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MAKING PROFIT FROM OTHERS’ MISERY

05 July 2014

Year after year for the past six decades, there have been regular reports of garment workers in Third World sweatshops, enduring poor pay, vile workplaces and constant abuse from their bosses. In recent years, these workers’ pains have been sharpened by the actual collapse of these shoddily-built sweatshops.

Worse, many of these garment workers are children, whose parents force them into labour from an early age to help feed their families. Their fate could be worse, these parents reason, because instead of making clothes, these children may be forced to sell themselves in city streets.

The sad fact is that those who invest in the garment industry, as well as those who wear the clothes they produce, are often not as bothered with the plight of these workers as they are with the rates of return they are enjoying from their investments.

On a recent visit to a company in an Asean country, the issue of extreme and inequitable working conditions was brought up. This visit, and the query it brought, was very timely as news had just broke about how workers in one Asean country apparently prepare seafood for export to the UK under circumstances akin to slavery.

The reports stated that the seafood workers worked up to 20 hours a day on average, were beaten up regularly if they dared to disobey their bosses and, if they really got on the wrong side of their employers, were even killed, mafia-style.

Media reports on this slave-tarnished business revealed that most of these slaves were workers who had migrated from a northern Asean neighbour. These workers were enslaved even though they had paid a hefty sum each to employment brokers to secure factory or construction jobs. Instead of being treated fairly, these migrants were actually sold to captains of fishing boats, for as little as US$420 (RM1,344) per worker.

Time limit
No one needs to be reminded that it is illegal to enslave anyone. According to the Global Slavery Index, this so-called “pro-slavery” Asean nation was risking a downgrading to a Tier-three ranking in the index which would put them into the same category as North Korea.
This would likely lead to this Asean country facing restrictions when it tries to get aid from the United States, the World Bank or the International Monetary Fund.

As anticipated, when the 2014 report on Trafficking in Persons was released on June 19, the Asean country with the enslaving seafood industry was indeed downgraded to Tier-three. It had already been warned last year that it would be downgraded automatically if it did not make considerable efforts to redress its issues of slavery and trafficking, particularly in its seafood industry.

A former American trafficking ambassador has revealed that there is a time limit on how long a country can stay in the Tier-two watch list, such as the above country. In fact, this country had been on that watch list for three years, and was viewed as not really cleaning up its act. You may wonder why international investors even consider focusing on this slavery issue. Well, this is the S in ESG, which stands for Environmental, Social and Governance, which all form a very important part of business sustainability.

In layman terms, would you as a consumer want to buy seafood from a supermarket that has been prepared for you under abject conditions of slavery? It is very likely that no one in their right mind would want to shop at a supermarket that indirectly supports slavery. The approach of pressuring business people to end slavery in their supply chains is increasingly necessary if one wants to do business in a sustainable manner.

One of two large American supermarket groups that did business with this alleged pro-slavery company actually saw its share price dropped by as much as 3.6% after the released media reports.

Drop in share price
The situation is not helped by the fact that large prawns and choice shellfish are farmed on such an industrial scale today that those working in the business are working for next to nothing, or more likely nothing at all.

Since the release of the slavery supply chain reports, supermarket chains have responded with advertisements posting messages such as each and every employee must be “treated fairly and with dignity all the time”. One such company has even gone so far as to commit to auditing its entire operation to ensure that their supply chain is free of such social wrongs. The company has also committed to systematic, independent spot checks to ensure that its supply chain continues to be slavery-free.

As this company happens to be one of the world’s largest buyers of fishmeal, and is also a leading manufacturer in Asia, its commitments will likely be the push for its competitors into following suit. In particular, the company said it would keep an eye out on any uncertain and erratic trends within their fishing activities in its supply chain.

Now, NGOs, consumers and certain investors are demanding that if a supply chain is corrupt, it needs to be changed.

Within the investment community, certain fund managers are also focusing on this supply chain issue with supermarkets but they are not asking consumers to forgo seafood or having the intent to force companies to close down. Instead, they are asking for clarity from those companies who are involved in preparing seafood for their consumption, and in what conditions they are made to do this. With mounting pressure from various groups, and with the focus all on ending this allegation of slavery, the goal is that the deplorable working conditions of these fishermen will one day end, and not for this to be a political game of chess by larger nations over the smaller ones.




© CORSTON-SMITH ASSET MANAGEMENT SDN BHD 2014