The news broken by the BBC Panorama investigation about refugees and children alleged to be working in Turkey on clothes for Marks and Spencer and ASOS, whatever the facts are found to be, highlights the challenge of supply chain management and risk to big brands of being linked with such accusations.
The law requires large UK companies to publish statements each year on the steps they have taken to ensure that slavery and human trafficking is not taking place in any of their supply chains or their own business. This creates a legal obligation of transparency and is the beginning of a strong push to raise ethical standards in global trade. The Anti-Slavery Commissioner Kevin Hyland OBE has recently submitted his first annual report, and one theme is his expressed concern to see decisive action is being taken and not just formal statements that tick the compliance box.
Marks and Spencer certainly sets out a lot of what it is doing in its Modern Slavery Statement, which does indeed appear to include some decisive action in, for example, awareness raising and training programmes. For example, they refer to running supplier workshops on Modern Slavery in Turkey given the risk of Syrian refugee exploitation. However, it is arguably never enough to rely on just communicating ethical standards. Training might simply tell suppliers what it is the customer wishes to hear. Marks and Spencer clearly recognise this and talk in their statement about reporting in future statements on actions to strengthen supply chain auditing and verification.
A general observation about many modern slavery statements so far published is that they have been criticised for not going far enough, often only setting out broad commitments and not describing how they will monitor effectiveness of their actions. Many statements follow similar wording, and tend to fall short of describing their auditing steps.
There has to be a serious risk that the obligation to publish statements will be seen as a mix of statutory compliance and PR, when there needs to be a rapid deployment of supply chain management skills and human resources management to really stop the exploitation of vulnerable people. This also needs to go right down the supply chain beyond first or second tier suppliers, and including product supplies.
This is not something specific about Marks and Spencer or ASOS, but organisations generally monitoring many published statements express concern that they often lack adequate information, and there is a central registry contrasting and comparing statements, so as soon as anything does blow up concerning any particular business what they have said in public is obviously quickly assessed against other companies.
It looks increasingly important that modern slavery requires in-house taskforces that can address the issues from all the necessary angles, and the report now about refugee and child workers by Panorama illustrates all too clearly the expectation that there will be close scrutiny what multinationals say, what they do, and whether it is enough to protect those most at risk of exploitation.
Quite apart from serious reputational risks, which may influence retail customers and investors, it is totally foreseeable that longer term legal remedies will be developed to ensure that those with control of supply chains will be accountable for damage suffered down the chain. Everything points to the law slowly catching up with adverse effects of globalisation, yet it is vital that global trade and investment grows in the interest not least of developing countries, hence the process of assessing and managing supply chain risks must be equal to the challenge in the interests of everyone who benefits from the global trade and investment of multinationals.
For further information on how we can support you with Modern Slavery Statements and supply chain management, please feel free to contact our employment team on employment@clarkslegal.com