Earlier this year we surveyed 100 managers and above in supply chain roles across a variety of sectors and business sizes. The findings were stark. Over a third (38%) said they did not have processes in place to check whether their suppliers had been convicted of modern slavery. That figure rose to 47% when we looked at the responses from those in C-suite positions.
We also asked the sample which ethical considerations they felt would be the most important over the next five years. Almost two thirds (65%) identified environmental issues, compared with just 17% citing modern slavery.
These results are surprising given how much of a highly-publicised issue modern slavery is. They're particularly surprising given that any organisation that does business with a supplier that employs people under terms which constitute modern slavery is leaving itself open to serious risk of prosecution and reputational damage.
Yet the reason for this may be a question of what’s practical rather than of ignorance. Almost half of our respondents (49%) said modern slavery was a difficult issue to monitor. Of these, 57% said having limited visibility of suppliers’ processes was a problem, and 53% cited challenges in monitoring suppliers who were active across different markets.
There is no doubt that ensuring complex supply chains are free from modern slavery is going to be very challenging. Cases of businesses being prosecuted have so far been rare. But the publication of the independent review of the Modern Slavery Act in May has prompted the government to announce its intention to give the legislation more teeth. Clearly the issue is not going away and businesses are best advised to now step up efforts to address it, not only on moral grounds but also to avoid significant adverse impact on their reputations and finances.
While there is no obligation to visit every supplier and carry out forensic analysis, it is advisable to maintain a ‘risk register’ of partners and be comfortable that no supplier is engaging in modern slavery practices. Companies should carry out a detailed audit of suppliers’ jurisdictions, as well as the processes they have in place to stamp out modern slavery. This requirement can also be written into contracts to ensure suppliers are doing their bit and scrutinising their own supply chain partners in the same way.
For HR teams, there are some practical points that they should bear in mind:
- Staff who have contact with supply-chain partners need to be trained on the parameters of modern slavery
- The modern slavery ‘risk register’ is a working document and should be regularly updated to highlight risk
- Disclosures by staff of concerns they have about supply-chain partners should be handled promptly and sensitively
From our research it’s clear that along with the threat of punitive action, businesses also need assistance and support in identifying where risk may lie.
Helpfully, in its response to the review the government said it wants to 'create the right incentives and support' to help organisations address modern slavery. The announcement of plans for a new research centre – that will bring together academics, businesses and charities to drive forward new studies, share knowledge and improve collaboration – could also present more support in the future.
However, what form that will take is as yet unknown. In the meantime the government has launched a consultation to gather views on its proposals to extend the scope of the legislation. For businesses this is an opportunity to articulate the kind of support they need to eradicate modern slavery. HR teams will need a voice in this to ensure relevant personnel are equipped with the skills to eliminate such risk from the supply chain.
Jawaid Rehman is a partner in the employment, pensions and immigration team at Weightmans
