The Role of Transnational Corporations in Combating Human Trafficking and Forced Labor

Updated: Dec 17, 2020


There are an estimated 40.3 million in modern slavery—a $32 billion annual-income business (at minimum), of which one out of four victims are children.[1] The International Labor Organization (ILO) reports:

Out of the 24.9 million people trapped in forced labour, 16 million people are exploited in the private sector such as domestic work, construction or agriculture; 4.8 million persons [are] in forced sexual exploitation; and 4 million persons [are] in forced labour imposed by state authorities. Women and girls are disproportionately affected by forced labour, accounting for 99% of victims in the commercial sex industry and 58% in other sectors.[2]

Human trafficking is an immoral atrocity and a gross violation of the rights of persons. Humankind—both male and female, adult and child—are made by God, in His image. Genesis 1:27 (Amplified Bible, Classic Edition). God has created mankind for His glory and good purposes, not for man’s misuse and abuse. Isaiah 43:7 (Berean Study Bible). For we are [God’s] workmanship, created in Christ Jesus unto good works, which God hath before ordained that we should walk in them. Ephesians 2:10 (Berean Study Bible). God commissions and ordains good-hearted leaders to speak to the Pharaohs of the world, “Let My people go, that they may serve Me.” Exodus 8:20 (Amplified Bible, Classic Edition). It is this same battle—setting the captives free, that began at the Fall (of mankind into sin) and runs the risk, unfortunately, of continuing until Christ comes again. Genesis 3 (Amplified Bible, Classic Edition). At that time, Christ will bring His “wages and rewards” (misthos: recompense or punishment) to repay to each person what his or her own actions and work merit. Revelation 22:12 (Amplified Bible, Classic Edition). It is with this biblical warning, and the hope of setting people free from the modern slave trade, this paper attempts to inspire corporate leaders to soberly evaluate the ethics of their contemporary business practices, extracurricular dealings amongst colleagues or associates, and policymaking with various national governments, and to seriously consider their global leadership capacity regarding the abolition of human trafficking and forced labor.

Modern slavery crosses all cultures, jurisdictions, and economic lines and its defeat requires strategic confrontation within those very same lines. In an increasingly global economic environment, transnational corporations (TNCs) are at the influential forefront of multicultural and technological change. While globalized trade and jurisdictive conflicts pose hurdles to overcoming human trafficking and forced labor,[3] such avenues also provide the opportunity for ethical business practices to fulfill the intention of the U.S. Declaration of Independence and the International Bill of Rights with regard to every individual within their economic sphere. This paper will address the economic and social benefits for the cooperative convergence of corporations within the operative combat of the modern slave trade—in both domestic and international jurisdictions, by appealing to the fundamental principles of international and natural (biblical) law. This paper will assert multinational corporations, and representative individuals of such TNCs, hold an ethical and legal obligation to refrain from business practices and dealings which directly or indirectly allow human trafficking and forced labor events to proceed.

Overview of Topic and Relevance to Human Rights Development

International capitalism has the ability to provide beneficial opportunities and economic independence for people around the world.[4]However, transnational corporations are motivated by profit and working conditions in “developing countries are often very poor,” child labor is common, and the “standards in developing states tend to be low or unenforced.”[5] Dana Raigrodski explains the economic complexity of this issue:

The ILO and the U.S. State Department estimate that at least 20.9 million adults and children are victims of forced labor, bonded labor, and commercial sexual servitude… 18.7 million...are exploited in the private economy. Of these, 4.5 million...are victims of forced sexual exploitation, and 14.2 million...are victims of forced labor exploitation. In 2005 and 2009, the ILO estimated…annual profits from human trafficking are at least $32 billion, of which $15.5 billion is made in industrialized countries. More current estimates put the total illegal profits obtained from the use of forced labor worldwide at $150.2 billion per year.[6]

It is important to consider these illegal and unethical dollars contribute a steady income stream towards legal commercial revenue, “which would not exist without the…trafficking of billions of people around the globe.”[7]No consumer is entirely immune to tainted commerce, however, the average consumer is becoming increasingly conscientious about where they spend their dollars, due to ethical considerations. The aforementioned dollar amounts do not account for funds “generated by trafficked and forced labor within the trillions of dollars in capital flowing across the globe.”[8]Of the “300 billion dollars generated annually by migrant worker remittance, possibly as much as 20 percent goes to pay commissions and debt bondage to the traffickers.”[9]The U.S. is the largest independent consumer in the world, with the government alone spending “$500 billion a year…in the global economy.”[10]

At the 2008 World Economic Forum, Bill Gates called upon corporations to begin initiatives toward “creative capitalism” with the “twin mission [of] making profits and also improving lives for those who don’t fully benefit from market forces.”[11] This ideology advisedly should permeate corporate culture in that businesses are “subject to the disciplinary regimes of…international human rights.”[12]

Article 21 of the Norms [Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights] include[s] any business entity, regardless of the…sphere of its activities.[13]

This means any business entity is responsible and can be held liable for human rights violations globally. There is no doubt that corporations are “powerful forces” within every nation.[14]

The 300 largest corporations account for more than one-quarter of the world’s productive assets [and] transnational corporations hold ninety percent of all technology and product patents worldwide, and are involved in seventy percent of world trade…[and] employ 90 million people (of whom some 20 million live in developing countries)…[15]

One of the greatest challenges facing international law is the tension between the voluntarism of, and enforcement over, independently sovereign states—some of which have differing viewpoints on legality, political policy, and cultural mores regarding forced labor, human rights, and even sexual exploitation. But perhaps the even greater challenge lies in harnessing the “powerful force” of transnational corporations as the primary instrument in the advancement of human rights policy around the world. This, too, is both voluntary and enforceable by international law. In order to persuade TNCs, and their members, to lead in the advocacy of global human rights, consideration must be made regarding the three main areas of profits, legality and ethics.

Human Rights Legal Framework

Many transnational corporations conduct business or contract with third parties in underdeveloped countries where the human rights and labor laws are lax, getting by with sub-par labor standards due to the undeveloped state’s jurisdictive authority. However, cutting these corners has legal repercussions under international law. According to David Weissbrodt and Anti-Slavery International:

The International Court of Justice has identified protection from slavery as one of two examples of “obligations erga omnes arising out of human rights law,” or obligations owed by a State to the international community as a whole. The practice of slavery has thus been universally accepted as a crime against humanity and the right to be free from enslavement is considered so fundamental “that all nations have standing to bring offending states before the Court of Justice.”[16]

Slavery, including forced labor, constitutes a “war-crime when committed by a belligerent against the nationals of another belligerent;” and it is a “crime against humanity” when committed by public officials against any person irrespective of circumstances and diversity of nationality.”[17] It is important for those engaged in international business to be aware that government officials, such as in Tier 3 China, who are committing the crime of forced labor are not immune from penalty under international law, nor are any private persons involved in any “crime against humanity” involving any person.[18]

The United Nations Secretary General, at the World Economic Forum of 1999, “called upon world business leaders to endorse the Global Compact” which included “nine voluntary principles with respect to human rights, labor standards, and the environment.”[19] In 2004, a tenth statement was added to read, “Businesses should work against all forms of corruption, including extortion and bribery.”[20] The term “corruption” implicitly calls for ethical business operations on every level. In addition, the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights clarify standards and accountability of corporate conduct, and the Global Sullivan Principles voluntarily promote corporate social responsibility and transparency.[21] Both the United States Constitution and the Universal Declaration of Human Rights prohibit slavery.[22] Further, the U.S. has ratified the International Covenant on Civil and Political Rights (CCPR) and the Convention on the Rights of the Child Optional Protocol (CRC-OP-SC), which respectively hold states, groups and individuals accountable (Art. 2, 5) and prevent the sale of children and child prostitution.[23] In short, detestable cultural mores and unethical business or government practices which constitute “slavery” are now prosecutable as “crimes against humanity” under international law.

Per the foregoing, businesses originating in developed nations such as the U.S., and each individual employee, now have a global, legal responsibility under international law to not “take advantage of” the lack of local jurisprudence with regard to forced labor and human trafficking. Further, such corporations and employees have an ethical responsibility to relentlessly endeavor to improve the lives of every individual impacted by their dealings. Case in point, the U.S. and China corroborate economically on various technologies, yet China is known for “harsh working conditions…including child labor.”[24] Despite having ratified the International Covenant on Economic, Social and Cultural Rights, the Convention on the Rights of the Child, and the CRC-OP-SC, China is a nation of top concern according to the U.S. Department of State’s 20th Edition Trafficking on Person’s Report.[25] Among several recommendations, the report recommends China:

Abolish the arbitrary detention and forced labor of persons in internment camps and affiliated manufacturing sites in Xinjiang and other provinces and immediately release and pay restitution to the individuals detained therein. End forced labor in government facilities, in nongovernmental facilities converted to government detention centers, and by government officials outside of the penal process; cease the use of harassment, threats, and illegal discriminatory immigration policies as measures to coerce the return to Xinjiang and subsequent forced labor of ethnic and religious minorities living abroad; criminalize all forms of sex trafficking and labor trafficking as defined under international law.[26]

With the U.S. Department of State issuing such report, it is imperative that U.S. TNCs, including executive leadership, legal counsel, and all employees, are fully aware of the stipulations in the report regarding each specific country with which they have dealings.

On December 25, 2003, the U.N. General Assembly’s Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children (Trafficking Protocol) was entered into force.[27] The Protocol defines trafficking in persons, in three applicable elements:

1) An action, consisting of “recruitment, transportation, transfer, harbouring or receipt of persons”; 2) By means of “the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person”; [and] 3) For “the purpose of exploitation”. [It] includes, “at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude, or the removal of organs”.[28]

While the U.S. has strict laws and penalties, China “establishes only the crime of the trafficking in women and children for the purpose of purchase and not of exploitation” and the Chinese government has been criticized for flawed interpretations of the General Assembly’s Trafficking Protocol, thus making it difficult to “facilitate transnational law enforcement cooperation.”[29] In addition, the ILO recommends any form of trafficking girls or boys under the age of 18 for labor be made a criminal offense.[30] While the lines between forced labor, child labor and sexual exploitation may be somewhat blurred, the international legal community has made it distinctly clear they are all crimes punishable by law.

Legal Principles and Applicable Case Law

Under international law, both states and individuals can be held liable for proven human rights violations—but can corporations? In Kiobel v. Royal Dutch Petroleum Co. the “Second Circuit diverged from prior case law” (regarding the Alien Tort Statute) and held, though individuals can be found liable for violations of international legal norms, “there was no such liability for corporations.”[31] Circuit Judge Level replied:

I agree with the majority that all of the claims pleaded against the Appellants must be dismissed. I cannot, however, join the majority's creation of an unprecedented concept of international law that exempts juridical persons from compliance with its rules. The majority's rule conflicts with two centuries of federal precedent on the ATS, and deals a blow to the efforts of international law to protect human rights.

In 2010, the U.S. Supreme Court granted certiorari but did not decide the case on the aforementioned grounds and the question has remained open in U.S. law, with the exception of Aragon v. Ku.[32] In this 2019 case, it was held:

[C]ertain forms of conduct violate the law of nations whether undertaken by those acting under the auspices of a state or only as private individuals. Although corporations have rarely been prosecuted criminally or civilly for violating customary international law, corporate defendants can and have been held liable for violations of international law. The Alien Tort Statute, 28 U.S.C.S. § 1350, is civil, and corporate tort liability is common around the world.[33]

The foregoing cases set forth precedent, establishing an avenue for potential individual and corporate prosecution regarding misconduct for human rights violations. This potential for penalization exists under both domestic and international law. Proper international and multistate legal analysis of all countries with which the TNC is doing business is imperative to the fiscal viability and ethical responsibility of such corporation. All direct and contracted labor policies should be routinely analyzed and effectively monitored to ensure compliance with ethical labor standards and international law. Global law firms, with expertise in both human rights and international business law, may prove a valuable asset regarding routine compliance analysis for TNCs.

The Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, though not legally binding, may soon become a form of “soft law” and the implementation procedures suggest corporations guilty of human rights violations should be subject to “compensation, return of property, and other reparations.”[34] It is best for TNCs to concisely and proactively “pick a side” with regard to fair labor standards and the human rights global initiative. The elementary framework for business ethics can be found within the U.N. Global Compact principles, which include the following:

Principle 1 and 2: Businesses should support and respect the protection of internationally proclaimed human rights; and make sure that they are not complicit in human rights abuses.
Principle 3 through 6: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced and compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation.
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.[35]

Though TNC and state lines of responsibility can be blurred, it is advisable for TNCs to be aware of their sphere of influence during ongoing negotiations and use it to consistently advocate for human rights development within the regions they impact. Further, TNCs can carefully select the sectors and contracted relationships within which they operate, based on the lawful and ethical labor standards in play within such sectors or contracted forums. Businesses must exercise due diligence regarding indirect associations as…

Businesses can…be indirectly linked to trafficking through the actions of their suppliers or business partners, including sub-contractors, labour brokers or private employment agencies. In this way, companies can be implicated if they source goods or use services that are produced or provided by trafficking victims.[36]

A conviction under international criminal law does not necessarily require “knowledge of [the] specific abuse” or desire or intention for it to occur, as long as there was some “knowledge of the contribution.”[37] Therefore, it is not an adequate defense against human rights violations that a company was merely carrying on “normal business activities” or “following orders, fulfilling contractual obligations, or even complying with national law.”[38] In short, ignorance—regarding international legal norms as they pertain to human rights—is not an excuse.

As previously stated, in order to persuade transnational corporations to lead the charge in global human rights advocacy, the categories of profits, legality and ethics must be considered. To fulfill the anti-corruption principle of the Global Compact (Principle 10 above), TNCs must seek legal expertise, develop educational programing, and implement internal fiscal incentives for the ethical behavior of compliant employees (and corrections or dismissal for those found noncompliant) while navigating the intersection of global business and legal ethics. Both categories of ethics coexist on an international plane and are to be employed to promote justice and freedom for all. Effective international leadership, wherein capitalism and free markets can “transform economies from extreme poverty…where socialism has failed” requires a firm stance against corruption, or “self-interests and greed will destroy democratic capitalism.”[39] This is, however, a cooperative effort from individuals on both sides of the human rights equation.

[I]ndividual rights, self-assertion and self-interest have come to play an increasingly important role in society. Some are inclined to claim a right to everything. This is, at the same time, one of the weaknesses of the human rights movement. There are important dangers to a boundless extension and misappropriation of the human rights movement. One role that business ethicists may play is in formulating better theories of rights that are not open to the corruptive effects of self-aggrandizement.[40]

In addition to human rights remaining legitimately within the realms of fairness and rightness (wherein labor unions, or other individuals or organizations, are not taking unjust advantages of corporations, nor swaying union members politically in exchange for benefits), corporate and governmental vices regarding power or the pursuit of financial gain must also remain legitimately within the realms of fairness and rightness. The red flag against corruption flies both ways, however, history has proven free trade, if ethically balanced, shores individual freedoms from a predominantly socialist or communist agenda which inevitably infringes on the “rights” of all persons under such state or dictatorial control.

Corporate ethical standards entail the responsibility to review present regional and international laws regarding human rights to ensure both business practice and the corporate culture support ethical policy-making and legal compliance.[41] The culture, or relational dynamics, of corporations are extremely influential over not only direct or contract employees and associates, but over consumerism, politics, media, government, and society at large. Daniel M. Warner explains the underlying principle that should govern all free-trade business conduct: