Still worried about slavery? Here’s how you can help your supply chain

Nov 7 2022, 9:40 AM5 min read

Slavery has been abolished in most nations for more than a century in most cases. But it’s still a critical issue for procurement leaders in 2022. UN research shows some 28 million people globally may be involved in forced labour or slavery. From fishing in southeast Asia to metals mining in South America, and apparel manufacturing in India, slavery can, unfortunately, still be found within many industries and supply chains.

Given the myriad pressures procurement leaders must manage, your organisation could be supporting forced labour somewhere in the world without your knowledge.

Because forced labour may occur in a distant land many steps removed from your enterprise, it may feel easy to ignore your organisation’s role. It’s a mental contortion known as ‘psychological distance’ that allows us to value the lives of unseen people less than those we know and care about.

Unfortunately, many organisations view slavery as just another ESG risk. As supply chains stretch around the globe through multiple layers of suppliers, it’s genuinely difficult to ensure every supplier meets your country’s ethical standards.

How deep does your responsibility go?

In our ‘Procurement Under Pressure’ Research Report – created in partnership with Ivalua – nearly a third (32%) of procurement leaders admitted to not following their own sourcing standards to secure supplies of products. Given the pressure procurement pros are under to do more with less, a lack of due diligence or laxity in standards could lead to quality, ethical, or sustainability issues.

A code of conduct embedded deep in a supplier contract may not be worth the paper it’s printed on. It’s hard for buyers to believe their suppliers may be involved in something like slavery. And your direct contacts may not be aware of the situation either, depending on the complexity of the value chain.

Defining modern slavery

Modern slavery is illegal in every country in the world. However, it still occurs, despite countries having laws against it.

The term ‘Modern Slavery’ describes situations in which coercion, threats, or deception are used to exploit victims and undermine or deprive them of their freedoms.

The Chartered Institute of Purchasing and Supply (CIPS) offers these examples of modern slavery:

Human trafficking: The act of recruiting, transporting, and transferring a person through coercive means for exploitation. Trafficking may not necessarily involve great distances.
Forced labour: Work or service taken from a person under the menace of a penalty and for which the person has not offered themself voluntarily. Forced labour may be a component of generational slavery as certain groups are designated for exploitation.
Debt bondage: Debt bondage occurs when a worker pledges their labour or the labour of others under their control as security for a debt. The actual value of the work is never applied to repayment of the debt, and the length and nature of the work required are never fully defined or limited.
Sale and exploitation of children: The sale and exploitation of children involves situations where one person transfers children to another for remuneration or other consideration.

Today, slavery exists within a surprising number of situations in the supply chain, from raw materials extraction and manufactured goods to transportation and logistics. Suppliers exploit workers to keep labour costs low and maximise profits.

According to CIPS, the risks of modern slavery are most pronounced in these situations:

Workers have fewer protections due to inadequate laws and regulations, weak or non-existent enforcement, and poor business and government accountability
High levels of poverty among workers
Widespread discrimination against certain types of workers, such as ethnic groups and women.
Widespread use of migrant workers
Conflict zones
High-risk industries usually involving raw materials

Depending on where your organization does business, it may already be required to publish an annual modern slavery statement.

Organisations often rely on self-reporting and third-party audits to certify the absence of slavery, but these efforts may be vulnerable to fraudulent auditing, bribery, or deception by suppliers.

Monitoring by technology is taking on a more prominent role, as artificial intelligence programs scan for signals like news reports and social media traffic, which can indicate a problem – but only after it surfaces in the public eye.

Slavery is a cultural and economic issue in some regions, with exploitation a long-standing fact of life in some communities.

Some companies are investing in understanding those conditions and building support systems for workers. The goal is to positively affect the factors that lead to abuse, rather than simply reporting on the situation.

Some organisations, such as the multinational consumer goods giant Unilever, have taken a proactive approach to address forced labour issues. Unilever’s policy is based on the principle that all work in its supply chain is conducted voluntarily for a living wage. The company is cracking down on recruitment fees that bond workers to forced labour.

Supermarket chain ALDI Australia was the first member of the Slave-Free Alliance in Australia. The Slave-Free Alliance is an international social enterprise that helps businesses protect their supply chains from modern slavery. ALDI’s participation began with a Human Rights Risk Assessment and Modern Slavery Awareness Training for ALDI employees and business partners.

3 elements of anti-slavery for procurement professionals

Procurement pros are well-positioned to influence decision-making in the supply chain, including due diligence, supplier evaluation, and managing supplier risks.

CISP outlined this modern slavery management approach for procurement leaders:

Policies

Establish policies to prevent, detect and stamp out modern slavery in the supply chain. Make statutory declarations and contract provisions for existing and incoming suppliers which establish expected behaviours.

Processes

Identify vulnerabilities and assess risks deep into the supply chain as possible. Emphasise transparency over compliance to work with suppliers to address any shortcomings.

Planning

Be prepared for situations when issues arise through audits or media reports to identify suppliers that may be involved with modern slavery. The problem may be able to be addressed or could result in cutting ties with the supplier.

Even in developed economies, there are still sectors that operate beyond the reach of government regulations. In the so-called informal (or black market) economy, labour may be sourced from undocumented or irregular migrants, with workers being paid in cash or in kind.

The risk of slavery in developed economies is higher when there’s a widespread use of casual or seasonal labour, unrealistic costs or delivery time expectations, orders without contracts, and other risky behaviours that reduce oversight from procurement processes.

Indeed, global slavery is a complex issue. It will take a concerted effort by business leaders worldwide to close the psychological distance between themselves and unknown workers in foreign lands to aggressively address the issues.

To understand more about the pressures currently facing procurement and supply chain professionals, the outlook for 2023, and what you can do to tackle these market challenges, make sure you download our ‘Procurement Under Pressure’ Research report. We teamed up with Ivalua to survey 170 procurement and supply chain leaders on the pressures and conditions they’re experiencing in 2022 and their outlook for next year. Click the link to download Procurement Under Pressure.

Find more ESG (Environmental, Social, Governance) news, insights, and best practises at Procurious.com.