Supply chain professionals need to take action on modern slavery

Tim Wright
24 November 2014

With reports of an increase in the number of reported victims of labour exploitation, the Home Office recently announced changes to the Modern Slavery Bill whereby large companies will be required to disclosure annually the steps taken to ensure their supply chains are “slavery free.”

Announcing the measure, Karen Bradley, the minister for modern slavery and organised crime, said that “greater transparency will give customers, campaigners and shareholders the information they need to hold all big businesses to account while also supporting companies to do the right thing”. Partly modelled on California transparency obligations which apply to manufacturers of consumer goods, these new measures will apply regardless of product or service type.

And with ministers to debate the bill in parliament, newly-appointed anti-slavery commissioner Kevin Hyland, former head of the Metropolitan Police’s human trafficking unit, told the Financial Times that companies that fail to eradicate forced labour from supply chains risk being “exposed”. These measures come as a timely reminder of the many challenges and responsibilities that large companies face in efficiently managing their supply chains, including steering away from bad publicity, with disasters such as the April 2013 collapse of a factory in Bangladesh embroiling major high-street clothing brands for weeks on end.

Supply chain professionals should seek to address such issues by undertaking due diligence on new and existing suppliers, including taking up references and carrying out site visits where appropriate, and ensuring that their contracts permit ongoing monitoring and audit, contain suitable warranties and representations (such as no use of child labour), termination and other rights, and also ensure the “flow down” of key requirements by their suppliers into their subcontracts.

On a more positive note, Manhattan district attorney Cyrus Vance has been successfully collaborating with the Thomson Reuters Foundation and leading US banks on sharing data to identify human trafficking. According to Monique Villa, the foundation’s chief executive, the banks have “incorporated red flags into their software designed to detect patterns of human trafficking or forced labour” with the results passed to law enforcement agencies.

☛ Tim Wright is a partner at Pillsbury Winthrop Shaw Pittman

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