Is there exploitation and ‘modern slavery’ in your supply chain?

Ian Nicholson, managing director of corporate responsibility consultancy Responsible Solutions, on how the Modern Slavery Act is beginning to impact on the industry.

Ian Nicholson

We’ve reached a huge turning point for businesses. Companies with a turnover of £36m or more that had a year-end of 31 March will be the first to publish a statement outlining how they are tackling transparency in their business and supply chains. This may bring business benefits in terms of future-proofing and proactivity, but it will expose those that choose to look the other way.  

An undercurrent of worry has been growing following the advent of the Modern Slavery Act in 2015. The construction industry has gone from barely knowing what the term “modern slavery” means to having to investigate it in every area of their business.

Construction has been highlighted as a concern by the Independent Anti-Slavery and Trafficking Commissioner Kevin Hyland, but the issue has largely met with an attitude akin to “why have we been targeted? We don’t have a problem with slavery in our supply chains.”

But there just isn’t enough evidence to prove otherwise. In most cases, organisations in the upper tiers of the chain have no idea they may be funding slavery. Without knowing exactly where your products and materials have been sourced, there will always be a chance that people are being exploited somewhere down the line, even if your suppliers are UK-based.

And it isn’t just the supply of products that you should be worried about. Construction is a huge employer, and with high volumes of low and semi-skilled workers, many of whom are supplied by subcontracted labour agencies, there is real potential for forced labour and trafficking to exist on site.

The implications of an exposé could destroy your reputation and brand image, depicting you as an organisation that exploits people in the name of driving down prices and maximising profit. On the flip side, a business that strives for transparency in its supply chain and that is honest about its sourcing and labour practices, will have a trusted reputation and a much lower risk of being associated with unethical or irresponsible behaviour.

Why ignoring the problem until deadline day is a mistake

Ignoring the issue of transparency and modern slavery until the last moment before having to write a statement not only places you in a vulnerable position in comparison with your competitors, but also impacts on your business resilience.

Being aware of risk is an integral component of effective supply chain management. Without proactively finding potential risks in your supply chain, you will end up on the back foot, reacting to issues when it is too late. This is likely to put your brand reputation at risk as well as cause significant disruption to your operations.

With sourcing increasingly under the spotlight and data flooding the public domain, the length and complexity of supply chains no longer offers an excuse. As an industry with complex, multi-tiered supply chains, it is undeniably difficult to gain transparency right down to lower tiers and raw material suppliers. However, this complexity can allow acts of modern slavery to take place without being uncovered.

It can also hide within relatively simple supply chains, for example, in on-site labour. Businesses need to be equipped to demonstrate accountability and to take responsibility for managing these risks in their own supply chains, however complex or simple they may be.

Why ethics are not just an issue for big corporations

Just because smaller organisations are not required by law to publish a transparency statement, the rest of the Act applies to all businesses regardless of their turnover. In fact, it is the smaller businesses that may even pose the largest threat.

Pressure to provide materials, products or labour at low prices in squeezed time frames may increase the potential of buying from organisations engaged in modern slavery. These organisations should strive to improve their own ethical credentials and become more transparent with the information they share, but they are likely to need support from larger businesses through collaboration and building trusting working relationships.

Why transparency will win competitive advantage… for some

Publically demonstrating your organisation’s corporate conscience and dedication to transparent and slavery-free supply chains is an invaluable way of building trust between you and your customers and stakeholders. Transparency also encourages collaboration and stability within supply chains.

In this way, the Act is a trigger to drive competition to go beyond compliance. Those that fall behind will have to admit they have done nothing or little in the way of reducing the risk of modern slavery. So where are you on your journey to transparency?

For more information on the issues covered in this blog, visit ethicalsourcing.co.uk, where you will find freely available resources such as a risk exposure tool, a designer’s guide to ethical sourcing and e-learning modules on ethical sourcing, including modern slavery