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April 09, 2009

Corporate Efforts to Help Eradicate Human Trafficking and Child Sex Tourism are Insufficient
    by Robert Kropp

Organizations dedicated to the eradication of human trafficking and child sex tourism find that US companies are especially reluctant to take action. Second of a two-part series. -- Statistics compiled by the United Nations Global Initiative to Fight Human Trafficking (UN.GIFT) detail the extent to which human trafficking, including forced labor and sexual exploitation, permeates the fabric of the global economy. An estimated 2.5 million people are victims of human trafficking, and 161 countries are affected.

The majority of the 2.5 million trafficking victims are between 18 and 24 years of age, and 95% of victims experienced physical or sexual violence during trafficking. 43% of victims are used for forced commercial sexual exploitation, and 32% are used for forced economic exploitation.

At the UN Special Session on Children in 2002, the UN estimated that 1.2 million children are trafficked every year, primarily for sexual exploitation and child labor. The underlying reason why children are susceptible to trafficking is always poverty, according to the UN.

Global annual profits made from trafficking are estimated to be $31.6 billion, of which $15.5 billion (49%) is generated in industrialized economies. The International Labour Organization (ILO) estimates that 80% of all forced labor abuse takes place in the private economy. The remainder occurs at the hands of governments and rebel military groups.

The globalization of the economy has resulted in the management of complex supply chains and outsourcing operations by multinational corporations. While management of human rights in their supply chains has become more of a corporate social responsibility (CSR) mandate for companies, the reputational risks associated with the use of forced labor remains considerable for many companies. A recent survey undertaken by UN.GIFT and the UN Global Compact found that the relationship between business and human trafficking remains poorly understood.

A survey from the UN Global Compact, entitled Human Trafficking: Everybody's Business, states that businesses should ensure that their operations do not contribute to human trafficking. Furthermore, "companies should consider ways to help eliminate the existence of human trafficking through the promotion of codes of conduct and corporate social responsibility."

Yet the survey found that less than 20% of corporate participants believe that human trafficking represents a serious threat to the security of their global supply chains, and only 31% identified themselves as motivated to address human trafficking.

Ursula Wynhoven of the UN Global Compact said, "While many companies visited the online survey, relatively few actually completed it. We found that even if businesses want to do something about the issues, there is often a reluctance to have their names associated with them."

The survey recommends that companies undertake risk assessments to help eliminate involvement with human trafficking. It also recommends that companies develop training programs to raise awareness of the problem.

Some members of the industries most vulnerable to involvement in child sex tourism have begun to take steps to address the issue. In response to a shareowner engagement effort led in the US by Boston Common Asset Management, an investment management firm, Marriott International agreed to implement training programs to address criminal activities taking place at its locations worldwide.

In addition, Catholic Health East, led by Sister Kathleen Coll, administrator of shareholder advocacy, has engaged with airlines in order to develop programs to educate their customers about the prevalence of child sex tourism in its destinations in developing countries, especially Asia and Central America.

Yet examples of successful engagement remain few and far between. And while many European companies have taken steps to address a particularly ugly example of human trafficking, very few US-based companies have followed suit.

Carol Smolenski is the Executive Director of ECPAT-USA, which is the US-based branch of End Child Prostitution, Child Pornography and Trafficking of Children for Sexual Purposes (ECPAT), a network of organizations dedicated to the elimination of the commercial sexual exploitation of children. Smolenski spoke with about the challenges her organization has faced in encouraging corporations to take responsibility on the issue.

"From its start in 1991, ECPAT sought to engage the travel industry, and by the mid-nineties travel companies had begun to engage in dialogue with ECPAT on the issue of child sex tourism," Smolenski said. "In 1998, ECPAT Sweden created a Code of Conduct for the travel industry and had much success getting travel companies in Sweden to sign."

The Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism contains criteria to which signatories agree to commit themselves. Companies agree to establish ethical policies regarding commercial sexual exploitation of children, train personnel in countries of origin and travel destinations, contractually require suppliers to repudiate commercial sexual exploitation of children, provide information to travelers and local key personnel at destinations, and report annually.

Of the 623 current signatories to the Code, only five are based in the United States.

Smolenski said, "We have been promoting the Code in the US since 2003, but we've always had extreme reluctance from US companies to talk to us at all. We tried to get US airlines to train employees and show an in-flight video, but they all refused. The US Department of Transportation stepped in and asked the airlines to show an in-flight video addressing child sex tourism, but the companies would not."

Smolenski recounted one incident in which an airline replied to the US Department of Transportation request by expressing concern that showing an in-flight video on child sex tourism would lead its customers to associate it with the practice.

A successful outcome of ECPAT's efforts to promote the Code in the US occurred in 2004, when the Carlson Companies became a signatory. "We had hoped that it would lead to other companies signing the Code, but that did not happen," said Smolenski.

Pointing out that an estimated 25% of sex tourists reside in the US, Smolenski continued, "We still hope they will take some steps to act responsibly. But I have to point out the striking contrast between the lack of action by US companies and the cooperation by other companies with holdings in Central America, for instance."

Wynhoven of the UN Global Compact also noted the reluctance of many companies to identify themselves with the subject of human trafficking, and suggested that actions taken by companies under the umbrella of general human rights issue might find more favor.

"It's possible that if the issues are rephrased to encompass more generally acceptable themes such as human rights and child protection, then more companies would be willing to address the issues," Wynhoven said.

"Many businesses have leveraged their influence with supply chains to further issues of women's empowerment," she continued. "Maybe in this context businesses could come up with initiatives pertaining to related issues involving human trafficking, which most often has women as its victims."

Meanwhile, efforts by shareowners to engage companies on the issue of human trafficking have found their way onto proxy voting proposals in 2009. The use of forced labor in Burmese oil fields, and the forced labor conditions under which pig iron is used to make steel in Brazil, are examples of current shareowner activities on the issue.

"What some might think is a social justice issue is becoming an investor issue," Lauren Compere of Boston Common Asset Management said. "Modern-day slavery is occurring at the sources where commodities are produced. Investors are demanding that corporations extend their responsibilities to the origins of their supply chains."

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