The Modern Slavery Act passed into law five years ago almost to the day, so it’s an ideal time for HR to look at how it can do more to champion all those who contribute to businesses’ supply chains, writes Pendragon Stuart.
Five years on from passing new laws to combat modern slavery, the issue remains a blight on the lives of those affected and on the businesses who rely on their labour – however unknowingly. But when addressed, it can not only solve a tragedy, but demonstrate business leadership, improving employee, customer and regulator engagement, creating a stronger, fairer, more resilient organisation.
Modern slavery in supply chains
The combination of the persistence of modern slavery in this country, its hidden nature and the linked but wider issue of exploitative labour conditions in nearly every global supply chain means that organisations need to take action to support the wellbeing and rights of workers.
The arrival of Modern Slavery Reporting in UK compelled businesses to publish annual compliance statements. However, it is clear that this alone has not been enough to drive the widespread, meaningful action this topic demands.
Momentum for change
A situation where no businesses or consumer can be sure that the goods they buy are not from a tainted supplier or supply chain demands a solution. There is an impetus to address these issues within and beyond the UK borders.
The drivers for change come a combination of factors: NGO activism – such as Oxfam’s Behind the Barcodes Campaign – which is putting pressure on businesses; the likely strengthening of the UK’s legislation following last year’s review of the Modern Slavery Act 2015; and the arrival of stronger regulation outside of the UK where, for instance, Germany is set to make mandatory supply chain due diligence a new legal obligation.
HR should seize the initiative
There is much to gain for companies who anticipate and act on these changes before they are compelled to.
Increasingly, consumers and the media hold brands accountable when instances of modern slavery or other infringement of worker’s rights takes place in their supply chains. This is not just a risk as good work can be rewarded. Take Tony’s Chocolonely – this Dutch company has a bold mission to end slavery in the chocolate supply chain. This may have helped it overtake the giant Milka in the Netherlands as the most popular chocolate bar with sales after hitting almost £40m in sales in 2017. And in 2018 it overtook Mars and Nestle in the country.
Modern slavery does not just have a human and reputational impact, however. Where there are shady operations, parts of the supply chain can be exposed and shut down at short notice resulting in the sudden inability to deliver products or services.
There is also the issue of corruption and financial waste to consider. Where there is modern slavery and coercion, the money you think you are paying to support a happy, healthy, productive workforce is actually being funnelled away to gangmasters, meaning you pay more than you should for what you are getting.
For most organisations, modern slavery and the wider issue of human rights in supply chains has yet to get the attention it deserves at executive or board level. Typically, that’s because it is regarded as a compliance issue, dealt with as a tick box exercise by procurement.
For any meaningful action to happen, this needs to change.
As the guardians of people resources in organisations and typically with a seat at the board, HR has the golden opportunity to champion the protection of the people who contribute to a business whether they are contractors, in the wider supply chain or employed in any other way.
A plan for action
For any organisation, this is a complex area to tackle and creating solutions requires a phased approach. The first phase involves taking a proactive stance in identifying the areas of risk to workers associated with the organisation.
This is a task for which HR and procurement teams should come together and map the occupations, geographies and activities undertaken by people in your supply chain.
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Some will immediately stand out as higher risk than others. In the UK, the presence of modern slavery in agricultural, construction, cleaning and increasingly garment production industries is well-documented. Higher risk regions, such as in south-east Asia, and higher risk products such as low–cost garment production and agricultural labour based on migrant populations, should be carefully analysed.
Identifying higher risk areas already enables smarter choices on where to source from and monitor, then the next stage is diving into the prioritised higher risk areas to understand the impacts. Generic procurement questionnaires are the start, but deeper insight is needed for true due diligence. That requires a plan to engage with suppliers more deeply, going beyond a reliance on what is reported back to you and arranging visits by partners or agents who are equipped to interrogate and understand what is happening.
The goal should be to produce impact assessments of each area of your supply chain on the workers you rely on and then put in place a remediation plan to fix common challenges such as enforced overtime, suppressions of workers’ rights (where they exist), child labour or dangerous conditions. You should also have contingency plans in place to deal with human rights abuse when you find out about it.
In the same way that your organisation has standards for how your employees are treated, a similar framework for workers in your supply chain should emerge.
While unilateral action and leadership from organisations is important, so too is the recognition that some challenges are best solved through collaboration – such as the non-profit Slave Free Alliance – where buying power, influence or shared knowledge combine to make a bigger difference.
There is much to gain by undertaking more due diligence and being more proactive around modern slavery and workers’ rights aside from the critical task of protecting the people involved.
HR practitioners who take leadership in this area can increase the resilience of the supply chains their organisations rely on.
It means you are not only ready to meet the demand for greater transparency around the issue from consumers and other supply chain partners but will put your organisation in the best position to respond to new regulation, policy and enforcement. It is also the best way of ensuring you avoid sleepwalking into a crisis, for which the public, media and politicians have shrinking tolerance.
To risk repetition, this is not just risk mitigation – it can also improve engagement externally and just as importantly, internally: employees increasingly care about their co-workers in supply chains and want to know what the organisation is doing.
Shining a light on the issue paves the way for wider action such as providing support for survivors or communities. HSBC is one organisation doing this with its Survivor Bank Account in support of people who are trying to establish lives in the UK have been trafficked here, helping them avoid financial exclusion.
While the extent of actions that each organisation takes will inevitably differ, the key principle to focus on is that the direction of travel to greater accountability around modern slavery and workers’ rights is already set.
It is a key area to address for any organisation which is serious about sustainability and the wellbeing of its people. Which leaves the question: is HR ready to champion the issue?