Children sit during a raid on a shrimp shed in 2015 in Samut Sakhon, Thailand, where forced labour has been a known issue. The pandemic has disrupted supply chains, creating opportunities for human traffickers to fill the void with victims. Photo: AP
by Ingrid Verschuren
by Ingrid Verschuren

How the coronavirus pandemic puts businesses at higher risk of being linked to modern slavery

  • The pandemic has allowed human trafficking and other types of labour exploitation to flourish, as supply chains were disrupted and traffickers rushed in to fill the void
  • The financial services and technology sectors have unwittingly become two of the industries most exposed to this issue

The global health crisis continues to disrupt and transform our daily lives. In particular, businesses have found their operations dramatically impacted and have had to find new ways to remain relevant, accessible and solvent.

For many business leaders, the severity of the crisis called for rapid responses to put their organisations on a recovery footing. However, on the flip side, the pandemic also created a “perfect storm” that has allowed modern slavery, one of the fastest-growing criminal enterprises, to flourish in the dark.

To understand this phenomenon better, Dow Jones recently conducted research on the impact of Covid-19 on modern slavery – an illegal activity which, according to the International Labour Organization, generates US$150 billion in profits each year.

The study revealed that coverage of the topic dropped by 25 per cent globally following the onset of Covid-19 compared to the same period the year before. In Asia, this decrease was 26 per cent and there was an even steeper drop in cases reported to regional NGOs on the ground.

At face value, these findings could imply that human trafficking now poses less of a threat to businesses, but the reality is quite the opposite. Because unlike conventional industries, modern slavery didn’t stop during the pandemic.


Body of Indonesian fisherman dumped overboard amid allegations of abuse on Chinese ship

Body of Indonesian fisherman dumped overboard amid allegations of abuse on Chinese ship

In fact, whilst most of the world was shutting down at the onset of Covid-19, the resulting material and labour shortages created new opportunities for traffickers to fill the void and exploit victims within the operations of legitimate businesses.

For example, many multinational organisations were forced to quickly change suppliers to meet fluctuating demand as a result of Covid-19.

The Dow Jones research found a 2,000 per cent spike in global reports of supply chain disruption in March 2020, and labour exploitation overtook sexual exploitation as the most reported type of trafficking following the onset of the pandemic.

And with this disruption, the financial services and technology sectors have unwittingly become two of the most exposed industries to this issue, with increases of 131 per cent and 25 per cent in modern slavery-related coverage respectively.

These two sectors are finding themselves in an unwelcome spotlight and the reasons are revealing. Technology platforms have now become convenient locations for traffickers to recruit victims of modern slavery, particularly as they are not reliant on borders remaining open.

This was the focus of the majority of related coverage during the pandemic, which also comprehensively covered the initiatives helping to combat the misuse of platforms by human traffickers as well as cases where the platforms were used to exploit others.

The financial services industry is inherently more embedded in the issue. This is because once money generated by modern slavery enters a bank, it can then technically be classified as money laundering.

From both a regulatory and a mainstream perspective, the authorities are increasingly demanding that the financial services industry more readily identify when money is being laundered and tackle the issue once and for all.

But achieving this is no small order. Financial business leaders must ensure that all staff members are familiar with the tactics and strategies used by human traffickers when attempting to store, conceal, manage, send, or launder funds through a financial services organisation. 

The reality is that modern slavery has not disappeared, it has simply been driven further underground by the pandemic.

This evolution has the potential to open the door to further post-pandemic risks for businesses, unless they understand the risks of deprioritising corporate due diligence, compliance and ethical frameworks.

However, complacency on the modern slavery issue poses both legal and reputational challenges for companies which operate within Asia and markets like Australia and Britain, where increasingly strict regulations and public scrutiny exist. 

As Asian economies begin the long road to recovery, regional business leaders must ensure that their own future success does not come at the cost of people forced into modern slavery.

Beyond the ethical issues associated with modern slavery, there are serious reputational, brand and regulatory risks that must be carefully and decisively navigated.

Ingrid Verschuren is head of Data Strategy at Dow Jones, a global provider of news and business information