Can blockchain stamp out modern slavery?

August 29, 2018
Chris Wheal

Global trade relies on many tangled supply chains often using slave labour. Blockchain could be a weapon in the human rights battle that’s also about the bottom line.

The front-of-shop risks from slave labour exposure are extreme: public shaming, plummeting sales and a precipitous drop in the share price or a strapping fine. Blockchain may be able to help companies track and protect their biggest asset – their employees, whether employed directly or not – while scaling up their CSR credentials.

At least some think so. But given the level of tracing detail demanded – bonded labour ranges from the agro-industry to sex work to mining and construction – the tech is well away from a miracle cure.

Supply chains may involve a plentiful number of modern slave channels, even in 2018

Taste the problem of modern bondage

Earlier this year Coca Cola confirmed it had partnered with the US Department of State to try and root out supply chain labour. Young kids wielding machetes to cut and strip sugar cane, a core Coke ingredient, have been rampant in places such as El Salvador in the past, often for many hours a day.

Scarred by unflattering media headlines the US beverage giant now hopes to verify worker contracts with a blockchain registry platform sourced from US tech player Bitfury Group (there’s also add-on blockchain services from Emercoin which claims strong security credentials).

The move was significant: here was blockchain co-operation between a blue-chip consumer giant and a Federal agency with the joint aim of improving economic conditions for its workers. This was well outside the usual bottom line profit-loss maths.

Coca-Cola and other big-name beverages have a troubled supply chain history

Everyone has slaves – lots

Brian Iselin, founder of Swiss-based Slave Free Trade, says too many company supply chains are unclean. The ex-soldier turned counter-intelligence expert offers Ethereum-based blockchain and artificial intelligence tools to help companies swerve away from indentured labour.

He claims the average Western consumer slave ‘footprint’ is between 30-50 slaves – each. From plantations to paedophile hang-outs, 45m modern slaves exist at any one time (though ‘slave’ is a rough umbrella term) underpinning, he says, a surfeit of business-to-consumer horror.

Premium price basics aren’t immune to slave trade concerns

Eye-shadow to leather bags

Practically, that means kids as young as five going into mica mines to pull out the shiny stuff that goes into women’s eyeshadow. In China, children working in leather tanneries can use chemicals so strong that their bones dissolve, slowly, while they labour.

“Children become rag dolls to make us shoes,” says Iselin in a Zurich presentation in 2017. “Every day we are buying products of slavery. Some 75% of companies in the western world admit they likely have slavery in their supply chains.”

Many businesses are wrong about whether consumers care about supply chain conditions claims Brian Iselin

He goes on: “Most big businesses tell us that consumers don’t care [about the conditions]. I think that’s crap. I think two-thirds of consumers care. I think when we put products on the shelf that are verified ‘slave-free’ what do you think about the product next to it that’s not?”

Verified: really slave free?

There are industry-wide issues though. While blockchain tech can encourage companies to adopt a contract, this agreement may not be necessarily enforceable. The Mekong Club, an anti-slavery NGO, says a big concern is the reliability of the numbers entered into a ledger system.

“If individuals who are entering the data at the first instance are corrupt, there is arguably nothing stopping them from entering information to say that a product is ethically sourced when in fact it is not.”

Not all about the T-shirt – supply chain worries extend deep into the textile industry, at several price points

Check and re-check

Which means nailing down due diligence and checks. What is to stop a quick response (QR) code linked to an ethically sourced product being replicated and attached to another? Solutions are being worked on, but trust kinks remain.

Other supply chain culture issues hang about. Take two fishing boats out on the Gulf of Thailand. One boat contains workers in servitude, the other boat contains free men. Both boats contain export-quality fish that can be likely sold for the same price.

In a developing economy such as Thailand or Indonesia, where is the incentive for better behaviour?

Bait to plate

The fresh food South East Asian fishing industry, in particular, is highly complex and has close links with many Western retailers including Costco, Tesco and Carrefour.

Fishermen grade fish for sale in December 2010 in Samutsongkram, Thailand, home to coastal commercial fisheries

One British start-up, Provenance, uses blockchain and mobile technology to create transparency in supply chains such as these. Proof of compliance data using mobile and smart tags are used along the product journey, from fishing boat to processing factory. The startup has worked in a number of industries with customers including retailer Co-op, working with them on some of their fresh produce.

A blockchain digital ‘handshake’ is created at each point the product moves down the supply chain, eventually to the company depot before the finished product is released to stores.

Staff and shoppers can access ‘proof of compliance’ info embedded into the unique batch ID, which might also include the sell-by or fabrication date.

Co-op Group appears to be a food supply chain pioneer

 

Future free

Is the UK moving faster than most on modern slavery? Possibly. The UK’s Modern Slavery Act 2015 demands companies with a turnover of £36m or more must publicise what they are doing to prevent slavery in their supply chains in a “prominent’ place on their website.

But a company could publish a statement saying it is doing absolutely nothing to prevent slavery and still be fulfilling its legal obligations, the Guardian warned at the end of 2015.  “Crucially, there is no legal responsibility for companies to police their own supply chains or guarantee that products or services are categorically slave-free.”

However, company statements have to be signed off by the chief exec who, along with a board, has a fiduciary duty to be accountable.

Slavery, updated

So, it’s work in progress. Reshma Kamath from the Blockchain Research Institute wrote in July that tokenizing slaves and tracking them on ledgers was nothing new. “Slave registries – records of slaves listed on a paper ledger – were commonplace in the South [US] and housed on the walls of each plantation.”

Run-down buildings on London’s Old Kent Road; a rotten supply chain could be nearer home than you think

She went on: “Slaves were listed as ledger ‘items,’ with accompanying characteristics of age, race, gender, and other defining features. Slave owners issued wooden tokens to slaves for use within the limited plantation economy.”

Modern day slavery

  • Labels lie – ‘Made in China plus one’ means the garment will have probably been made in either a North Korean labour camp or factory. A surfeit of North Korean clothing agents act as go-betweens for Chinese suppliers and Western buyers in Dandong, Reuters reported last August
  • Many companies boast of a quick product turnaround, even for big orders. Guaranteed delivery overnight. But such flexibility may rely on a ‘flexible’ labour supply chain where not enough questions are asked – be it in New Delhi or an Old Kent Road warehouse
  • Germany is considered the brothel of Europe and home to many Romanian and Nigerian prostitutes. But any European can rent a child in the Philippines for an hour, “who then has to do whatever they want in front of a webcam,” German news site Deutsche Welle reported, August 2018

For Made in China you may have to read ‘North Korea’

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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