WATCH: How Blockchain Fights Modern Slavery: Mark Blick, Diginex

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It may be jarring to consider, but there are currently more slaves in the world now than at any other point in history. According to figures from the United Nations’ International Labour Organization (ILO) and the Walk Free Foundation, there were about 40.3 million people who can be considered modern slaves in 2016. That means that one in 200 people in the world is a slave. Forkast.News Editor-in-Chief Angie Lau sits down with Mark Blick, Head of Government; Blockchain Technology at Diginex to find out more about how they are using blockchain to address the issue of modern slavery.

Key Highlights

  • I think for us, the real the real value add is how do we move away from a paper based process? The fact that I use an orchestrated workflow amongst a bunch of market participants that happens to use DLT. Where we’re coming at it from is where is there an inefficient process often based on people that has a high error rate, that’s potentially open to fraud. In a complex ecosystem, we have multiple stakeholders we’re looking to create, share and read information who may or may not trust each other, then we believe that blockchain is a great answer to be able to store that information.
  • [We’re working with] Members of the Mekong Club Business Association. Where we’ve started is right on the ground. You tend to have the brands that sit on top who may and actually generally do not own the factories that they source. We’ve gone directly to work with the factories in collaboration with the brands. And as we move vertically, we’ll move closer towards where migrant workers came from and also move closer to the brands and ultimately move closer towards the consumer. 
  • There are various ways in which we want to scale. The most direct one is how do we scale with the with the core product that we have, which is enhancing transparency in labor recruitment processes. We’re putting together right now a very large project which has ambitious goals, five million workers over three years. It’s a large project that we have that we feel very confident with. But then it’s back to the point around the broader social governance metrics that it then becomes very exciting. How can I get a greater picture of how companies operate?

Listen to the podcast version

Modern slaves may not be the type that you’d imagine existed in history, as technology and changes to society have also changed the nature in which people are being exploited for labor. A key component of contemporary slavery are contracts, and written agreements that individuals sign. People such as migrant workers–which move to different countries or regions expecting to work under agreements specified in a contract–may find that the arrangements have changed once they arrive.

Under threat, coercion, and a variety of manipulative situations, slaves are at the mercy of record keeping systems that are centralized and easy to manipulate. But by putting such record on the blockchain, any interested party can check and track any changes to the agreements. This decentralized system of record-keeping may also be adapted to monitor conditions in which labor is carried out, to ensure the fair treatment of potentially vulnerable individuals working in different industries.

See related article: Harnessing Blockchain’s Potential to Eradicate Modern Slavery

As consumers become more aware of market forces and the effect that globalization has on manufacturing, blockchain can be used to provide proof that products have not been created through modern slavery.

Full Transcript

Angie Lau: Welcome to the special edition on Word on the Block, I’m Editor in Chief of Forkast News, Angie Lau.

And today we’re going to talk about the social impact space and how blockchain can be a key tool in eradicating modern slavery. Now, modern slavery is something that just sickens any stomach. Think of this: indentured servitude, forced labor, and really trapped by your employer with really no cause or any dream to escape. And that really is the fate of forty million victims worldwide. This is the twenty first century.

How do we fix this problem? It’s something that Mark Blick, head of Government Solutions, Blockchain Technology here at Diginex is very familiar with. And Mark, you’ve been working on blockchain solutions to help eradicate modern slavery. Now, when we think about blockchain, modern slavery is not necessarily the first thing that comes to mind. In fact, a lot of people are still unsure as to the application of blockchain. How did we get here? How can blockchain help this worldwide issue that exist still?

Mark Blick: Yeah, that’s a great question. As a company, we’ve always had a purpose and the mandate to identify fundamentally good projects which helped validate the technology and also preferably projects would have a potential impact at scale.

We were very fortunate in early last year to meet with an NGO based here in Hong Kong called the Mekong Club. They’re a single issue NGO focused on combating modern slavery in private sector supply chains. And I remember our first meeting with them. They were very humble. Matt Friedman [and their team] turned up saying, “We know nothing about blockchain”. And then they produced a white paper they’d written on how blockchain could help combat modern slavery. 

So that was great for us as a technology company, always cognizant of not building something and then just telling people to use it. But have people like the Mekong Club who have spent decades combating this issue and really understand it from a policy perspective and issue perspective and identifying if you guys want to help, please do this. And that was our starting point.

Angie Lau: But why does blockchain allow this transparency to exist in and to eradicate modern slavery? What is it that is the key issue that keeps people really enslaved, that blockchain can solve?

Mark Blick: So I think there’s a wide range of issues which causes [that]. But the two specifically which blockchain I think can help with, this was in the Mekong Club white paper, was around contract substitution and around the fees that are charged. So if we look at the journey of a migrant worker who may choose to move from Bangladesh to, let’s say, Malaysia to go and work in the toy factory, and that’s a willing journey they undertake. 

They agree a set of terms and they’re in the country of origin in Bangladesh and say, I’m going to work for 40 hours a week for $X. But during the course of that journey, they work with employment agents of country of origin and also country destination. Often contracts are substituted or changed. They arrive in a factory finding they’re working for double the time and half the pay.

And often they’ve had to take out high fees in order to secure those roles. And on those fees they’re paying extortionate interest rates.

So they find themselves working from a lot less money than they thought, a lot longer hours. All of their salary goes directly into repaying loans they’ve taken out. The passports have often been taken away. They’re in a foreign country, maybe not speaking the local language, probably not speaking the local language.

Angie Lau: And they probably have no idea how to access help, police, lawyers. They have no idea about the system.

Mark Blick: Yeah. So we were focused on that issue of contract substitution. And the single question which I like to boil blockchain technology down to, which is “I need to know what I’m looking at is what you’re looking at”. And if you look at the various ecosystem, stakeholders that are in in this universe, you have the employment agents, you have the migrant worker, the factory, the brands, you have social audit companies, Ministry of Labor and intergovernmental organizations all trying to look at contractual terms, understand what was agreed and at what point, how can we capture a set of employment terms which will agree to the specific point and that be captured immutably and forever and then transmitted and circles throughout that ecosystem? 

I think for us, the real the real value add is how do we move away from a paper based process? The fact that I use an orchestrated workflow amongst a bunch of market participants that happens to use DLT. Well, that gives me better cryptography. And it gives me some interesting workflow or options and some deterministic computation. But it’s really just a design choice around storage. 

Where we’re coming at it from is where is there an inefficient process often based on people that has a high error rate, that’s potentially open to fraud. And we start with how do we create digital information within that, preferably native? If not, we digitize existing paper information into digital and then we understand, OK, we have this digital data, how do we store it? And maybe blockchain isn’t the best situation. If it’s two people and they’re just transacting amongst themselves.

But if it is this complex ecosystem, we have multiple stakeholders we’re looking to create, share and read information who may or may not trust each other, then we believe that blockchain is a great answer to be able to store that information.

Angie Lau: Because right now you take a look at the situation that a lot of migrant workers or people who are really economic refugees, if you think about it, seeking wealth or work in another land, right, but the contract itself, that seems so unfair. Why should that exist in the first place? And why should anybody think that that would be a valid contract? I mean, if we talked about the contract in and of itself, what is it about the system that allows these very disadvantageous contracts to even exist and be held by law? I don’t get that part.

Mark Blick: Yeah. And it’s a vulnerability of the migrant worker. They move through these various checkpoints from employment agent and country of origin where everything looks great. I’m going to move to a new country. Here’s the contract. It looks wonderful. I’m going to move, and when I arrive in my next country, the clause has been edited, or new contract is given, or we’ve worked in situations where we’ve surveyed workers and 100 percent haven’t had the contract with them, it had been taken away. 

So how can we give access to this? This was the point at which we started. I think there are lots of additional benefits that we can discuss to the solution, but we started with this core question of how do I ensure that a migrant worker always has access to the contractual terms that they originally agreed, and they can then show those terms to anybody who asks. And that may be a social order company or NGO, but they can demonstrate: I agreed this at this time and nobody can dispute that that, was that the core of the project.

Angie Lau: So nobody can dispute it. But of course, it means that the migrant worker has to tap into the system that you’ve created with Mekong Club. Tell me how this is actually unfurling in real life. How is this blockchain application being used right now?

Mark Blick: There are two ways. The original way was, we have created a stand-alone app. It’s as simple as possible. We had a formal Google project engineer here who said if it’s more than two clicks, no one will use it. So we went from the original prototype, which was eight clicks and down to: “press a button, take a photograph, agree, and it’s done”. So I think that in and of itself is a great solution. Where we tended to offer that as often with our partners in Thailand, as a great example, they have a platform that’s already in the field that migrant workers are already familiar with.

And for us, it’s about how do we integrate the system that we’ve built into a platform that migrant workers are already comfortable with an already use. And so for them, it’s not a new download on a new phone. It’s not trying to explain that this is what it does. It is new functionality and something which they’re already familiar with. And that’s a preferred way for us to try and drive scale.

Angie Lau: And the consumer on the retail end of things– this is something that actually consumers are increasingly demanding of retailers: to make sure that they are socially responsible at every stage of supply chain and manufacturing. Which are the retailers that are using this blockchain technology to eradicate modern slavery and to ensure that, you know, fair contracts exist between the manufacturer and its employees? Which retailers are we talking about right now?

Mark Blick: Members of the Mekong Club Business Association. Where we’ve started is right on the ground. You tend to have the brands that sit on top who may and actually generally do not own the factories that they source. We’ve gone directly to work with the factories in collaboration with the brands. And as we move vertically, we’ll move closer towards where migrant workers came from and also move closer to the brands and ultimately move closer towards the consumer. 

I think it’s our goal as we work towards transparency, and there’s a wonderful quote by William Wilberforce, “You may choose to turn the other way, but you can never claim that you did not know”. And for us to drive that, to have these complex supply chains with multiple factories, how can we raise the level of transparency where it’s difficult to claim that you did not know at least where folks are being transparent as to who is working in these factories?

Angie Lau: How do I know as a consumer that this is being applied? This is something that actually I would really care about. So how transparent is it for me to see that this is being used right now in any product that I consume?

Mark Blick: Not yet. Our goal will be by next year that it’s consumer ready. We started in the middle with the migrant worker in the factory. And the quicker we can move out to the consumer, the better.

Angie Lau: Give me some analytics in right now from the Mekong Club. How effective has this been already?

Mark Blick: If you look at the universe of modern slavery, we have 40.3 million people affected by modern slavery globally. 9 million people entering modern slavery every single year. 25,000 a day, 1,000 an hour. One new person entering slavery every four seconds. A one hundred and fifty billion dollar a year industry. And despite the best efforts of wonderful people doing great work, we’re only helping around 0.2 percent of those every single year. It is not a good number. 

Our partners in Thailand and it’s still our first project and we’ll be scaling into others across different regions, but we have scale across 5,000 workers and 100 farms and sugarcane, and shrimp farming. And the quicker we can integrate within private sector — this was a big driver from the Mekong Club and again, partly by luck, partly by design, was working with a partner like the Mekong Club who understood the power of the private sector and that the way to drive scale was to engage positively with those folks who really want to do the right thing. 

[A partner] who understands, well, from a risk mitigation point of view, that the better transparency I have as to my supply chains, the better, but also from a brand consumer point of view, the better I can demonstrate I’m doing the right thing, the better. And the best way for us to roll out that technology is with those brands. And that’s where we’ll be working on in the next six to nine months.

Angie Lau: One of the big criticisms of blockchain is that the blockchain itself can not guarantee the validity of the information. It can only make sure that once it’s in there, it’s immutable. It cannot be changed, which means that if it is not valid or true or genuine information before it enters the blockchain. 

On the back end, it’s still garbage. How do you make sure that this process before it’s enforced, immutable, unchangeable is actually the genuine artifact truth that the migrant worker knows all their rights. They haven’t signed away their life or their families. How do we make sure that this process is clean?

Mark Blick: I think there’s a couple of ways. One is, of course, for education and training. And you look at treating pre-departure training you do with migrant workers to raise awareness of what technological solutions are out there. I think where this project is really got to us, if we look at the current social order process, the current social order process is somewhere along the lines of: I’m turning up on Thursday. Heads up, I’m coming. I have a clipboard and three hundred questions. I’m going to spend eight hours in your factory and I’ll come again next year. This is how we can improve that process. 

Now, to your point. If people enter in fake information or false information, that is a risk. But if we can improve the social audit process and I look at it in this construct, you have factual information. That’s information you believe you know to be true. It’s told to you during the KYC process or onboarding process or a screening process. So you have a factory that’s told you I employ a thousand workers and I pay each one of those workers five hundred dollars a month. And you’re told this piece of paper and it’s stamped and so on, so forth. But what we’re lacking is the transactional and behavioral information you should be able to see that underpins that. You say you have a thousand workers. Fine. I want to see a thousand contracts that are being verified on both sides which reconcile to your records.

I want to see salary verification slips which can be reconciled to those records. And it’s not going to be perfectly reconciled. But let’s say when I do turn up on my once-a-year audit, I have 70, 80 percent of my data collection done and I can focus on A: filling in the gaps and B: capacity building or I’m working with my workers to ask the questions of “well I see here, that you’ve ended this, is this correct?” and it’s more engagement with people. 

There’s a funny anecdote which came across the other day of a company that made all sorts of wonderful declarations around social governments and so forth. And they had thousands of workers in factories across Southeast Asia, so very hot. And it turned out that they only turned on the air conditioning the two days of the year that the auditors came through town. And it was a big electricity save, of course, to turn it off every other day of the year. Now, what we should do is create a basket of eight to 10 social governance metrics. Air conditioning, maybe one of them, employment contracts, dust monitoring levels, hours, work and so on and so forth. Maybe I’ll see that real time, but why can’t I see it on a monthly basis?

Why do I have to rely on an auditor? How do I put that on the platform, which can then be sent to a broad network of stakeholders within the ecosystem so they can all see the conditions under which that factory or the company operates.

Angie Lau: And now we’re really talking here. How are we applying the technology tools of observation and correlation in a way that we could scale versus the inspector that can only come once or twice a year, probably overwork, probably has thousands and thousands and thousands of cases and just wants to or needs to get to the next inspection? 

I mean, that’s what we’re really talking about here. How is this idea changing, really the precept of how NGOs can work with their projects on the ground? Are you starting to also educate the NGOs as to the potential of how they can use and apply technology in their thinking as they help real people.

Mark Blick: Yes, we are. And we’re trying to and it’s it’s a long journey. And I have been increasingly and always inspired and amazed by the passion and drive that we see from that community. And I can’t speak highly enough of the Mekong Club and what they’ve taught us and how they’ve shown technology can help on this issue. So I work with them in Hong Kong and across Asia. I work in Thailand with verification. We’ve recently started partnering with two NGOs in India. And it’s I think that partnership between public and private that’s very important and I think is the optimal way and try to combat these issues.

Angie Lau: Which industries are on the roadmap to use the “eMin” app to apply to eradicating modern slavery?

Mark Blick: So we started an aquaculture, shrimp farming. We’ll be moving into sugarcane in Southeast Asia later this year. Apparel in Bangladesh, in India and food and beverage in Bahrain. And that’ll keep us occupied for a full twelve months. And I’m sure we’ll grow from there. But those are the industries which tend to be the ones which are more consumer facing, tend to be more aware of the issue. And we believe strongly that socially well-governed companies normally a great predictor, an indicator of a well-run company and trying to help companies who are doing the right thing demonstrate that. 

So a great example is the shrimp farm that we work with in Thailand. And suddenly we are learning from that visit. We’ve done a great job from the head of sustainability point of view, because that was the people we worked with at the Mekong Club. And I think we did a pretty good job with the migrant workers because again, the Mekong Club helped us understand that issue. The audience, which we really learned from the beginning and phase one was the hiring manager, the factory manager, that we come in and say, here’s a new tool upload data. And the question is, what’s in it for me? How this help helped me. And we have the luxury of being able to choose to work with great actors who are doing good things to explain to them so they supply into a large Thai fishing fishery company. And every quarter that company comes down and conducts an audit and they do the right thing. 

But it’s not particularly efficient and it’s pretty painful. It’s sitting in a room over a week and going through lots of paper. And they’re understanding that we can start connecting the company and the factory and the work on a more real-time base basis. So, again, the quantitative data collection can take place ahead of time. And when the Thai seafood company company comes on the site, a lot of that work is already done. Ultimately, that Thai seafood company supplies into Costco, so it continues going up and up. You have this transparency.

Angie Lau: Look, it reinforces good practices, to be sure. Right? What about all the competitors who say it’s cheaper to trick people to work for half price or cheap or for free? How do we get those bad actors? How does this technology assist getting those bad actors called to task? Through either government or law enforcement or what? I mean, how does this technology help eradicate that or can it?

Mark Blick: I think it’s by by crowding them out. If I am a brand that I want to contract with people increasingly for regulatory reasons, for legislative reasons and for consumer brand awareness reasons, I’m going to choose to work with those companies can demonstrate that they’re doing the right thing. If there are bad actors that want to continue doing the [wrong] thing and not make declarations about how they operate and give transparency, companies will just choose not to work with them. I think a very interesting evolution you saw very recently. 

You’ve always had this pressure coming downward from brands saying do the right thing. What we’ve seen recently is factories coming to the brands and saying we used to just compete on price. We now understand that risk mitigation and brand view is important. How can we demonstrate to you that we’re doing the right thing and that makes it a value differentiate between all the other guys in the marketplace so that that’s beginning to happen.

Angie Lau: And blockchain actually makes it cheaper and more efficient for them to do so, which means it’s affordable, and it  encourages and empowers them to observe best practices. So you’ve started now where do you see this scaling? Do you see this scaling in other socially impactful ways?

Mark Blick: There are various ways in which we want to scale. The most direct one’s how do we scale with the with the core product that we have, which is enhancing transparency in labor recruitment processes. We’re putting together right now a very large project which has ambitious goals, five million workers over three years. It’s a large project that we have that we feel very confident with it. But then it’s to go back to the point that we raised earlier on around the broader social governance metrics that then becomes very exciting. How can I get a greater picture of how companies operate?

Angie Lau: Because how they operate matters a heck of a lot to the consumer. Increasingly, we recognize that as individuals we have not only purchasing power, but that purchasing power also comes with social power. So thanks for helping us understand a little bit more as to how transparency can really cast light on darkness, which is what this is all about at the end of the day. Mark Blick, thank you and good luck.