An estimate from the Global Slavery Index indicates that approximately 35.8 million people are being subjected to modern slavery today. 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. In this blog we cover all you need to know about modern slavery in supply chains.
What is modern slavery?
Modern slavery is a broad term that encompasses the offenses of human trafficking, slavery, forced labor, and domestic servitude. 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 globalization of supply chains has made it extremely difficult to ensure that suppliers are enforcing the same measures.
What are the risks for companies?
Companies that associate themselves with modern slavery will experience several serious impacts. With laws becoming rightly stricter, organizations can be hit with costly legal sanctions for not ensuring that correct labor standards have been implemented. Arguably more costly is the reputational damage caused. Exposure to 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, organizations will not only avoid the risks but place themselves in a strong position to encourage investment and flourish.
Increased Focus on Supply Chains
Internal labor standards have long been a consideration for the vast majority of organizations. However, 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 organizations 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. The Act aims to help eliminate modern slavery around the globe. The goal is to do so by strengthening enforcement powers, and increasing the maximum sentence for serious offenses from 14 years to life in prison. In addition to that it aims to provide more protection for victims, and increase transparency in supply chains.
On top of this, public expectation has altered significantly. Consumers are 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 can review an organization’s non-financial performance. They can also change purchasing decisions based on the results.
What information should suppliers be disclosing?
All of this means that, for buying organizations, it has become vital to ensure that the risk of being embroiled in modern slavery allegations is effectively managed. To achieve this, organizations must start by asking their suppliers the right questions. This includes human rights, working conditions, employment contracts, child labor, 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. This includes 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.
References:
https://www.walkfree.org/global-slavery-index/
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