Three quarters of companies believe modern slavery likely in their supply chains

31st October 2016

Senior executive involvement in tackling modern slavery has doubled since legislation was introduced, with 77% believing that it could be an issue in their supply chains.

Hult International Business School and the Ethical Trading Initiative questioned 71 brands and retailers about their approach to the issue one year on from the introduction of the Modern Slavery Act.

More than 40% of respondents said supply chain complexity was one of the biggest barriers to addressing modern slavery. According to the study, how best and how long to work with suppliers to improve working conditions is a challenge for most organisations.

Companies are identifying risks in new areas as they start to map their supply chains, including in logistics, warehousing, catering and cleaning services and labour recruitment agencies.

Almost all (97%) participants said damage to reputation from modern slavery in the supply chain is the biggest driver for change, while 86% identified corporate action on human rights as a critical business responsibility, regardless of reputational risk.

Two-thirds (67%) of chief executives and senior executives have received training on modern slavery in the past year, the research found.

The majority of respondents (90%) said due diligence on core labour standards is crucial to tackling modern slavery. Leading companies are increasingly conducting human rights risk analyses by country, sector or type of labour, and prioritising their risks accordingly, the study found. More than two thirds (71%) had these formalised and embedded processes to capture this information in their operations.

A quarter of companies identified fear of investors’ reaction to negative media stories on modern slavery as a reason to address the issue, compared with 0% in 2015, when Hult International Business School and the Ethical Trading Initiative last examined the issue. However, they did not report pro-active engagement by investors seeking information on the issue, the researchers noted.

All companies said that one of the most effective interventions is to involve workers directly in managing and mitigating the risks of modern slavery. Although some firms are working with trade unions on the issue, only 31% said they saw labour organisations as critical stakeholders in addressing modern slavery.

Quintin Lake, co-author of the report and research fellow at the Ashridge Centre for Business and Sustainability at Hult International Business School, said: ‘We wanted to know what “good” looks like for companies seeking to address modern slavery, to help those who are just starting to look at the issues to make faster progress. Though there is much more work to do, it is encouraging to see the steps leading businesses are taking.’

Within leading companies, the study reveals that the conversation has shifted from a sense that the problem is ‘out there’ to ‘this is our problem’. Businesses also recognise that addressing modern slavery is not about short-term risk management, but about changing the way the organisation thinks about human rights, and what systems need to be place to alter practice in the long term, the report concluded.

It finds that companies face several significant barriers and tensions in addressing modern slavery, and that the amount of work needed to improve corporate policies and practices should not be underestimated. This includes addressing the policy and legal environment, altering the mindsets of investors and consumers, and changing the culture of business, particularly around worker representation, it said.

Cindy Berman, the report’s co-author and head of knowledge and learning at the Ethical Trading Initiative, said: ‘What’s most important is ensuring that workers have choices over who they work for, free from threat, coercion, abuse and exploitation. When workers can negotiate the terms and conditions of their working arrangements, the likelihood of modern slavery is minimal.’

Companies that took part in the study were selected because of their reputation as leaders on ethical trade or as companies that have been public about their commitment to address modern slavery, which the researchers acknowledged meant that the results were not representative of all those covered by the act. Participating companies include Asda, Ikea, the John Lewis Partnership, Nestle, SABMiller and Sainsburys.


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