Boards of directors have a lot – maybe too much – to do. Subjects long believed to be the province of management are now viewed as being in the board’s wheelhouse, and when a problem arises with respect to any of those subjects, the first question asked by investors, regulators, the media, and others is often “where was the board?” So it is with a degree of reluctance that I am writing to suggest another subject that I believe boards need to address.
Some background may be in order. A few weeks ago, I attended a meeting of the American Bar Association International Law Section in Madrid. (How a US-centric lawyer ended up at that meeting is a tale for another day.) The trip, the city, and the conference were wonderful; I met some extraordinary people and was beyond grateful that I was able to go. I also learned a lot, mostly on things like international trade and customs law, cross-border discovery, and other topics that I don’t often encounter in my practice.
Another panel that I thought had little to do with my practice turned out to be the most compelling panel of them all, and it definitely is relevant to my practice and to the observation above about the ever-growing responsibilities of the board. The title of the panel was “Recognizing Human Trafficking as a Common Occurrence During Conflict, and Building Protection and Anti-Trafficking Strategies into Global Responses”. I suppose the title of the panel could have been more succinct, but – as the moderator of the panel suggested – a more helpful change might have been to give a trigger warning before the panel got underway.
The panel featured four remarkable women, each of whom told stories that were grisly, chilling, and profoundly upsetting – actual, true stories about enslavement, kidnapping, life in refugee camps, and other disturbing topics. I will not attempt to repeat any of the stories here – among other things, I could not do them justice – but I came away from the panel believing that we must do better and that, once again, businesses can and should play an active role in so doing.
Another digression. Several years ago I attended a panel discussion about gender diversity on boards. Much of the discussion focused on gender diversity being the right thing to do. Of course, I agreed that it was (and is) the right thing to do, but I approached the panelists at the end of the program to say that businesses don’t necessarily do things just because they are the right thing to do. Rather, it’s necessary to make a compelling business case why boards should be diverse. Businesses seem to have figured that out, at least to some degree, and while we are nowhere near achieving desirable degrees of diversity, we seem to be getting closer.
So it is with human trafficking. There is a strong case to be made why businesses need to work on its elimination, but we need to make that case. One of the key components of that case should be apparent to us all; can you say “supply chain”? As boards increasingly take deep dives into how their companies address supply chain challenges, they should ask questions about the components of their supply chains: Where are goods coming from? Are they the products of forced labor? Child labor? If that doesn’t move a board, how about reputation? How would the company’s investors, employees, customers, and others react if they learned that its products are produced by women who are virtually enslaved, making far less than what we euphemistically call “subsistence wages”? How would that play out in the media?
There are other reasons why this is a “must have” rather than a “nice to have” issue for boards to consider, but rather than spell those out, I urge my counterparts to bring this issue to the attention of their companies’ and clients’ boards, as well as their managements, and to consider the business and human implications of ignoring it.