08 December 2017 by Matt Gitsham
Modern slavery in supply chains is a serious risk and boards and governance professionals must take action
A major new study by the International Labour Organisation and the Walk Free Foundation has found that more than 40 million people in the world today are victims of modern slavery. You might think that is terrible, but also not your problem. And you would be wrong.
Many people assume slavery died out over a century ago. Some hear the phrase ‘modern slavery’ and think that someone is using sensationalist language to talk about poor labour practices.
But modern slavery describes people in working conditions that they cannot leave, whether because of threats of physical violence against them or their family, or their wages being withheld.
To some this conjures images of domestic workers, the sex trade, or forced labour in countries like North Korea. In any case, it is assumed to be something that is happening in a faraway place and not something that has anything to do with your business.
But the risk of modern slavery affects the supply chains of most major commercial businesses.
Some 18% of the people who are victims of forced labour are in the construction industry, 15% in manufacturing, and 11% in agriculture and fishing – sectors that make their way into just about every company’s supply chains one way or another.
Although many victims of forced labour are in parts of Asia and Africa, many others are closer to home. The British government estimates that the number of victims of modern slavery in the UK is in the tens of thousands.
The people organising and profiting from modern slavery are often criminal organisations that are good at hiding what they do. A company might be sourcing from respectable businesses, but somewhere in the chain someone is subcontracting to a supplier who is not what they appear to be.
Even accepting there is a chance that modern slavery practices occur at some point deep in a supply chain where there is construction, manufacturing, or food production, a company might assume it is not its problem to sort out.
Managers reason it is not them but some other company breaking the law, and it is up to the police and the criminal justice system to do something about that. They are also wrong.
“No company wants to be on the wrong end of a modern slavery news story, or for its corporate customers to be”
First, there is the morality. Slavery is abhorrent and illegal in international law and nearly every country in the world. It is one thing for organisations to be unaware, but once there is a suspicion that modern slavery could exist within the supply chain, they have a moral duty to address it.
Second, customers care. No company wants to be on the wrong end of a modern slavery news story, or for its corporate customers to be.
And third, the legislative trend is towards requiring companies to conduct due diligence to check for risks of modern slavery in their supply chains and do something about it when they identify high-risk hot spots.
The 2015 UK Modern Slavery Act, for example, requires all companies with operations in the UK and turnovers of more the £36,000 a year to publish an annual statement on what steps they have taken to ensure modern slavery is not occurring in their supply chains.
A team of researchers at Ashridge – now part of Hult International Business School – teamed up with the Ethical Trading Initiative and engaged with over 70 major companies to find out what they had been doing to tackle modern slavery in their supply chains, and what they had been finding most effective.
We have published a detailed report, full of case studies, but below are four things you need to be considering to tackle modern slavery in your organisation’s supply chains.
The first step is to really know your supply chain. You need to ensure you not only have the systems in place to know at any time who is supplying you with what, but also who is supplying those suppliers – all the way down the chain.
Once you have created a proper map of the supply chain, you then have to identify where the high-risk areas are for modern slavery. Look for high-risk sectors – for example, construction, manufacturing, agriculture and fishing – in high-risk countries.
Also look for any areas where there might be high concentrations of migrant workers, and where there are agency workers and temporary labour.
When you have worked out where the high-risk areas are, you need to do something about it. Because the highest risks of modern slavery are probably going to be far down your supply chain – maybe tiers four or five – you need to partner with your direct suppliers to effect change.
As well as working with your suppliers, there are some other, more unconventional partners you need to work with.
First, you will often need to work with your competitors, which does not come easily to most companies.
Second, you may need to work with non-governmental organisations (NGOs). This would have been unusual a few years ago, but is becoming more normal. Some of the NGOs most active on modern slavery are Anti-Slavery International, Humanity United, The Freedom Fund, The Walk Free Foundation, Unseen, and Verité.
“Workers are less likely to suffer modern slavery in places where unions and worker rights are recognised”
And third, you may find you need to team up with unions. The stereotype is that management and unions tend to have a hostile relationship, but in the case of modern slavery, some unions might be the best partner you can find.
The evidence suggests that workers are less likely to suffer modern slavery in places where unions and worker rights are recognised. Unions are often best placed to help raise workers’ views.
Another stereotype is that business does not like government intervention; but government can do things that other organisations cannot.
Many of the companies we spoke to in our research told us that they had lobbied the British government hard to strengthen the new UK modern slavery law, and in particular to push for it to include the clause that forces companies to make a public statement on what they are doing to tackle modern slavery.
The firms did this because they felt it would help for more companies to be involved and also to share the associated costs more fairly.
This kind of government intervention works. The findings from our research show the UK act has had a real impact.
One of the key findings is that since the UK act came into force, the engagement of chief executives with modern slavery inside their companies has doubled, while the proportion of companies that are proactively working with suppliers, competitors, NGOs and others is up too.
It is another truism, but leadership matters. In our research we found that the companies that were doing the most to tackle modern slavery had vocal champions in senior roles who were making the time and sticking their neck out to say that action on this topic mattered.
Do not assume modern slavery is nothing to do with you. You need to find out if it could be happening in your supply chain and take action if it is.
Here we have set out just some of the steps you can be taking – our research study contains lots more examples and can be freely downloaded from the Ashridge website.