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Retail Environment

Modern supply chains continue to hide a dark secret

In 2013, when she was Home Secretary, British Prime Minister Theresa May wrote in an editorial for the Telegraph, “It is walking our streets, supplying our shops and supermarkets, working in fields, factories, or nail bars, trapped in brothels, or cowering behind curtains in an ordinary street: slavery.

Something most of us thought consigned to the history books, belonging to a different century, is a shameful and shocking presence in modern Britain.” This was the preamble to the process that saw the introduction of the Modern Slavery Act 2015. The rest, as they say, is history. Or is it?

Ending Enabling

There has long been an unspoken suspicion of a darker reality behind the high street - that our slavish drive towards fast fashion itself encourages modern-day slavery in other parts of the world as businesses chase lower-cost manufacturing locations in order to drive higher margins.

Fast fashion, it has been argued, could be an enabler rather than an inhibitor of slave labour. Whereas a few years ago the average wardrobe life of a garment was over three years, it is now, according to the Waste and Resource Action Programme (WRAP), just five weeks as cheap clothes are disposed of after a season.

Last spring, according to a study commissioned by Sainsbury’s, a staggering 235 million items of clothing - the equivalent of 1.3 million tonnes - ended up in landfill sites as Britons readied their wardrobes for summer.

In a recent article in the Guardian, environmental correspondent and BBC presenter Lucy Siegle wrote, “The fashion industry has developed a pretty terrible reputation - not least for the exploitation of human capital, outsourcing production to the world’s lowest wage economies. Four years ago, 1,133 garment workers were killed in Rana Plaza, Dhaka, Bangladesh while producing clothes for high street brands and their subsidiaries.”

Horrible as it is, the prevalence of slavery in the modern world is not surprising considering how profitable it is. Slavery is the third most lucrative trade in the world, after arms dealing and drug trafficking, and generates €120 billion for those involved in the trade of human misery who target the vulnerable, often those already exploited people fleeing war-torn areas of the world in the hope of a better life.

According to supply-chain clarity software provider Sugura, there are an estimated 129,600 people enslaved in Italy—the closest sea-crossing point from North Africa - compared to 18,354,700 people in India, the territory with the highest percentage of slaves per population with almost 1.5 per cent of its population living in slavery.

Prior to the adoption of the Modern Slavery Act 2015, a study by Sugura was conducted across twenty-one retailers to gain an insight into how companies across the UK were approaching compliance with the new legislation. The study highlighted how slavery presented a significant strategic dilemma for companies facing increasing pressures to bring products to market at an agreed quality, cost, and timeframe, as well as the complexities and demands of modern supply chains. This was put into context by one head of corporate social responsibility (CSR) who said, “Think about how big the supply chain is. More than 5,000 factories, and you don’t have a camera in each one. So to any brand that is saying it does not have any issues, I would say, ‘You don’t know your supply chain.’”

As another anonymous respondent to the report added, “It’s very clear that the biggest risks we face, of the most severe abuses in supply chains, are where you have vulnerable workers. They’re generally migrants and, most acutely, illegal migrants. If you’ve got people who do not feel they can run to the legal authorities or work in countries where those authorities wouldn’t treat them tolerantly anyway, they are incredibly vulnerable to abuse.”

The climate of tolerance to modern slavery has also changed. Pre-2015 when the act was introduced, the study revealed that 92 per cent of businesses cited damages to their reputations as their biggest drive for corporate change, but many also acknowledged the risk to workers as a significant factor too. It is argued that the moral imperative has now shifted towards complete zero tolerance of modern slavery as a first priority, although the issue is still prevalent two years after the implementation of the act. This, it could be argued, is because the act has flushed out more cases, which would have previously gone unnoticed rather than simply unreported.

It appears now that for many companies, addressing the risk to workers has become a personal crusade after many have witnessed the effects of slavery first hand. One company boss said, “The mind shift I’ve seen generally is it’s not just about looking after the share price and the reputation any more. It’s more that people actually realise this is important - s is about doing the right thing, having a moral responsibility, putting something back into where you’re taking out resources. This is about people.”

Businesses are now exploring new strategies to minimise the supply-chain risk attributed to slavery. Most interestingly, company leaders who provide a strong vision and support for ethical trade and modern slavery issues make more progress in eradicating slavery. Furthermore, companies that are aligned in their response to slavery are more likely to drive a business culture where employees are able to have open discussions regarding responsible sourcing. 

Companies are also wising up to methods that aren’t as effective. While supplier audits have long been a staple of supplier relationships, most businesses admit that they are only partially effective in identifying instances of modern slavery, despite the fact that the biggest challenge that companies face in tackling modern-day slavery is the lack of supply-chain visibility over their suppliers. This means knowing where each component of a product is sourced from, which for multi-merchandise retailers is easier said than done. And it needs to be backed up by an improved understanding of how to spot the signs of labour exploitation, incorporating such awareness into audit regimes.

The Modern Slavery Act 2015

The Modern Slavery Act 2015 (MSA) recognised the responsibilities of major companies (those with a turnover higher than £36 million), requiring them to produce statements outlining how they intended to tackle and monitor the risks of modern slavery within their own organisations over the next twelve months. But the MSA was not the universal panacea to resolving the terrible trade.

While a noticeable few businesses had gone beyond the requirements of the act to set up taskforces to stamp the issue out in line with their own CSR programmes, a more recent study from Segura showed that only five of fifty-three retailers that should have published their MSA statements by 30 October 2016 successfully made the deadline. 

For the statements that have been produced, a trend has been noticed. The statements’ contents were analysed by law firm Shoosmiths, which suggested that MSA compliance is simply a “cut and paste job” with different statements having “identical wording.” The lack of urgency with the MSA is not surprising when non-compliant companies are unlikely to face penalties for failing to outline their intended actions, so enforcement is a real issue. Kevin Hyland, the independent anti-slavery commissioner, announced at the Modern Slavery and Ethical Labour Symposium that although sanctions may be imposed on non-compliant companies in the future, currently no such punishments are likely to occur.

The concept of modern slavery can take many different forms including forced labour, human trafficking, exploitation, forced marriage, and domestic servitude. Within the fashion industry, slavery and child labour have been found incorporated across supply chains around the world. A recent BBC Panorama investigation found Syrian refugees being exploited in factories manufacturing clothes for household-name retailers with both large physical and online estates.

Tackling modern slavery should be more than just a legal obligation. Creating a more transparent supply chain whereby risks of modern slavery can be identified has multiple advantages for retailers. Brand image is essential for any major retailer. The failure to comply with legislation and create a more ethical organisation that overtly shows effort in tackling human rights abuses could lead to issues of brand protection. 

With the likes of Gap and H&M trailblazing the eradication of unethical practices within the fashion industry, if other retailers don’t catch up, they’re sure to get left behind, according to Sugura. The evidence that an unethical supply chain can negatively affect brand reputation can be taken from Nike’s tarnished reputation in the late 1990s. With Phil Knight (Nike’s co-founder) admitting in 1998 that the brand had “become synonymous with slave wages, forced overtime, and arbitrary abuse” came a tarnished reputation that led to a 70 per cent fall in earnings.

One of the other more proactive fashion retailers has been JD Sports, which has championed anti-slavery across its supply chain. On its website JD states, “Modern slavery involves criminal activity, and the signs are often subtle and difficult to identify. Over the past months we have been working with our staff and suppliers to create awareness, and May 2017 saw the development of a bespoke modern slavery training programme focusing upon recognising potential risks within our supply chain and actions to take to avoid and eradicate modern slavery. During May and June, 120 key staff attended an off-site conference, which we believe will help create the awareness and skills to embed these policies into their everyday lives and job roles.”

JD has now adapted the training programme into an e-learning platform that will become a mandatory part of the induction for all employees. Likewise, the whistle-blowing facility has been updated to allow confidential reporting of modern slavery when suspicions come to the attention of staff - both permanent and agency workers.

But the task of cascading the message down to the second suppliers will be a longer challenge, the company admits, because of the complexity of its global supply chain. Acknowledging that close to 19 million of the world’s forced labourers are exploited by private enterprise - the free market - JD accepts that the task is an uphill struggle and will present particular challenges where local laws are insufficient to protect workers in countries where there is a higher percentage of migrant workers.

JD’s website continues, “Supply chains are increasingly complex, and responsibilities for company supply chains can be impossible to own. The JD supply chain is no different, and we are committed to developing policies to combat the suffering of today’s slaves.”

The Co-op, which puts ethical trading at the heart of its business philosophy, has also responded to the challenge earlier this year by announcing plans to offer jobs to modern slave-trade victims as part of a new scheme known as the Bright Future programme. The company is collaborating with City Hearts, a charity that offers support and accommodation to vulnerable people, to provide thirty modern slavery survivors with paid work placement in its food business. Afterwards, the survivors will have the opportunity to undergo a non-competitive job interview, and if successful and a position is vacant, they would be offered a job.

Kevin Hyland said this was the first time modern slavery victims have been directly offered work placements and employment opportunities. “In doing so, the Co-op has empowered victims of modern slavery and human trafficking to live a bright future, and I am pleased to see that this initiative opens the door for that to become a reality,” he said.

 Gangmasters and Labour Abuse Authority

The Gangmasters and Labour Abuse Authority (GLAA) is the UK body regulating employment standards of temporary workers in the agricultural industry since 2006. It has now been given wider policing powers to investigate exploitation across the labour market to eradicate modern-day slavery. According to Darryl Dixon, GLAA director of strategy, the phenomenon is a major risk for workers and the businesses that ultimately employ them, albeit they may not be aware of the legal abuse in their supply chains. 

In the UK’s modern slavery strategy published in 2015, the Home Office assessed the problem in the UK as impacting between ten and 13,000 UK victims, all of which are low-paid, low-skilled, and often kept out of general circulation. Apart from retail, risk sectors include agriculture and fishing, food packing and processing, hospitality, construction, car washes, cleaning, care, transport, and distribution.

Following a Government review of enforcement in the UK labour market, GLAA was given new powers to widen its ability to investigate labour exploitation. The new powers were introduced in the Immigration Act 2016, enabling the GLAA to protect the rights of victims being traded in contravention of the Gangmasters Licensing Act (2004), the Employment Agency Act (1973), the National Minimum Wage Act (1998), and the Modern Slavery Act (2015) using Police powers from the Police and Criminal Evidence Act (1984). Working with its key law enforcement partners since the new powers went live on 1 May 2017, the GLAA has been involved in forty-one arrests and assisted 566 victims of labour exploitation.

The worry for GLAA is the increase in organised criminal gangs involved in the trafficking of people and slavery with many nationalities involved. Although there is a distinct trend towards Eastern Europe, all are happy to exploit their own in pursuit of profit. These gangs are predominantly  European males who operate under the radar because workers are intimidated and reluctant to complain. 

Darryl Dixon said, “The role of business should be to demonstrate their commitment to the eradication of exploitation in their supply chains by being the eyes and ears of law enforcement and to take and show a lead.”

If businesses are suspicious of behaviour, they should not feel the need to intervene on their own but should report the matter to the GLAA or the police. This is because interviewing a victim may yield little in the way of facts, but is likely to destroy vital evidence, tip off the exploiters, and potentially place the worker at greater risk, as well as place the business and its staff at risk. It is therefore vitally important that business knows how to spot the signs of exploitation. 

The GLAA has produced guidance to help business spot the signs: 

 For more visit here

Not Just Fashion

Of course, it is far from just the fashion industry that is of concern. Agriculture is one of the major areas populated by people who fall prey to traffickers, and the products that they pick are likely to find their way onto supermarket shelves, and not just in the UK. In 2015, Channel 4 reported on concerns from workers in Spain about their treatment working on salad-growing farms supplying to the UK supermarkets. Similarly, the Covino farms scandal in Australia widely reported the exploitation of workers, where calls for licensing of employment agencies and action to tackle modern slavery are now being considered.

Alternatively, they can be found in transportation or storage, the other “Cinderella” sector where transient workforces come and go or they depend upon agency workers, not all of whom have gone through employment screening.

The GLAA is urging businesses to work together to audit their own supply chains and subcontractors or to simply discuss concerns with them. This is particularly important where supply chains extend outside the UK.

Many Police forces are also providing information on people trafficking for local businesses. Greater Manchester Police (GMP) has published publicity material for businesses in the northwest with even more graphic information and telltale signs to look out for.

These indications include employers looking out for tattoos that might indicate “ownership,” poor health, and the inability to provide records of previous employment. The GMP’s website includes hard-hitting videos, including one with an Eastern European voice-over reading the evidence of someone convicted of modern slavery who was bragging about how easy it was to exploit the victims and the UK benefit system to line their own pockets with the proceeds of misery.

Because it has been seen as easy to get away with, many slave masters are brazen in their flouting of the laws and hide their victims in plain sight knowing that they will be unreported. Now, it is hoped, there is a gathering momentum among businesses to work with organisations such as the GLAA to break the chains of enslavement by reporting suspicions, even if they are only suspicions. This can be done anonymously at gla.gov.uk/report-issues. 

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