Five steps supply chain executives should take to remove modern-day slavery practices
The impact of modern slavery being identified within your supply chain should not be underestimated. Actions can be taken to remove this practice, but it is essential to understand what is meant by the term ‘Modern Slavery.’ It is often used as an umbrella term that includes bonded labor, descent-based slavery, forced labour, early and forced marriage and human trafficking–all of which can include children as well as adults.
London, November 2019. Police discovered the bodies of 39 Vietnamese migrants inside a refrigerated truck. All victims had died from overheating and asphyxiation. The victims included two 15-year-old boys. Authorities quickly identified the perpetrators and charged them with manslaughter, facilitating unlawful immigration and human trafficking. Their case is still to be heard within the UK legal system. London’s Metropolitan Police confirmed a 1,154% increase in the number of recognised victims of modern slavery—from 187 referrals in 2013 to 2,346 in 2018. In Canada, it was estimated in 2017 that 17,000 people were living in conditions of modern slavery.
The tragedy shatters two misconceptions shared by many: slavery does not exist anymore, and it is a practice restricted to emerging economies. It can be found anywhere. It is a practice often hidden and ignored until an atrocity forces us to confront this injustice. We should question exactly what we can do to stop it both as individuals and in our professional lives. As supply chain executives, we can certainly influence how we source goods and materials.
The facts about modern slavery
- The United Nations reports more than 40.3 million people (adults and children) are slaves. This is a conservative estimate. Put into context, it is bigger than the population of California.
- The International Labour Organisation (ILO) and World Economic Forum states 64 million girls and 88 million boys are working as child labourers—more than half in severely hazardous conditions.
- The ILO found the most significant abuse of forced labour is in the private sector with an estimated 16 million people exploited in domestic work, construction, factories or agriculture.
These workers often leave their families and dire economic circumstances for the promise of employment and financial reward. Private businesses have benefited by almost US$150 billion in profits from these practices, according to the ILO.
Forms of slavery can be found in both emerging economies as well as in developed countries. For example, Congolese plaintiffs recently filed a class-action lawsuit against technology and automotive companies for using child labor through cobalt supply chains. The suit under the U.S. Trafficking Victim Protection Reauthorization Act (TVPRA), claims the companies “knowingly” benefited from forced child labour.
Several major global brands have been dogged for decades with legal problems and severe reputational damage because subcontractors were found to be using forced labour, including using children in sweatshop conditions who were producing consumer goods for customers based in the West.
Construction services and the sourcing of construction-based materials have also been found to be using children on worksites, quarries and factories. Consumer services often involve food, fast fashion and inexpensive imports. Generally, if something is cheap, it is not because the manufacturing process is efficient, the cost is somewhere in the supply chain.
The five-step solution that can make a difference
The first step to stopping exploitation is education. One survey found 62% of global business leaders conducted due diligence only for the first tier of their supply chain. Which in simple terms means they have little if any understanding of what is happening with the bulk of their suppliers involved in helping them produce their products. In many cases, simply not having a direct relationship or contract does not negate potential bad publicity if human rights abuse is found within the supplier network.
Only 16% said they were knowledgeable about forced labour and slavery. Executives must gain better levels of understanding, not just about legislation in their countries of operation, but they must also comprehend labour practices, what is deemed culturally acceptable and so on. Make sure information sources are accurate, utilise trusted sources who possess an intrinsic understanding of the countries where sourcing takes place and ensure sourced information is kept up to date.
Code of conduct
To drive commitment from the very top within an organisation requires the company to develop and implement a code of conduct defining the standards for ethical and transparent sourcing practices and ensuring the fair treatment of workers within the organisations involved in producing goods. Identifying the person who placed the contract is irrelevant. If it is in the name of the client organization, the same practices should be applied across the supply chain. The code of conduct must demonstrate a clear commitment that shows deviations will not be tolerated and offers clear instructions, not platitudes.
The CEO and the company executive should promote and enforce the contents of the code and include clear consequences both within the client organisation and the third party for clear deviations. A champion should be identified who has the necessary influence to drive the code and its contents forward. This includes internally and within mapped suppliers. They should also seek confirmation from contracted suppliers to show they understand what is required from them and that they understand the implications of not adhering to the content.
Sourcing suppliers with the same values is a difficult task, especially when they are not always located within the same country of operation. It is essential when evaluating potential suppliers, either direct or indirect, to oversee the type of questions that are used and how the responses are evaluated because it will impact greatly upon the quality of the selected supplier. The evaluation of supplier evidence should be validated. It should not simply be based upon self-assessment or ‘honesty-box’ approaches. In the event of an incident, the lack of due diligence will prove costly not only in terms of revenue loss but also on brand equity. Additional levels of verification and assurance should be considered, especially in locations where issues such as forced and child labour are known to exist. This oversight can be achieved using location-based audits. In many cases, the cost is justified as it may prevent issues further into the relationship.
One of the most effective tools in the supply chain for influencing change is the provision of support and guidance to suppliers, explaining what standards are expected of them, what is acceptable and what will not be tolerated. Rewarding good practices by continuing and developing the relationship might seem strange, but good practices become the norm. We need to change mindsets, which includes realistic pricing as undue pricing pressures can push suppliers to use unacceptable practices simply to win orders.
Managers should conduct objective analysis of suppliers at all points in the supply chain. Stop focusing just on tier-one suppliers. The greater risk is found in the lower levels where it can become quickly fragmented and can initiate a suite of “agents and people in the middle” facilitating work. The ongoing assessment process should include both programmed and “unannounced” events and visits to the production sites. These reviews should not just focus on quality; inspectors should also look at issues such as the factory layout, storage facilities, how workers are sourced and working practices. They should take supporting photographic evidence that is date stamped. It has been found that using independent third parties for this process can add massive value, especially when shareholders, stakeholders and other interested parties demand to know what actions are being taken to prevent human rights issues.
Don’t turn a blind eye to what might be happening in your supply chain. Follow these steps to root out nefarious practices by your suppliers and contractors to make sure all forms of slavery are found only in the history books. You’ll protect your company’s reputation and might even save a life in the process.
Michael Ford is the Global Expert on EHS and Sustainability for Avetta, a leading global provider of supply chain risk management that currently serves more than 450 enterprise companies and 95K suppliers across 100-plus countries.