Supply Chain Stewardship Gets Bumped Up the Agenda by Anti-Slavery Policy in the UK and Possibly in the US
This week the Business Supply Chain Transparency on Trafficking and Slavery Act 2015 has been introduced into the US House of Representatives. Passing of the bill would require firms to disclose to the SEC the auditing and verification procedures, risk assessments, training and remediation plans they have established to combat human trafficking and slavery in their supply chains. Meanwhile the UK Modern Slavery Act 2015 is set to come into effect in October, affecting around 12,000 firms with annual revenues over £36 million ($56 million). Qualifying firms doing business in the UK will have to publish an annual statement, reporting on the steps they are, or indeed aren’t, taking to tackle instances of forced labour and human trafficking in their supply chains. Although it puts a legal obligation on company directors to ensure steps to eradicate slavery are happening, in reality enforcement is an almost impossible task.
The apparel industry was provided a timely reminder of its less than illustrious supply chain record this June, when Bangladeshi authorities filed murder charges against 41 people for the collapse of the Rana Plaza factory in 2013 that killed 1,137 people. Meanwhile supermarkets including Tesco and Morrisons have been embroiled in a number of supply chain scandals, including slave labour use by Thai seafood suppliers, campylobacter contamination in chicken processing and the horse meat fiasco.
Taking action to improve supply chain stewardship is not straightforward. Effectively managing environmental and social supply chain issues is an extremely time-intensive process and reliant on corporate codes of conduct being cascaded down multiple tiers of globally dispersed suppliers. Where should firms to turn for help? Recent Verdantix research has revealed over 20 vendors offering solutions to manage supply chain stewardship, including labour issues such as slavery. Software solutions from the likes of cr360, Intelex and Rivo Software can help consolidate data from suppliers in centralized databases, monitor evolving regulations and perform language translations. While others such as Achilles, 3E Company, EcoVadis and thinkstep actively engage suppliers to educate them on disclosure requirements and follow up when data submission is inaccurate or incomplete. While this new legislation is unlikely to be a game-changer overnight, it is a stepping stone to more comprehensive and meaningful supply chain sustainability disclosures. Leading firms are already taking risk-centric approaches to managing EH&S and sustainability within their own four walls. It is only a matter of time before they extend this to supply chain management.