Tectonic Shift: From Audits/Compliance to Due-diligence & Collaboration: Recap of the Forum on UK Modern Slavery

May 15, 2016 EcoVadis

140 procurement execs, human rights experts, analysts, NGO leaders gathered in London on May 4 last week to exchange on practices and discuss the potential impact, pitfalls and response strategies to UK Modern Slavery Act. EcoVadis CSR Analyst Michael Smith participated in the panel on “How have businesses in different sectors responded to slavery risks – and what are the cross-context lessons and mistakes?”

The opening keynotes – defining the context

  • defined the context of Modern Slavery: with 150 million migrant workers worldwide, the level of vulnerability of workers has never been higher.
  • The practice of extracting ‘recruitment fees’ from worker fees has become the “original sin”.
  • The Institute for Human Rights in Business ihrb.org has set a goal to eradicate worker fees by 2026, through the “employer pays” initiative.
  • International organizations are not focusing enough on the demand side of forced labor & exploitation. In fact often the practices we define as modern slavery are still completely “legal” in some countries, the gulf states in particular.
  • Businesses need to acknowledge that there are human rights abuses in their supply chain, and get the policies in place now to address this when it eventually is discussed.

The UK Mod Slavery Act still has a major loophole: overseas subsidiaries of UK companies are exempt (to remain competitive in the Gulf states).

The question of whether the law is really strong, is more a question of where the balance of tradeoffs should sit: forcing disclosure which provokes action through public shaming, vs on the other extreme sanctions which would likely just encourage better hiding of issues.

Morning panel – responses and techniques

  • During the second morning panel EcoVadis’ Michael Smith discussed multi-faceted approach, and provoked lots of note-taking when the 360° watch feature (part of our multi-source news and stakeholder monitoring aspect of our Methodology) was mentioned.
  • Some practitioners saw their UK Modern Slavery statement as a journey.
  • An example challenge of trying to gain an understanding down in deeper tiers in the supply chain: Distributors are reluctant to share information on their suppliers for fear of being bypassed (e.g. the buyer would discover their key suppliers and start purchasing directly).
  • The discussion touched on advocacy with governments on sweat-shop conditions in Cambodia, and concern about opportunistic employment agencies in Europe who prey on laid-off workers in Eastern Europe, and bring them to UK.
  • 71% of UK company CEOs assume that some form of Modern Slavery exists somewhere in their supply chain; this is a very important step to move from “tick the box” to driving improvements
  • Audits face too many problems, including widespread fraud: “If it is not working then stop doing it! An alternative approach suggested: senior buying company management to make unannounced visits to supplier factories. This approach is not scalable, though.”

Agriculture Breakout session – Carrots more than sticks; Cultural obstacles

  • Some consumer brands put a strong focus on community involvement. Other retailers see their largest risks in Logistics, and said they were in a transition phase from audits to a human rights due-diligence approach, with a focus on implementing grievance mechanisms.
  • Cultural challenge example: with 30,000 sugar suppliers in India, how can you impose standards, and educate without ruining traditions. Analyzing flow-on effects of cancelling a supplier contract.
  • Ultimately, if a supplier is not taking sustainability seriously, they’re probably not on the top of their game in quality or innovation, either
  • Focus has to be on primarily targeting the “worst forms” of slavery,  not so much the kids who work on family farms after school. The problem is that in the minds of the consumer, “slavery” is a wide-ranging term and can hurt.
  • Need to get Indian and Chinese companies involved. So far the anti-slavery effort is a very Western-dominated domain. are we understanding enough culturally?

What to write in reports

As of today 239 companies have published at least a draft version of their UK Modern Slavery report. This is just a tiny fraction of the thousands more companies who fall into the criteria, and will be required to follow suit. There is healthy skepticism whether many of them will contain valuable statements.

Make your report count. Here’s a good set of guidelines:

  1. Identify your audience – you are not writing to lawyers, so don’t get them to write it
  2. You can’t cover all your supply chain tiers. Focus on some priority areas/industries.
  3. If you don’t have much to say, don’t say much. Next year you’ll have more. This is the 1st statement in a journey
  4. Demonstrate that YOU understand Modern Slavery – you can’t subcontract your understanding of the issues. It needs to be part of your company’s DNA.
  5. Accept that you will have risk if you operate in x industry/country
  6. Be open about what you find – in today’s world if you don’t, it will come out eventually… but show how you reacted to it.  If you don’t, what are you hiding? Look close to home… how is your office cleaned?
  7. It is ok to publish an ‘incomplete’ statement – including plans of what you want to put in place
  8. Get your communications team to review it
  9. Show what you know about workers (the employment relationships) – this is where the real risk lies
  10. This is a real opportunity, you are free to write what you want, make it work for you.

Phil bloomer, executive director, Business and Human Rights Resource Centre

Closing thoughts:

  • If consumers are the judges – are they adequately qualified to evaluate whether a statement is good/valid?
  • Will many consumers assume that if a statement is not (yet) published, the company is exempt from doing so?

Many thanks to Andrew Dick, Program Manager at EcoVadis for ‘reporting’ on this event for us!

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