibility within supply chains, companies can engage with their suppliers in a much more focused manner, allowing critical issues like child labour to be dealt with more efficiently.

Once an occurrence of child labour has been identified, the business then needs to decide how to deal with this issue. Kneejerk reactions should be avoided and any action taken should in no way be detrimental to the child. (Read more…)

Maplecroft:  Conflict and economic downturn cause global increase in reported child labour violations – 40% of countries now rated ‘extreme risk.’

Maplecroft provides risk management products and services to leading global corporations across all sectors, governments, UN agencies and international non-governmental organisations. For example, banks use our indices and in depth reports to screen and manage risk, corporations use our research to understand investment risk and supply chain managers use our tools for due diligence monitoring.

It finds that Brazil, China, India, Indonesia and Philippines, for example, expose companies to high levels of supply chain risk.

Launching their 2012 Child Labor Index study earlier this year, Maplecroft explained:

An annual study by risk analysis firm Maplecroft has revealed that 76 countries now pose ‘extreme’ child labour complicity risks for companies operating worldwide, due to worsening global security and the economic downturn. This constitutes an increase of more than 10% from last year’s total of 68 ‘extreme risk’ countries.

The Child Labour Index 2012 evaluates the frequency and severity of reported child labour incidents in 197 countries. Worryingly, nearly 40% of all countries have been classified as ‘extreme risk’ in the index, with conflict torn and authoritarian states topping the ranking. Myanmar, North Korea, Somalia, Sudan are ranked joint first, while DR Congo (5), Zimbabwe (6), Afghanistan (7), Burundi (8), Pakistan (9) and Ethiopia (10) round off the worst performers.

The Child Labour Index has been developed by Maplecroft to evaluate the extent of country-level child labour practices and the performance of governments in preventing child labour and ensuring the accountability of perpetrators. By doing so, the index enables companies to identify risks of children being employed within their supply chains in violation of the standards on minimum age of employment. The index also analyses the risk of the involvement of children in work, the conditions of which could have a negative impact on the health, safety and wellbeing of child labourers.

Maplecroft suggests that the global increase in the use of child labour is mainly caused by a deteriorating human security situation worldwide. This has resulted in increased numbers of internally displaced children and refugees who, together with children from minority communities, continue to be the groups at most risk of economic exploitation. Sub-Saharan Africa is identified as the region posing the most risk in this respect but most of the growth economies have their own unique conditions in respect of child labour and its remediation. (Read more…)

Finally, Gerard Oonk of the Stop Child Labour campaign in India provides a link to a the campaign’s wonderful Action Plan for Companies to Combat Child labour – published June 12, 2012, which will help companies, NGOs and others to do what is needed: eradicate child labour in your supply chain.

I recommend the Action Plan to all supply chain and corporate leaders who are committed to developing ethical and sustainable supply chains.

Your comments and feedback are welcome.

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