Pressure is increasing on companies to show their supply chains are free from modern slavery and the demand is for action, not box-ticking.
Modern slavery encompasses a wide range of worker abuse, including debt slavery, child labour, some forms of prison labour and oppressive employment of illegal immigrants. Whatever form it takes, companies must eradicate it from their supply networks.
“Over the last 12 to 18 months, we’ve seen a ratcheting up of the wider sustainability requirements we’re receiving from our customers and prevention of modern slavery is a key part of those enhanced expectations. And this reverberates right down through the supply chain,” says Jonathan Maclean, divisional supply chain director at Weir Minerals, which supplies heavy equipment mostly to mining groups worldwide.
John Adams, group procurement director of housebuilder Barratt Developments, notes broad pressure from investors around economic, social and governance issues. “Slavery or labour exploitation is one of the key metrics they are interested in,” he says.
Michael Ford, global lead for environment, health, safety and sustainability at procurement platform Avetta, adds: “What we’re starting to see is a move away from simply asking for paper-driven documentation to proof they’re actually doing something.”
However, addressing the challenge is not easy. A component produced by forced labour, or an agricultural product harvested by a child, may pass through a dozen companies before being bought by a UK customer. Adding to the complexity is the rewiring of global supply chains caused by the coronavirus pandemic. Companies have had to urgently onboard new suppliers. Travel restrictions have hindered direct inspection of suppliers.
Brian Webb, operations excellence director of global commercial services group Rentokil Initial, points out that the pandemic could have opened new opportunities for exploitation by unscrupulous suppliers. In countries without furlough schemes or other government safety nets, it is likely people are desperate for work. “We know there’s been a lot of economic hardship. We need to be particularly diligent to make sure that people are not unfairly treated,” says Webb.
The roundtable participants agree that the real challenge is not in the tier-1 suppliers with whom they have a direct relationship, but lower into tiers 2, 3 and possibly beyond. If suppliers refuse information that would enable this deeper scrutiny, then this is already a warning signal; Rentokil Initial has terminated suppliers on these grounds.
Panelists agree a risk-based approach is needed to identify which suppliers need extra scrutiny. Emma Goodwin, head of procurement and supplier management at Wesleyan Assurance Society, a specialist financial mutual serving doctors, dentists and teachers, suggests adding the risk of modern slavery to a wider set of due diligence criteria during supplier selection that also include financial and cyber risk as well as resilience.
One red flag, she notes, is if a bid is abnormally low, which may be an indicator that workers are not being paid fairly. “When you’re considering evaluating a tender, you should never take price as the only factor; you obviously have to take risk into consideration,” says Goodwin.
Geography is another risk factor. The Walk Free anti-slavery initiative has an interactive online map that enables businesses to quickly identify whether a potential supplier’s country has weak labour safeguards.
In a lot of cases, workers are grateful to have a job, but this doesn’t mean we as Western companies should be exploiting that
However, risk exists everywhere. The UK ranks as the 132nd most risky country out of 167 in Walk Free’s ranking, but in 2020 online brand Boohoo was found selling clothing made in COVID-unsafe conditions in Leicester by workers paid £3.50 an hour.
Maclean of Weir Minerals says: “If you look at the World Slavery Index, you would think the UK was incredibly low risk. I think that was probably a real eye-opener for a lot of people to realise this could happen right under your nose.”
Avetta’s Ford adds: “This is not a new problem. Several key industries can be found domestically within the UK that are very high risk. One of the problems is that a lot of individuals simply don’t know how to recognise the signs.”
Both Rentokil Initial and Barratt Developments train staff annually to spot signs of modern slavery when subcontractors are working on their premises, such as workers arriving and leaving together in shared transport or being reluctant to communicate. Rentokil Initial is also extending this training to their first and second-tier suppliers to extend awareness deeper into the supply chain.
A development that would make a real difference, participants say, would be a reliable accreditation scheme. These exist in some narrow categories, but they need to be broader and affordable for suppliers in the developing world.
Another is high-level support, seen as a critical differentiator between companies that are ticking boxes and those trying to make a real change. Goodwin of Wesleyan Assurance Society says: “We’re fortunate we have executive-level sponsorship, with drive and support from the top down for sustainable supplier management. Our work is measured, managed and monitored, and progress discussed at board level.”
Some decisions require care. Pulling a contract from an abusive supplier may put workers out of jobs, making their lives even more miserable. But the implicit threat is an essential element in forcing standards to rise.
Practices that are standard in the developing world are viewed as abusive here, such as employers holding passports or ID cards, which makes it difficult for an employee to leave their job. Adams of Barratt Developments notes: “You might have a very good supplier who, because of culture, is doing something that you don’t agree with. If we can explain this to them, you might be able to come to an accommodation that works for everybody, without blame.”
Rentokil Initial’s Webb says: “In a lot of cases, workers are grateful to have a job, but this doesn’t mean we as Western companies should be exploiting that. We need to help raise their standards, ensuring a fair wage is paid to everybody and no one is forced to work.”
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