12 May 15

Modern Slavery in Supply Chains: What you need to know

factory_imageAn estimate from the Global Slavery Index indicates that there are approximately 35.8 million people being subjected to modern slavery today [1]. Recently receiving Royal Assent in parliament, the Modern Slavery Act 2015 aims to cut this number by requiring businesses to take action and report on modern slavery standards in their supply chain.

What is modern slavery?

Modern slavery is a broad term used to encompass the offences of human trafficking, slavery, forced labour and domestic servitude [2]. For businesses, the most common area where such exploitation occurs is in complex supply chains. Although corporations of all sizes may be taking all necessary actions to treat staff fairly in-house, the globalisation of supply chains has made it extremely difficult to ensure that suppliers are enforcing the same measures.

What are the risks for companies?

Although it may be done inadvertently, companies that associate themselves with modern slavery will experience a number of serious impacts. With laws becoming rightly stricter, organisations can be hit with costly legal sanctions for not ensuring that correct labour standards have been implemented. Arguably more costly is the reputational damage caused. Exposure of slavery within supply chains could result in companies risking their place in the market due to a dramatically decreased consumer confidence. By taking the right actions and ensuring a transparent track record of ethical procurement, organisations will not only avoid the risks but place themselves in a strong position to encourage investment and flourish. 

Increased focus on supply chains

Although internal labour standards have long been a consideration for the vast majority of organisations, a combination of factors has led to an unprecedented spotlight on supply chains. One of the main reasons for this is the increasing number of stringent legal frameworks dedicated to the topic; the latest being the Modern Slavery Act 2015. Receiving Royal Assent in parliament on 26th March this year, the Act consolidates current legislation and is the first anti-slavery legal framework in Europe. Included in this is a specific clause that requires organisations of a ‘to-be-decided’ size to report annually on the actions they have taken to ensure there is no modern slavery in their supply chain. By strengthening enforcement powers, increasing the maximum sentence for serious offences from 14 years to life in prison, providing more protection for victims and increasing transparency in supply chains, the Act aims to help eliminate modern slavery around the globe.

On top of this, public expectation has altered significantly, with consumers now expecting corporations to adhere to best practice standards in a host of non-financial areas, including modern slavery. With technology making information readily available at any time, customers are able to review an organisation’s non-financial performance and change purchasing decisions based on the results.

What information should suppliers be disclosing?

All of this means that, for buying organisations, it has become vital to ensure that the risk of being embroiled in modern slavery allegations is effectively managed. To achieve this, organisations must start by asking their suppliers the right questions around human rights, working conditions, employment contracts, child labour, diversity and freedom of association. Detailed analysis can then be undertaken to identify and take action on high risk areas.

For suppliers, being proactive and transparent by disclosing this information will result in a number of business benefits; including increased buyer confidence, strengthened brand image and new opportunities.

The Modern Slavery Act 2015 supply chain requirements

The supply chain requirement applies to companies or partnerships that:

-          Sell goods or services and are;

-          UK based or;

-          Based outside of the UK, but have a part of their operations in the UK.

 

[1] http://www.globalslaveryindex.org/

[2] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/266165/Draft_Modern_Slavery_Bill.pdf

 

SupplierPortal contact

Modern Slavery

Sign up to Greenstone's blog updates