Corporate leadership on modern slaveryTue 18th Feb 2020
Addressing modern slavery is becoming a business-critical issue – essential for the credibility and legitimacy of a business in the eyes of all its stakeholders. On the first anniversary of the passing of the Modern Slavery Act, with its Transparency in Supply Chains clause, Hult International Business School partnered with the Ethical Trading Initiative to examine the role of corporate leadership in addressing modern slavery. The research is the first in-depth analysis of corporate perspectives on tackling modern slavery since the introduction of the Act, and has generated momentum for the introduction of similar legislation in other countries resulting in the adoption of new behaviours by companies. The research reveals examples of what companies are doing, what they are learning, and what they regard as leadership in addressing this problem in complex global supply chains.
There exist strong drivers for companies to address modern slavery and these have intensified further since the introduction of the Act. Reputational risk is one of the strongest drivers, but human rights are also recognised as being a significant factor. In addition, companies are experiencing a greater level of interest and engagement from their customers on responsible sourcing issues and, from the other side, customers increasingly expect companies to have taken every possible step to mitigate exploitation in their supply chains.
The areas in which companies have identified key risks related to modern slavery include migrant workers, child labour, recruitment fees and debt bondage, temporary labour, working hours and wages, and subcontractors. However, there exist several barriers to addressing modern slavery, such as supply chain complexity, availability to support supplier improvements and due diligence, cost pressures, and transparency dilemmas.
The research by Hult International Business School is based on in-depth interviews and surveys with 71 companies that either had a reputation as being leaders in ethical trade or had been public about their commitment to address modern slavery. Those participating in the study all had established policies and strategic commitments to ethical trade before the Act was passed. The companies came from a variety of sectors including apparel and textile, FMCG, food and drink, retail, building and construction and technology. The majority were consumer facing organisations but some B2B organisations were also included.
Hult International Business School’s research found that the Modern Slavery Act had already had a significant impact on companies’ conduct one year since its introduction. Twice as many CEOs and other senior executives are actively involved in addressing modern slavery since the Act came into force. Twice as many people from Legal, HR, Procurement and quality/technical roles are also involved. Companies have also significantly increased their activity to address modern slavery risks, including training and awareness raising for board members and senior executives (67% of respondents).
Communication between companies and their suppliers has also increased, with 58% of the companies reporting that they have dramatically increased communications to their suppliers on expectations on actions to address modern slavery, and many now communicate directly with tier 2 and beyond (53%). Moreover, half of the companies responding to the survey are collaborating more with peers, NGOs and multi-stakeholder initiatives since the Act was passed.
Long-term, partnership-based relationships with suppliers – as opposed to simply switching suppliers to manage short-term risks - was seen as an effective approach by 93% of the responding organisations, and the majority of companies were making significant progress in implementing such measures. Due diligence on core labour standards was viewed as crucial by 90% of the respondents and 71% had formalised and embedded human rights risk analyses by country, sector or labour type. Furthermore, all the responding companies reported that they were increasingly trying to directly involve workers who are most at risk of modern slavery, thus recognising that workers themselves need to be actively engaged in mitigating modern slavery risk.
The research is one of the primary sources of evidence of the potential impact of modern slavery legislation on organisational behaviour and has been widely cited in advocacy efforts to persuade countries such as Australia and Canada to introduce similar legislation. For example, during the Australian Parliamentary Inquiry into adopting a Modern Slavery Act, 23 of 185 submissions cited findings from Hult’s research and the Australian Parliament subsequently passed into law a Modern Slavery Act on 29 November 2018.
The research has also been widely cited in public debate on modern slavery in the mainstream press, trade press, and social media, as well as in several books, and has been referenced in numerous guidance documents for companies tackling modern slavery in their supply chains, including the UK Government official guidance, guidance from the UK Independent Anti-Slavery Commissioner and the UN Global Compact. Furthermore the influential Business & Human Rights Resource Centre cited the research in its analysis of the FTSE 100 companies’ performance on modern slavery. The research has moved into a new phase focused on designing effective education on ethical trade for business leaders and managers.