Sowing the Seeds for Supplier Resilience

Being resilient to change and uncertainty has always been a fairly reliable indicator of a company’s long-term prospects; but faced with the unprecedented challenges of today’s increasingly unpredictable and volatile world, ensuring longevity now depends on it. As the social, economic and environmental consequences of climate change become increasing concerns for consumers and business communities alike, business leaders are becoming ever more thoughtful about not just how to prepare for an unsettled future, but also what opportunities lie within it.

 

For retailers and manufacturers in particular, there is only so much a company can do to “future-proof” its business in-house. More often than not, the tangible effects and threats of climate change are being most keenly felt in the regions of the world where their suppliers are based. Ensuring long-term resource availability involves adopting a bottom-up approach, working much more closely with suppliers to improve trading relationships, support sustainable livelihoods, and build resilience in the supply base.

 

Many businesses recognise the need – and are willing to take action - to build supply base resilience in key sourcing areas, but are coming up short when it comes to quantifying robust and effective improvement programmes. But this needn’t be so. As the following case study of a well-known tea and coffee company demonstrates, carbon finance initiatives offer a tried and tested way of delivering verified results and putting the metrics behind the means.

 

An industry facing climate challenges

 

After water, tea is the most-drunk beverage in the world, consumed at a rate of three billion cups a day. But tea as we know it is under threat: aside from being grown in some of the countries most vulnerable to climate change-induced weather extremes, many other factors are leading to rapid change, from competition for land to changing consumer habits and the mass migration of agricultural workers to the city in search of higher wages and better lives.

 

In the face of these challenges, the sector is rallying together. The Ethical Tea Partnership (ETP), for example, was formed in 1997 as a not-for-profit membership organisation working “to improve the sustainability of tea production, the lives of tea workers, and the environment in which tea is produced”. More recently, the collaborative Tea 2030 initiative was set up by global sustainability non-profit, Forum for the Future, to bring together leading organisations from across the tea sector to better understand how current trends will affect the industry and to create a roadmap to tea’s sustainable future.

 

Direct action

 

Bettys & Taylors Group, known for tea and coffee brands Yorkshire Tea and Taylors of Harrogate, is itself a member of both ETP and Tea 2030, and is taking a collaborative, long-term approach to addressing supplier resilience that will deliver long-term results. By 2020, the Yorkshire-based family business aims to have carbon neutral sourcing through a range of activities including planting of one million trees across tea farms in its supplier heartland in the foothills of Mt Kenya, delivering both carbon sequestration and livelihood benefits.

 

The Community Reforestation Programme is being carried out in partnership with Natural Capital Partners, specialists in working with corporations on results-based solutions for their environmental goals. Through the initiative, participating farmers – tea farmers directly supplying Bettys & Taylors - receive a modest annual income for every tree planted on their land, and further revenue as the trees grow and sequester carbon. They will also be sharing knowledge and best practice on how to sustainably manage their land and increase biodiversity through training programmes and seminars in conservation farming and agroforestry techniques. In conjunction, an ongoing life cycle assessment will guide Bettys & Taylors toward an internal reduction target of 20% by 2020. The second phase of the carbon management programme will use carbon finance projects to address the company’s coffee business.

 

More than just a tree

 

Tree-planting has long been linked to carbon offsetting schemes, but while offsetting is an important part of the effort – Bettys & Taylors has pledged to make its entire tea and coffee sourcing operations CarbonNeutral® by 2020 - sequestering carbon is just one of the Kenyan programme’s many benefits.

 

Many of the trees being planted will be fruit and nut trees, which in time will become valuable cash crops for farmers, diversifying their money-making potential and increasing their economic security. Applying conservation agriculture techniques will also help farmers increase yields and improve food security. Planted in the right locations, trees provide useful shading to prevent tea bushes from scorching as well as acting as wind breaks, natural barriers to reduce surface water run-off and even as barricades against roaming elephants. Trees also support soil fertility and reduce erosion, a serious problem in many deforested areas, and provide fallen leaves and bark for mulching and composting.

 

Simon Hotchkin, Head of Sustainable Development at Bettys & Taylors, said the programme provided the “perfect fit” for the company’s carbon neutral ambition and broader environmental and social objectives, and complemented its previous tree planting schemes (Bettys & Taylors Group’s Trees for Life campaign, for example, is responsible for the planting of three million trees worldwide since 1990 and has protected an area of Amazonian rainforest larger than the Yorkshire Dales.)

 

He said: “We could have bought carbon credits as a quick-win solution to achieving our carbon neutral goal, but that’s not the way we do business here. Our top quality tea comes from the Mt Kenya region and so ensuring its continued availability is critical to the future of our business. We wanted an approach that would protect and enhance production while improving the livelihoods of our suppliers and their communities, which in turn would safeguard the supply and quality of our tea. This programme with Natural Capital Partners delivers on all fronts.”

 

He added: “This is not about CSR or philanthropy, this is about building up a sustainable business for all and integrating sustainable development within the whole community. After all, what’s the point in having a sustainable farm in an unsustainable landscape?”

 

The programme involves an extension of the wider International Small Group and Tree Planting Program (TIST), to tea farms surrounding four strategic factories in the Mt Kenya region important to Bettys & Taylor’s supply and managed by key supply partner, the Kenya Tea Development Agency (KTDA).

 

Smallholders supplying tea to these factories typically come to hear about the programme through word of mouth or organised “come and see” seminars, and those that are interested register their interest to get involved. Bettys & Taylors has made a ten-year commitment to the programme, by which time, it is hoped that over 3,000 local tea farmers will be benefitting from the scheme, with one million new trees sequestering over 84,000 tonnes of CO2 from the atmosphere and offsetting around 40-50% of Bettys & Taylors entire sourcing emissions globally.

 

Sarah Roberts from the ETP said the initiative was an excellent example of how project-based carbon finance programmes could build resilience in the tea industry.

 

She said: “People around the world treasure their daily cup of tea, but are often unaware of the challenges the industry is facing from climate change. It is small farmers who are most vulnerable to the effects of climate change and in Kenya they are fundamental to the tea industry, supplying both more volume and higher quality teas than the large estates. So building their resilience is not only essential for farmers’ livelihoods and the future of their communities, but it is important for tea-drinkers too. The work that Bettys & Taylors’ is doing directly with the farmers that supply them is a brilliant approach to using carbon finance to support rural livelihoods and another example of the incredibly strong and strategic relationship that Bettys & Taylors have with their suppliers. I am sure it will point the way for similar initiatives in the future.”

 

Carbon finance

 

By focusing results-based carbon finance projects within the supply base, companies like Bettys & Taylors are able to meet emission reduction targets while providing a host of additional benefits to communities and biodiversity which are critical to their success. And thanks to organisations like the Climate, Community and Biodiversity Alliance who are working to measure and validate these added positive impacts, taking such a direct course of action is becoming an increasingly easier sell to corporate finance teams and investors.

 

Simon Brown, European Managing Director of Natural Capital Partners, said that Bettys & Taylors’ long-term commitment to the project is indicative of a shift in businesses’ interest from simple carbon offsetting schemes to projects where additional sustainable impacts like biodiversity, education, water provision, empowerment and job creation are the primary focus. Through Natural Capital Partners Project Catalyst solution, a number of corporates are customising and developing projects to meet targeted sustainable development outcomes that align with business goals.

 

He said: “It is hard to conceive of any business in the food and drink sector that is not aware of the risks and issues presented by climate change and don’t have some form of plan – it would be negligent not to. But there is a difference between awareness and taking action through leadership. Leaders like Bettys & Taylors see the bigger picture, but also realise that the only way they can achieve it is if they are prepared to stick with the project for many years.

 

“In doing so they are demonstrating to their suppliers that although they may have different challenges in the face of climate change, they are in it together.”

 

Photograph: Natural Capital Partners.

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Small scale farmers and big data

With more data than ever before in human history, nowadays data is king. This is a good thing for businesses, as many companies have incorporated data in their decision making.

 

However, there are still many areas of business that lack sufficient or relevant data to make informed decisions. For example, most food and drink businesses source raw produce from small-scale farmers, yet they struggle to collect meaningful information throughout their supply chains because of complex supply chain structures, as well as the remote nature of the producers they source from.

 

Without sufficient or timely data on the producer levels of their supply chains, businesses cannot effectively analyse and mitigate risk - and this can result in serious losses. Coffee rust is a completely preventable crop disease but because it was not identified in 2012 and 2013, millions were lost by coffee companies.

 

So how can we collect data on the remotest parts of the world’s supply chains to help businesses analyse and mitigate risk effectively?

 

Case study

 

Through our SMS service WeFarm, more than 76,000 farmers have shared over 12 million messages about farming and agriculture. These consist mostly of questions and answers that were submitted directly from farmers and can provide insights into common issues that they are facing.

 

By capturing and storing this information online, WeFarm is building a unique bank of rural agricultural knowledge from farmers without access to Internet. WeFarm then analyses this user-generated content to provide businesses with actionable insights from the ground.

 

Such data enables companies to monitor seasonal, regular and temporary trends and identify those that worsen over time or during a particular season. They can then mitigate against risks that pose a significant threat to their business.

 

Making the data work

 

In order to unearth some potential risks for tea companies we analysed thousands of messages shared between tea farmers in Kenya. Two of the five most discussed topics were climate and pest control. We also found that older farmers are much more likely to grow tea. Amongst our tea farmers there are almost twice as many farmers over 65 years old growing tea than under 25 year olds.

 

Our findings point towards some important learnings. Firstly, climate change is already impacting farmers and supply chains. New types of pests or increases in pests can be an indication of climate change affecting the ecosystem, so farmers mentioning both pests and climate could suggest that a serious risk is emerging.

 

Secondly, tea companies could consider an ageing tea growing population as a potential risk. What inspires farmers to farm tea, a notoriously delicate crop? Do young farmers not see a viable future for tea farming? How can businesses make tea farming a more attractive proposition?

 

Supply chain risk mitigation

 

When it comes to mitigating risk, tailored and timely information provides a solid foundation in order to take action. By gaining insights into the lives of farmers, businesses can more effectively allocate resources.

 

For food and drink companies, a lot of risk mitigation can be achieved through working with farmers. Firstly, granting farmers access to useful information to build adaptation strategies can greatly reduce risk. Alternatively, building tailored training can improve farmers’ understanding of their role in sustainable tea production and create sustainable, more robust supply chains. Finally, helping farmers tackle and prevent crop diseases can save entire harvests from being wiped out.

 

Data from the ground - a new way forward

 

Technology provides us with many new opportunities in an increasingly complex world. Data from remote supply chains can simplify making important business decisions, especially in analysing and mitigating risks. Ultimately, this will help businesses save money, improve sustainability, and fight some of the biggest challenges of our era.

 

Amy Barthorpe is Head of Business at WeFarm

 

 

 

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Can technology help us to feed the world?

How to work together to produce safe and sustainable food

 

Around one in nine people on earth do not have enough food to lead a healthy, active life. And in the next 50 years as diets become richer, experts estimate that to feed a population of 9bn people, more food will have to be produced than has been during the past 10,000 years in total. Combined with the challenges of climate change, water scarcity, and biodiversity degradation; not to mention the impact of antibiotic use in livestock and antibiotic resistance; and new and emerging pathogens – the outlook appears bleak.

 

The food industry has the most complex supply chain – being both global and highly fragmented at the same time. Given this degree of complexity, it is difficult for food producers to have good visibility beyond their first tier of suppliers and they are unlikely to have any direct sight of the farmers and fisheries at the primary production stage. At this level, a large food brand may be supplied by hundreds of thousands of small suppliers, who are totally out of reach. We live in an era when food safety scares and sustainability scandals can rightly go viral on social media in a matter of hours, with long reaching consequences for the individuals affected and for the brands involved; it’s time for the food industry to find a new model to address these challenges.

 

To produce the food needed safely and sustainably, the food industry needs to build greater resilience and security into its systems. Effective assurance services and enhanced transparency throughout the supply chain can form a solid foundation to achieving this. However, the assurance industry also faces challenges, including a lack of qualified auditors in emerging markets – often the very markets where food production is expected to grow in the coming years. And, the traditional audit model is based on auditors traveling to client sites, where they often spend a large proportion of their time reviewing documents. Don’t get me wrong, this has been an effective way to provide independent third party assurance and continues to ensure confidence in food safety and sustainability. However, given the developments in communications and technology, it seems high time to review our food safety and sustainability assurance business model to take advantage of these developments to work in a more collaborative and efficient way.

 

Possible solutions

 

A new model is possible; LRQA has recently delivered remote audits in Iraq and Afghanistan. With no possibility to send an auditor into these conflict zones, LRQA’s technical experts developed specific procedures to conduct remote audits in extraordinary circumstances that were reviewed by the accreditation body UKAS. Our lead auditor interacted with the client and a local subcontractor by using webcams, video conferencing and phone to carry out the audit to the same rigorous standards as if they had been there in person.

 

Remote assessment and greater transparency in the supply chain have been made possible thanks to disruptive technologies. To support this vision, LRQA has recently announced adoption of greenfence platform technology. Based in Silicon Valley, greenfence is the first platform technology serving the Testing, Inspection and Certification (TIC) marketplace – connecting everyone from large retailers and certification bodies, to global scheme owners and farmers.

 

The platform is supported by some of the world’s largest food manufacturers and is capable of mapping the entire food supply chain of existing connections and certifications. We expect that it will improve supply chain confidence with greater coverage and visibility, enabling producers to analyse the data more easily to target existing and potential risks more effectively. The assurance business model will then move from a retrospective focus to predictive insight – from what went wrong, to what is likely to go wrong. From an assurance perspective, our services powered by the greenfence platform should address a variety of challenges such as; enabling global traceability and transparency, delivering online assessments to thousands of clients within a short period of time as well as the possibility to benchmark, enabling the assessment of suppliers who are out of reach through traditional audits, overcoming the issues of lack of auditors and geographic limitations, delivering a truly global management of the food supply chain, and reducing audit costs for clients.

 

Registration on the platform is free and increases the ability to interact with other parts of the supply chain, which will enable more effective and efficient processes. Additional services will include the authentication of existing certificates (for any scheme) as well as various levels of remote assessment, which will enable benchmarking of suppliers and easier risk identification. Remote assessment will not replace on-site audits but will complement them, for example, to pre-assess risks in the supply chain to target on-site audits where there is the biggest perceived risk or to enable compliance to basic standards at an affordable level for very small suppliers.

 

This development fits well with the Lloyd’s Register Foundation’s mission to enhance the safety of life and property. Most organisations do something to make money but at Lloyd’s Register, we make money to do something, as a percentage of our profits go towards the Foundation. Indeed, we envisage that the flexibility provided by this platform and accessible throughout the supply chain will help small farmers in emerging markets to improve their communications, logistics, access to training, exposure to the food market, as well as access to credit markets. Initiatives to connect farmers run by Nestlé in Central America and by Vodafone in East Africa have proven to be highly effective in the fight against world hunger and it is hoped that the greenfence platform will have a similarly positive impact.

 

Scaling up

 

Ultimately, the platform aims to consolidate big data from the supply chain including Radio Frequency Identification (RFID) and Global Positioning System (GPS) data from transportation, lab results, drones, and on-site webcams to enable real time compliance monitoring with automatic alerts to clients in the case of any nonconformity.

 

Food safety is non-competitive, and the greenfence platform is no different. To gain the critical mass needed to create real transparency it will need to be used by all parties in the food supply chain, driven by the large food processors. This is the first project of its kind with a holistic aim to enable collaboration to support the changes needed in the global food industry. 

 

As we continue to address innovative ways of providing assurance to the global food supply chain, to enable the sector to continue to feed the world safely and sustainably, this can only be a positive step.

 

Vincent Doumeizel is Vice President  - Food, Beverage & Sustainability at Lloyd’s Register Group. 

 

 

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Benet Northcote: 'We can’t eradicate slavery without appreciation of human rights'

The John Lewis Partnership’s Director for Corporate Responsibility, Benet Northcote discusses the human rights agenda and what the UK Modern Slavery Act means for business.

 

What the Modern Slavery Act means for the John Lewis Partnership – is it a risk or an opportunity for business?

It’s about human rights, it’s non-negotiable. This is simply about the way we should be behaving as actors in civil society. It shouldn’t be classified as a risk or an opportunity.

 

Do you think the Modern Slavery Act somehow changed John Lewis Partnership’s approach in this space?

We’ve always taken these issues seriously. I think there is no question however, that the Act has sharpened focus on the issue of modern slavery and human rights. It raised awareness of the issue and challenged all large businesses to take action.

 

What do you see as the biggest challenges in implementing the Act and what are the challenges of the broader slavery work?

The way the Act is framed is very simple – complying with the basic elements of the Act isn’t that challenging. What’s more challenging is complying with the spirit of the Act. And that does require a broader understanding of the underlying causes and risks around modern slavery. That’s why we’ve been very clear to link our modern slavery response to our business strategy on human rights. If society is to successfully eradicate slavery, one can’t pretend that targeting that as a single issue is going to remove the systemic causes.

 

Incorporating modern slavery – which is one of the most severe breaches of human rights – as part of a broader strategy on respecting people’s human rights throughout global supply chains will unlock and address instances of labour abuses.

 

What does implementation of the act look like?

There isn’t one answer to this. All businesses have to understand where the greatest risks are in their operations and supply chains and where they can have the most influence and can make the most difference. It’s important to go above and beyond the basic audit or compliance in the areas where we can have a particular impact. Also no one business can address this alone: collaboration is essential.

 

We have engaged NGOs and experts in developing our human rights strategy and in delivering the projects that we are running. Waitrose is partnering with the Wilberforce Institute on assessing the risks in fresh produce. John Lewis is running a model factory programme in the UK. It was launched at the Fast Forward employment practices workshop in January with ten bedroom, upholstery and fitted kitchen suppliers taking part. We have engaged a specialist assessor to undertake the forensic employment practices and HR systems assessment at each site and each factory are testing a mechanism for workers to confidentially share thoughts, feelings and views about the employer and the place they work. However, for all businesses it’s about understanding their point of influence, trying to drive ambitious improvements and sharing learnings and being honest about what works and what doesn’t.

 

Who is responsible for anti-slavery work at the John Lewis Partnership? Where does it sit in the organisation?

We have a formal governance structure and process. Ultimate responsibility sits with the Partnership Board and is delegated through the management board to teams within our trading divisions.  The formal delegation and senior accountability is important in a retail business to ensure that the activity is embedded in how we operate.  For example when you’re dealing with suppliers, it has to be managed by supplier relations and merchandising teams. They are the ones who understand the technical specifications, such as quality of products as well as buying goods and services. They are also the ones who understand what the solutions could be.

 

Some of the biggest scandals tend to be connected to human right violations. In the era of ever growing corporate transparency, what’s the best way to handle the labour crisis?

The starting point has to be understanding the situation, what has happened and focusing on helping the people impacted by the labour abuse. It’s not always clear what the immediate answers are, but working with the supplier to rectify the situation and drive improvements has to be the objective.

 

You have to have a robust approach on how you tackle modern slavery and you shouldn’t be afraid of understanding what the issues are and working to help those victims of modern slavery as well as other companies further down the supply chain. Simply walking away isn’t the answer. Working with the police, NGOs and any other actors involved to try to find the best solution for the individuals is the way forward.

 

What is the role of digital and technology in addressing slavery?

Technology is going to drive the level of supply chain transparency that we haven’t seen before. The potential for our ID tagging or other technologies that are harder to get your head around – these are clearly the technologies that are going to make a difference to the way supply chains operate going forward.

 

Will technology on its own wipe out crime? I don’t think so. I think at the end of the day a criminal will always find a way of distorting the law.

 

How to get started? What would you advise to someone starting the journey?

Firstly, putting the effort in to map out your supply chain early is tremendously important. Secondly, it’s key to understand what it is that you do in the sector best. Identifying the point of influence, areas where you’ve got the most impact is the next stage. Then you can dig down and understand the problems in those areas and put in place programs to explore and address those challenges.

 

I don’t think we can eradicate modern slavery without a deep appreciation of human rights.

 

Benet Northcote is Director for Corporate Responsibility at The John Lewis Partnership. 

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Healthy diet – healthy planet?

Partnership is very often how we get things done at WWF. We’ve been working to convene influential groups, market leaders, and communities for years, creating household names in certification like the FSC (Forest Stewardship Council) and the MSC (Marine Stewardship Council) to ensure a rise in standards.

 

Our work with businesses is driven by the pressing need for a major shift in how our economy works, whilst retaining an ability to address current and urgent environmental challenges. 

 

One of those challenges relates to the food sector. Why does WWF work on food? It’s the one question I get asked more than any other about my job and it’s a reasonable one; after all most people know WWF as a conservation charity working to protect endangered species such as the panda, which forms our iconic logo.

 

The simple answer is we realise that in order to achieve our conservation aims we need to address the drivers of the habitat loss that is pushing some of our most precious species to the brink of extinction. One of these drivers is food. In fact, some of the greatest challenges facing the natural world in the 21st century are directly related to food and agriculture. For example, much of the deforestation that is happening across large parts of the world is to create more land for growing animal feed, and crops like soya and palm oil which we consume as ingredients in everyday grocery products, while the extraction of water for irrigating these crops is putting huge pressure on our water sources.

 

These issues need to be looked at in a holistic way. We wanted to look at the food we eat and explore how we can encourage people to adapt their diets so that both our health and the environment benefit. One holistic way of doing this is by working in partnership with progressive businesses such as Sodexo.

 

WWF has been working in partnership with Sodexo globally since 2010 and in the UK since 2013. The focus of our work here has been on developing meals that are good for people and the planet. The result is Green & Lean: a range of meals for the independent schools sector that follow ten simple principles that make them more nutritious and better for the environment. In practice this has meant substituting some of the meat, which has a high carbon footprint, with low-carbon, nutritious alternatives such as vegetables and pulses, as well as using wholegrains rather than refined grains, minimising levels of salt and sugar and sourcing certified meat and fish. We piloted ten sustainable meals at eight schools around the turn of the year, replacing almost a tonne of meat with healthy vegetables and pulses in the process, and receiving positive feedback from both students and chefs.

 

So what have we learnt so far? Firstly, that delivering innovative projects such as Green & Lean takes time and effort and inevitably involves taking a few twists and turns along the way. With Sodexo we initially focused on trying to deliver our objective through a range of pre-prepared sandwiches and wraps. It quickly became apparent however that reformulating a packaged product such as a sandwich posed a number of challenges around product integrity, shelf life and consumer acceptability. Hopefully we’ll find solutions to those challenges, but at the time, we’d focused our attention in the wrong place. However, the project was far from a waste of time as it helped establish relationships and build trust between key WWF and Sodexo personnel, and required both of us to see things from the other’s point of view. We’re also more aware of the challenges we face.

 

When working in partnership, trust is a word that crops up again and again. We both have our own organisational priorities but for a partnership to work it’s vital there is mutual trust and that, ultimately, everyone is fully committed to achieving the same end goal. In our case, that goal is to embed a sustainable meals offer within the Sodexo business so that in the long-term it becomes the norm rather than the exception – the difference, if you like, between genuinely transformative change and soft-touch CSR.

 

Sodexo serves in excess of a million meals a day in the UK - in schools, hospitals, workplace canteens, and many other settings - giving them huge influence over the food we, the public, consume. They also know their customers far better than WWF ever could and so with their detailed market insight coupled with our subject matter expertise, together we can deliver a pioneering programme of work far better than by working separately.

 

And if by working in partnership there is extra scrutiny placed on the integrity of our work then we say: bring it on. We’re very clear that businesses should only benefit from the halo effect of working with a trusted brand like WWF if they make good on our joint commitment to deliver meaningful change. Businesses that know their own resources and indeed their very future is also at stake ask us to challenge them.

 

The next phase of the partnership will see Green & Lean meals rolled out to the entire independent schools sector in September with the intention being that sustainable meals will become firmly embedded within the Sodexo business in the years ahead. No doubt there will be more bumps in the road, but I firmly believe that our shared experiences and complementary skills will ensure that, together, we will continue to achieve our goals.

 

Nick Hughes is food sustainability adviser at WWF-UK.

 

Photograph: WWF-UK.

 
 
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  • Your Curve Insight Report

    With 650 projects in the Curve, this is our first Curve Insights report. This is the first time that this volume of user-generated project data has been collected, and it emphatically supports the belief that energy management is an attractive investment class. Average paybacks for the 16 technologies is 3.6 years, a better ROI than most core business. There are multiple co-benefits to energy pro......Read more
  • Modern slavery and what it means to business

    The Modern Slavery Act came into force in October last year directly affecting 12,000 UK businesses as well as creating knock-on effects for many others worldwide. 

     

    Its purpose is clear and its motivation is laudable. More challenging, however, is identifying the extent to which businesses are affected and how they can best tackle this far reaching and important issue. 

     

    What the act means

     

    The term modern slavery encapsulates offences covered in sections 1 and 2 of the act: 

    • Slavery, servitude and forced or compulsory labour, as set out in the act
    • Human trafficking

     

    It is based squarely on the principle that companies should be taking steps to prevent slavery from occurring. Where it does occur, organisations should assume accountability and work with suppliers to improve practices and minimise future risk. It follows on from the UN Guideline Principles on Human Rights, which takes the view that businesses should mitigate risks posed by business relationships. 

     

    Compliance requirements

     

    A key element of the act is the transparency in the supply chain clause, requiring companies affected to publish a slavery and human trafficking statement within six months of each financial year end. 

     

    This statement must specify actions taken by the company to ensure that slavery and human trafficking are not present in any part of the business or supply chain. 

     

    It is a legally binding requirement that applies to companies that fall under all of the following – whether in the private, public or non-profit sectors: 

    • Operating in the UK, whether incorporated here or elsewhere
    • Have a turnover of £36m or more per year 
    • Providing goods for sale or service

     

    The statement needs to include one of the two following declarations. Either:

    • ‘Steps are taken to ensure slavery and human trafficking are not taking place within the supply chain or any part of the business’

    Or

    • ‘The organisation has not taken any such steps’.

     

    The statement could also include:

    • Information about the organisation’s structure
    • Business and supply chain policies
    • Due diligence processes and staff training in relation to slavery and human trafficking
    • Risks identified and steps taken to manage such risks
    • Effectiveness in ensuring slavery and human trafficking is not taking place

     

    It must be must be published in the organisation’s annual accounts and placed on its website with a prominent link on the homepage. Any businesses without a website must provide a copy of the statement in writing within 30 days to anyone who requests it.

     

    The first to report under the act will be businesses with a financial year end of 31st March 2016, with statements required by the end of September this year at the latest. Non-compliance can result in court injunction, forfeiture of assets, reparation orders, an unlimited fine and even sentencing.

     

    Getting started

     

    Organisations affected by the act and focussed on maintaining their reputations should be trying to show that they have taken steps to address these issues.

     

    It is generally difficult for businesses to ensure their supply chain is slavery-free. By its very nature slavery is secretive and the complexity of many supply chains makes it harder to identify. 

     

    But organisations with robust stakeholder management should already be well on their way to addressing these issues. Others may need to direct more time and resources towards this area.

     

    The following steps are a useful guide:

    1. Map your supply chain
    2. Identify areas of greatest risk – and greatest potential for improvements 
    3. Set targets and allocate resources to tackle the issue
    4. Prioritise remedial issues
    5. Develop a long term strategy and code of conduct
    6. Evaluate, report and communicate regularly

     

    Beyond compliance

     

    Forward looking organisations will also be quick to recognise the brand and reputational risk associated with this act. More than being solely a compliance issue, the need to include a statement within financial reporting and accounts – and show meaningful progress – will have the effect of shining a spotlight on a controversial issue.  

     

    As a result of the act, slavery reporting is now even more of a transparency issue, one where wide-reaching and decisive action will head off unwanted investor, stakeholder and media attention as well as contributing to a more equal society. It’s also a timely opportunity to look at wider human rights issues, such as child labour and diversity, and their impact on supply chains.

     

    For more information on whether your organisation falls within the scope, visit the Modern Slavery Act 2015 website

     

    Murray Sayce is Principal at Ramboll Environ.

     
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    What could be: new roles for business in confronting and eradicating slavery

    There is a quote from an old Trevor Howard film, The Golden Salamander, that stuck in my mind when I saw it one rainy Sunday afternoon many years ago: “Not by ignoring evil does one overcome it, but by going to meet it.”

     

    Forced labour and child exploitation have been evil features of international supply chains for centuries. They have been too easily ignored because they occur in some of the more obscure corners of the world – the fields and forests of Africa for example, or the slums and anonymous industrial estates of Asia. 

     

    In the past, as diligent journalists and non-governmental organisations exposed some of these abuses, it has tended to be businesses that have been most roundly criticised and condemned for tolerating such cruelties within their supply chains. 

     

    Slowly this has begun to change, beginning with the 2011 UN Guiding Principles on Business and Human Rights. These recognise that businesses have a responsibility to respect the rights of workers, and that it is governments which have the duty to protect those rights. Plainly it is difficult for businesses to respect workers’ rights if they are operating supply chains in countries in which the governments, as a result of lack of capacity, disinterest, or corruption, are failing to protect workers’ human and employment rights. 

     

    While many business executives will be profoundly distressed by the thought of slavery or child labour abuses in their supply chains, many others may not be particularly troubled by the human rights risks that governmental failures pose. Some may even be privately delighted at the cost savings that can emerge from a disdain for the basic rights of human beings at work. Indeed some countries and businesses have based their competitive advantages on the cost savings that forced and child labour bring.

     

    A number of recent laws offer a distant prospect of ending any complacency or cynicism about the enslavement of vulnerable workers in supply chains. Perhaps the most significant is that signed into law by President Obama in 2016: the Trade Facilitation and Trade Enforcement Act (TFTEA). This introduces new powers for public officials to exclude from the United States slavery tainted goods. The possibility of being denied access to as lucrative a market as the USA must give pause to those who have hitherto been glibly enriching themselves through the enslavement of others.

     

    While much less world-leading, the transparency in supply chain clause (TISC) of the UK’s Modern Slavery Act 2015 provides something of an unappreciated opportunity for businesses. This clause requires businesses with a turnover of more than £36 million trading in the UK to report on what they are doing to ensure the elimination of slavery from their supply chains. 

     

    If they chose, businesses can use the necessity of their reporting requirement to confront the evil that slavery represents. They should not limit themselves to accounts of the management measures they have introduced in order to counter risks of trafficking. They should also begin to enumerate the law and policy failings in the countries in which they are operating that increase risks of human trafficking. 

     

    Because it is a fundamental truth of contemporary politics: that the voice of business carries greater weight than that of conscience. As Spiderman teaches us, with that great power comes great responsibility. Business can use its voice to help set out the laws, policies and practices that are necessary to eliminate slavery in supply chains and, ultimately, in the world.

     

    This goes to the heart of the matter. The elimination of modern slavery is a political issue. Those who are enslaved are excluded from power in part so they can be enslaved. This means that slavery is not a simple criminal justice challenge that good policing can resolve, nor a managerial one that can be resolved by new codes of practice, or ethically dubious social audits. 

     

    In the end slavery eradication within supply chains and beyond will require a range of measures from diplomacy to international education, aid and trade policy. Business leaders can provide a vital service in this struggle by offering their insights on the causes of the slavery that they encounter. In other words, by no longer ignoring the evil of slavery, but going out to confront it, and, in doing so, joining the struggle to overcome it. 

     

    Dr Aidan McQuade is Director at Anti Slavery International. 

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