Campaigners have a stark message for procurement chiefs who believe their supply chain is free of slavery: you’re probably wrong. Supply Management investigates a complex scourge that could damage your business.
If you own a smartphone, an item of cotton clothing and eat food, you’ve probably got in the region of 40-60 slaves working for you.
That is the stark warning from Andrew Wallis, CEO of anti-slavery non-governmental organisation Unseen, whose work paved the way for the Modern Slavery Act 2015 and earned him an OBE. He became involved with the issue 10 years ago when he realised that Bristol, where he lives, had become a transport hub for criminal gangs trafficking people between Eastern Europe and the US. His organisation does everything from directly helping survivors of modern slavery to working with companies to prevent it and lobbying governments to prioritise the issue. The name Unseen is tragically appropriate. To many, the word ‘slavery’ conjures up images of black workers being exploited on plantations in southern states of America in the 19th century. Many members of the public, influenced by such images, assume this scourge has been eradicated. Yet slavery is now a global problem that transcends age, gender, ethnicity – and geography.
Anti-Slavery International says someone is being enslaved if they are: forced to work - through mental or physical threat; owned or controlled by an ‘employer’, usually through mental or physical abuse or the threat of abuse; dehumanised, treated as a commodity or bought and sold as ‘property’; or physically constrained, or has restrictions placed on their freedom of movement.In the Modern Slavery Act, ‘modern slavery’ is used to encapsulate slavery, servitude, forced or compulsory labour and human trafficking.
The fourth of the 10 principles that comprise the world’s largest sustainability initiative – the United Nations Global Compact – says businesses should eliminate all forms of forced and compulsory labour. Getting paid does not necessarily signify that work isn’t forced, the Compact points out, and labour should be freely given and employees have the choice to leave.
A low-risk, high-yield trade
Slavery has been illegal in the UK since 1833, but bonded and forced labour, trafficking and exploitation persist. The global illicit trade in human beings to be bought, sold and exploited is still a disturbingly lucrative business.Figures suggest there are anything from 21m-38m victims worldwide. The International Labour Organization estimates it generates $150bn in illegal profits in the private economy every year. “Criminals are always looking to exploit weaknesses in your business and capitalise on them for profit,” Wallis says.This a complex problem that defies easy solutions. For example, although slavery is particularly prevalent in some sectors in some parts of the world – such as Southeast Asia’s seafood supply chain and Bangladesh’s building industry – it is thought every nation, with the possible exception of Greenland, has a problem. The UK is believed to have 10-13,000 slaves. Commercial cases have been exposed from Southampton to Sheffield.
Under the new legislation the British fight against slavery will be spearheaded by Kevin Hyland, the UK’s first ever independent anti-slavery commissioner. A former head of the Metropolitan Police’s human trafficking unit, Hyland has 30 years’ experience of investigating organised crime and has worked closely with victims of slavery to secure prosecutions. He anticipates that more cases will be brought this year, telling Supply Management: “In the first half of the 2015 financial year, there were more charges than the whole of the previous year.” There were 130 convictions in 2014 and 235 charges in 2015, many of which he hopes will lead to convictions.
As Paul Broadbent, chief of the Gangmasters Licensing Authority (GLA), which aims to protect workers in the UK’s agriculture sector, puts it: “Dealing in people is considered high yield and low risk. Criminals are determined, resilient and entrepreneurial by nature. Market forces move very quickly so we need to be nimble too.”
Forced labour, particularly of migrants taken against their will or tricked into debt, may be occurring at your local car wash, a nearby nail bar or on a farm to catch chickens. The GLA was set up in 2005 after 23 Chinese cockle-pickers drowned in Morecambe Bay the year before.
Large organisations are culpable too – wittingly or not. It could be that there are victims 28 steps down your supply chain or even in your first or second tier, but the longer the supply chain, the “increased propensity” for exploitation, says Broadbent, who believes supply chains are likely to be simplified and shortened over time as companies confront the issue.
One company that has scaled back its supply chain to eliminate risk is Diamond Technology Innovations in the US. It began sourcing gems on home soil (growing most of them in labs) after the movie Blood Diamond raised awareness of modern-day slaves mining the stones in war zones so they could be sold to fund conflicts.
One provision of the Modern Slavery Act requires organisations with a turnover exceeding £36m, and which supply goods and services in the UK, to publish an annual statement explaining what they are doing to eliminate slavery from their businesses and supply chains. These statements will begin to emerge from March this year – some have already been released – and companies will be judged publicly on their efforts for the first time.
In a recent survey of 469 CIPS members, of whom the majority (73%) are procurement or supply chain leaders, 58.8% were ‘fairly certain’ that there was no modern slavery occurring within their supply chains but a significant minority were ‘not very’ or ‘not at all’ certain.
Yet a 2015 Ethical Trading Initiative study, involving interviews with senior executives at retailers and suppliers, found that 71% of firms believed there was a likelihood of modern slavery occurring at some point in their supply chains: particularly in high-risk countries or sectors and at the lower stages of the chain.
In Broadbent’s view: “It’s safe to assume there’s a problem in most supply chains until we take positive action to find out that’s not the case.”
John Thompson, head of human rights at risk analytics company Verisk Maplecroft, agrees: “It’s not a question of ‘if’ your organisation has a problem, it’s ‘to what extent and where?’ All companies and all sectors will be affected in one way or another, it’s just a question of the specifics.”
Thompson says many of the companies his organisation works with are household names that are aware of the problem and striving to tackle it.
Combating it usually isn’t easy. In effective anti-slavery programmes, vulnerabilities are strategically redressed using a realistic theory of change that identifies key risk factors, adapts interventions and focuses resources. It’s a measure of how onerous the fight can be that FMCG giant Nestlé, which found forced labour in its supply chain in Thailand, spent a year investigating the problem and has estimated that it will take another year to solve.Like Thompson, Wallis says every company should presume they have a problem, try to identify it and devise a plan to address it.
“Bollocks to PR,” he says, “just hold your hands up, accept you’ve got a problem and focus on what you’re going to do about it.” This is what clothing company Patagonia, New York University and Nestlé have done.“
Look at the reaction to them,” says Wallis. “Nestlé has been called courageous. Whereas look at what happened to Tetley on Facebook and Twitter when the tea-pickers story broke.” The brand was among those tarnished when Columbia Law School’s Human Rights Institute alleged poor pay and inhumane working conditions on tea farms in Assam part-owned by its parent company. “They were caught with their pants down,” says Wallis. “It’s a scary world for corporates but they’re better off saying: ‘We’re guilty, let’s deal with it,’ because that’s a non-story.”
Accepting you have an issue is the first step to cleaning up your supply chain. To achieve that, Tom Smith, director of strategy and planning at supplier ethical-data exchange organisation Sedex, says transparency is critical. “Having an open relationship with suppliers who can raise problems with you is the road to success. The same goes for all responsible sourcing issues,” says Smith.
Visibility in the supply chain
Modern slavery can come in many guises. Sedex says there is no single indicator that will prove that slavery is present. Companies need to assess a combination of factors to get a true picture.“
You have to understand your supply chain, where your products and services come from, to understand if there is a risk and look across all tiers. Because supply chains are constantly in flux, it’s a very big challenge,” says Smith. “You can’t just ask people if they’re using slaves.”
The complexity of the challenge is one of many reasons why CIPS advocates a self-regulatory licence for the procurement profession, a stance supported by anti-slavery commissioner Hyland and GLA head Broadbent.
There are certain red flags that might indicate you have a problem – recruitment fees, migratory workforces, stories of abuses in the sectors or regions your suppliers are in – but even so it’s hard to eliminate slavery if you can’t see your supply chain. Achieving greater visibility of your suppliers will help you identify where the risks of slavery are most severe, launch audits and track progress.
Some businesses have already taken a lead, notably Virgin (which has publicly backed the new Act) and Unilever, the latter being the first company to report under the UN’s Guiding Principles Reporting Framework.In terms of complying with the law (see CIPS guidance), in the first year of reporting, companies can simply state they are yet to have a policy, but they will need to demonstrate an improvement the following year.
Some have already taken steps to meet the ‘transparency in supply chains’ clause, including training, reviewing existing corporate responsibility policies, reading the government guidance, establishing a plan for drafting and approval of the statement by a senior manager, determining when the first statement will be due and/or appointing an executive accountable to the board for the report.
In December, the London Universities Purchasing Consortium became the first UK organisation to publish a statement outlining what it had done to guard against modern slavery in its supply chain – even though its annual turnover was below the new law’s threshold – because it felt every organisation had a responsibility to help.
Wallis suggests that once you have your procedures and policies in place, you map your first two tiers and move further down the supply chain the year after. “It’s not about the first year or two, it’s about five years’ time, and more detailed reports will enable us to deal with bigger issues,” says the head of Unseen. “It will flush things out like EU trade agreements between Europe and Africa that are so punitive they cause hardship.”
Collaboration is essential here and no single organisation – massive multinationals included – is expected to solve this issue on their own. “The world’s biggest companies and sectors will be most effective if they can engage with their peers in their sectors and related sectors,” says Thompson.
Five years to fix it
In the UK, the government is giving organisations the opportunity to fight modern slavery – with the caveat that if they don’t show enough commitment when doing so it will probably compel them to.Wallis says the legislation he worked so hard to ensure reached the statute books is a “spiky carrot”: a five-year window of opportunity for businesses to prove they are making headway.
Indeed, the Home Office announced in January this year that the GLA’s remit is to be extended to every sector of the UK economy and that the body will be encouraged to focus on industries where slavery has proved troublesome.
“There is no economic argument for ignoring slavery,” says Wallis. “It’s bad for your reputation, risk, quality control, consumer confidence, investor confidence, share price and more.
“You also risk consumer backlash and the ‘millennial factor’ – the brightest and best will ask you about responsible practices and if you don’t have a clear enough answer in the next 10-20 years, you’ll be toast.”