With plans in place to introduce a single piece of anti-slavery legislation, there is greater onus on businesses to be accountable for their supply chains and to do what they can to help tackle child and slave labour.
In this new era of corporate honesty and accountability, some businesses could be forced to restructure their supply chains and alter their buying behaviours, and there are still no guarantees that it will have the desired effect.
From October this year, under the incoming Modern Slavery Act, about 12,000 British businesses with a turnover of £36m or more will be required to make an annual statement setting out any steps they have taken to ensure slave labour is not being used within their supply chains.
This has long been recognised as an issue but businesses have come under the spotlight in recent years, with tragedies such as the collapse of the Rana Plaza factory in Bangladesh, when garment workers were forced to keep working even after cracks appeared in the building. Ultimately, 1,129 people died and more than 2,500 people were injured.
Recent revelations about ‘World Cup slaves’ in Qatar and seafood workers in Thailand have served to further highlight the issue.
But it is not a straightforward problem to solve.
The Chartered Institute of Procurement and Supply (CIPS) published research last year revealing that three quarters (72 per cent) of British supply chain professionals have ‘zero visibility’ of their supply chains beyond the second tier, with only 11 per cent able to trace their entire supply chain.
The issue of modern slavery and human trafficking is creating a real dilemma for businesses; they need to balance a requirement to source products and services cost-effectively and stay competitive, while operating ethically, which is increasingly important in consumer-driven markets.
By encouraging companies to be more accountable for their supply chains, the incoming legislation means they will need to start policing their supply relationships even more closely and invest more resources in doing so.
This will require greater corporate honesty as it will no longer be acceptable for businesses to ignore what they can’t see. This is vital if they wish to avoid potentially-damaging supply chain scandals in the future.
For most businesses, the level of scrutiny typically applied to each supplier depends on the degree of risk they represent both ethically and operationally. In most instances, it simply wouldn’t make sense for businesses to spend a significant amount of time supervising or building relationships with suppliers of relatively minor, low-risk components. This approach may need to change in the future, as companies are forced to take a more proactive approach to demonstrating ethical business practices.
With the increased scrutiny, the costs associated with sourcing goods and services are likely to increase as low-cost suppliers are forced to check and prove they are using responsible supply chains. Businesses using low-cost suppliers will need to factor in these increased costs along with an increased exposure to reputational risk.
Tackling modern slavery will require a fundamental shift in corporate buying behaviour and while these changes will have a positive effect, they are unlikely to eradicate such abuses completely. Market forces will prevail and it is likely that slave labour and human trafficking will be driven further underground rather than disappear altogether.