April 1st is a landmark date. Under new government regulations, all companies that operate in the UK with an annual turnover of over £36 million must publish an annual statement showing the steps they have taken to ensure there is no slavery or human trafficking either in their business or in their supply chain.
New advanced training course: Human rights due diligence
With some companies already producing statements, we’re beginning to get a sense of how seriously companies are taking their commitments under the Act. Are they viewing it as a PR or light-touch exercise, or as something that can help bring about transformational change if done properly?
Disappointingly, the vast majority of initial reports failed to comply with the legislation, as a Business & Human Rights Resource Centre/CORE report revealed, and which I commented on in my last blog. I hope the next tranche will be better but I’m not all that optimistic. Why?
It appears that many companies, in their endeavour to comply with the legislation, are being tempted to do what they’ve always done. Outsource.
Companies as a matter of course contract goods and services for sale. And now they’re outsourcing their due diligence on modern slavery to external contractors and consultants. This is a bad mistake.
A growing industry of contractors claiming to sort out modern slavery
We know this much: the nature of modern slavery is complex, and most of it is hidden beneath a veil of secrecy, fear, complicity and deception. It cannot be treated in the same way as businesses might treat other problems, which is to find someone who knows about the issue and get them to sort it out.
Yet I see a vast stream of offers every day from a growing industry of ambulance-chasers claiming to be able to sort out modern slavery for companies.
Legal advice. An app. A new IT database. Novel audit methodologies. Quick-fix training.
There is no shortage of profit-making organisations ready to offer these services. For a price. Lawyers, auditors, and consultants are all offering to help companies identify their risks and write their modern slavery statements and human rights policies.
Companies are buying these services out of panic, fear and confusion rather than pausing, taking a deep breath and looking in their respective organisational mirrors to better understand the problem and find their own solutions.
So what is it about corporate culture that is so wedded to this out-sourcing model?
Companies appear to think that because they are contracting the services of so called ‘experts’ this will be seen as an indication of how seriously they are taking the modern slavery issue.
There is a clear risk in outsourcing modern slavery expertise
I’m not for a moment suggesting that companies shouldn’t seek to enlist expertise. No-one expects company staff to be experts on modern slavery or forced labour.
But the risk of out-sourcing due diligence and risk management is that is treated as a ‘project’. There is a deliverable – a statement, a policy, a toolkit – and the company treats it as a box ticked in their list of ‘to do’s’.
Leaving aside the exorbitant financial costs of outsourcing this work, the heaviest price for taking this approach will be paid by the company because it has outsourced knowledge, learning and ownership.
’Expert’ contractors pocket a fat cheque, gain new insights on companies and their supply chains, and have a portfolio of experience and insight that helps them market themselves to other willing customers. But the company is left holding all the risk. It is no less wise on how to tackle or prevent the problem. Nor does it have the right level of ownership to drive solutions within its own company.
The result? No change from what we see now…. companies lurching from one crisis to the next, trying to respond to media stories, campaigns or criminal liability cases that expose abusive labour practices in their supply chains or operations.
Companies must build internal capability and engage directly with workers
Companies should spend their time and money more wisely. They should build their internal capability and leadership - having hard conversations internally about what needs to change in their sourcing, purchasing and human resources practices. Short-term fixes may be tempting, but this kind of investment will pay off far more in the long-term.
And of course, the most effective form of due diligence is to engage directly with workers and their representatives. Because workers that can advocate for themselves and negotiate their own terms and conditions are not at risk of modern slavery.
Sounds simple, but there is a long and complex road to achieving this.
It will involve companies building trusted relationships with trade unions and NGOs, engaging with governments, and drawing on appropriate expertise to help shine a light on the problem or advise on how it might be tackled.
But that cannot replace the work that businesses must then do to build internal buy-in, figure out what needs to change, who needs to lead it, and how to make it happen.
The bottom line? A ‘business as usual’ approach just won’t work with modern slavery.