Earlier I wrote about unintended consequences of corporate codes of ethics. Now a recent article shows that there may be similar risks for other “motherhood and apple pie” corporate initiatives – anti-slavery and anti-human trafficking statements. If you haven’t read, British vacuum cleaner and home appliance maker Dyson terminated their business relationship with Malaysian vendor ATA due to audit findings concerning forced labor at ATA. Conditions there were allegedly reported to Dyson in 2019, and according to the article Dyson “reported that it had undertaken six social audits of the factory between November 2019 and June 2021, with the final report identifying significant risks of forced labor.” None of the audits have been released to the public.
Most observers thought that Dyson’s termination of the business relationship was the end of the story. However, that is not the case as a “group of migrant workers from Nepal and Bangladesh are initiating legal action against … Dyson over allegations of forced labor, unsanitary living conditions, dangerous working conditions, and other claims.”
“The plaintiffs argued in their legal claim that Dyson was ‘unjustly enriched as a result of the unlawful, exploitative and dangerous conditions at the factory’ … [and plaintiffs] contended that Dyson was responsible for the violation of their legal rights due to its awareness of the illegal working conditions in the factory since at least November 2019. Further, Dyson had assumed responsibility for detecting and preventing forced labor and exploitation in its supply chains in several public statements and policies, such as its Dyson Slavery and Human Trafficking Statement 2020.”
What This Means
This legal challenge presents a conundrum for a couple reasons – not the least of which is that there are legal mandates for businesses in the UK (Dyson’s home), California, and Australia to issue such statements – and other countries are considering following suit. There are no real teeth in the current legal disclosure laws and many companies issued boilerplate and aspirational language, possibly not considering extra-territorial third party liabilities. Even though the Dyson action is only a claim at this point, it would be prudent for companies to revisit their anti-slavery/anti-human trafficking statements with this development in mind.
Beyond the written statements, this potential liability could cause companies to withdraw from actively supporting and monitoring needed improvements in working conditions at their suppliers, vendors and contract manufacturers – something of a perverse consequence. When reviewing anti-slavery/anti-human trafficking statements, companies should also consider what actions they may take if faced with claims similar to those levied against Dyson, and what that means for supplier engagement and support initiatives.
