How to improve supply chain sustainability and ethics

From forced labour to debt bondage, sti­fling back-street sweat shops to haz­ardous, unsafe con­struc­tion sites, mod­ern slav­ery is a very 21st cen­tu­ry prob­lem. 

A star­tling 40 mil­lion peo­ple live in slav­ery accord­ing to the organ­i­sa­tion Anti-Slav­ery; that’s one in every 200 peo­ple on the plan­et. Around 25 mil­lion of these are trapped in forced labour, with 60% in sup­ply chains, a sit­u­a­tion exac­er­bat­ed by Covid and labour short­ages.

It’s a trag­ic state of affairs that has helped to focus minds, says Matt Fried­man, CEO of the Hong Kong based Mekong Club, which works with com­pa­nies across bank­ing, hos­pi­tal­i­ty, retail and man­u­fac­tur­ing to help bring action to their mod­ern slav­ery state­ments.

The demand for com­pa­nies to oper­ate with more social respon­si­bil­i­ty is grow­ing, from fund man­agers under pres­sure from investors who want to know that their pen­sions aren’t sup­port­ing mod­ern slav­ery, to con­sumers who want to buy guilt-free clothes.

“It used to be that com­pa­nies focused on prof­its, pres­tige and growth but now the expec­ta­tion is that they also have to do good,” says Fried­man.

The Eth­i­cal Trade Ini­tia­tive (ETI) is anoth­er mem­ber­ship organ­i­sa­tion, bring­ing togeth­er a mix of pri­vate com­pa­nies, NGOs and trade unions, to improve the rights of work­ers in sup­ply chains. “Mod­ern slav­ery is a just a piece of paper… unless it is embed­ded in organ­i­sa­tion­al plans,” says head of mem­ber­ship Kate Lewis.

The ETI encour­ages its mem­bers to map their sup­ply chain from top to bot­tom: “because often the biggest risk you are car­ry­ing is at the end of your sup­ply chain,” adds Lewis. Debt, exces­sive over­time, a lack of free­dom of move­ment, and whether accom­mo­da­tion is offered, are all poten­tial signs that work­ers are pos­si­bly being coerced.

Com­pa­nies need to under­stand their vul­ner­a­bil­i­ty and their risk. There are a grow­ing num­ber of reports and met­rics, such as the Slav­ery Index, the annu­al Traf­fick­ing in Per­sons (TIP) report, as well as sta­tis­tics about the vul­ner­a­bil­i­ty of indi­vid­ual coun­tries and prod­ucts, that can help com­pa­nies assess risk.

By iden­ti­fy­ing salient issues, says Lewis, set­ting objec­tives and tack­ling the most con­cern­ing human rights issues first, com­pa­nies can bring more dynamism to their mod­ern slav­ery poli­cies. And with the growth of social media, and ever more vig­i­lant NGOs and media organ­i­sa­tions, man­ag­ing the risk of rep­u­ta­tion­al dam­age has nev­er been more impor­tant.

Tra­di­tion­al­ly, audits have been a sta­ple of sup­ply chain mon­i­tor­ing, but this is chang­ing.  Lan­guage issues and intim­i­da­tion often mean that employ­ees asked to give feed­back to audi­tors are too scared to speak, says Fried­man.

Unilever, for instance, now sup­ple­ment audits with human rights impact assess­ments, car­ried out by inde­pen­dent organ­i­sa­tions, as well as anony­mous work­er sur­veys.   Con­fi­den­tial griev­ance mech­a­nisms such as phone lines and apps are anoth­er way of ensur­ing work­ers have a way of speak­ing out about any issues.

Food and agri-busi­ness Olam sees col­lab­o­ra­tion as cen­tral to its poli­cies around mod­ern slav­ery.  The com­pa­ny deals with a vast range of com­modi­ties, all of which have intri­cate sup­ply chains, includ­ing cocoa, which has long been linked with issues around child labour.

Access to edu­ca­tion, and rules about when chil­dren should attend school, dif­fer wide­ly between coun­tries, says Andrew Brooks, the company’s head of cocoa sus­tain­abil­i­ty, which leads to a grey area about the law­ful­ness of chil­dren work­ing on a fam­i­ly farm.

In the Cote d’Ivoire, the world’s largest cocoa pro­duc­er, Olam is work­ing with the Gov­ern­ment to fund the Child Learn­ing Edu­ca­tion­al Facil­i­ty (CLEF). In a part­ner­ship includ­ing cocoa proces­sors, choco­late man­u­fac­tur­ers and the World Bank, the scheme will pro­vide edu­ca­tion for five mil­lion chil­dren and the con­struc­tion of 2,500 class­rooms. Olam is also work­ing with com­mu­ni­ties to help col­lect infor­ma­tion such as birth cer­tifi­cates, which will help to iden­ti­fy chil­dren that are at risk of miss­ing out on their edu­ca­tion.

Indus­try col­lab­o­ra­tion though ini­tia­tives such as the Inter­na­tion­al Cocoa Ini­tia­tive, is a well-estab­lished way of mon­i­tor­ing human rights in cocoa and is now tak­ing on greater rel­e­vance in oth­er sec­tors.

“I think the mul­ti­stake­hold­er, col­lab­o­ra­tive approach is essen­tial,” says Fried­man, as it cre­ates: “peer pres­sure that moves every­body at the same rate.”

Mem­bers of the Mekong Club meet on a quar­ter­ly basis, he adds. “They may com­pete on every­thing else but in that room, they recog­nise that if any one of those organ­i­sa­tions gets in trouble…everyone else is in the same boat. None of them want that to hap­pen so they will col­lab­o­rate, work togeth­er and share infor­ma­tion on this par­tic­u­lar top­ic in a way that you won’t see with any­thing else.”

Covid has also height­ened the vul­ner­a­bil­i­ty of sup­ply chains and the ETI has estab­lished a team to look into logis­tics, par­tic­u­lar­ly ship­ping and the issue of crews marooned on boats that can’t dock.

The pan­dem­ic also shone a light on the trad­ing rela­tion­ships that big com­pa­nies have with their sup­pli­ers, as demand for goods dropped off. But for every com­pa­ny that looked care­ful­ly at their pay­ment terms and hon­oured con­tracts, says Lewis, plen­ty more just walked away, ignor­ing the knock-on effect their actions would have on whole com­mu­ni­ties.

“If you rip out sales, what hap­pens to work­ers in that sup­ply chain?” she asks. “Being pre­pared and being able to car­ry that risk with sup­pli­ers is key…Anyone trad­ing, sell­ing or mak­ing any­thing that has work­ers in the sup­ply chain, should be address­ing this.”

But many weren’t pre­pared, lead­ing to a growth in indebt­ed­ness, which Fried­man antic­i­pates is going to result in a sig­nif­i­cant increase in mod­ern slav­ery. Indebt­ed­ness grows when indi­vid­u­als bor­row mon­ey from agents, in order to pave their way to a bet­ter paid job, often in a for­eign coun­try. But peo­ple sign up unaware of the huge inter­est rates and fees they will have to pay. When the new job actu­al­ly pays far less than was promised, peo­ple end up work­ing for years just to pay back the ini­tial loan.

The clo­sure of fac­to­ries due to order can­celled because of Covid made the prob­lem worse, says Fried­man, with sto­ries of lenders ask­ing peo­ple to offer up a fam­i­ly mem­ber to go and work in a fac­to­ry for a year in order to clear their debt.

There are ways to break the chain, he says, such as iden­ti­fy­ing hon­est, local recruit­ment agen­cies and using blockchain to man­age con­tracts. When peo­ple arrive at their new jobs, they are often forced to sign a sec­ond con­tract, in a lan­guage they don’t know, and this is when fees and costs for accom­mo­da­tion start to be deduct­ed from wages. “The trans­paren­cy (of blockchain) ensures peo­ple don’t get cheat­ed,” he says.

Mod­ern slav­ery remains a glob­al prob­lem, too.  “There can be a per­cep­tion that any­thing sourced inside Europe is fine,” says Lewis. “(But) there shouldn’t be any assump­tion that any sourc­ing coun­try is okay.” To address this, the EU is set to bring in new due dili­gence leg­is­la­tion which places the bur­den of evi­dence to prove there have been no human rights vio­la­tions along the sup­ply chain on the importer.

Fried­man sup­ports the idea of the ‘buy­cott,’ which urges peo­ple to active­ly sup­port good com­pa­nies that are try­ing to make a dif­fer­ence, rather than boy­cott those that aren’t. “There are a lot of com­pa­nies that des­per­ate­ly want to do the right thing,” he says, and by reward­ing them: “the incen­tive is for com­pa­nies to step up and do more.”