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Adapting your Business to Stay Ahead of Human Rights Legislation

Posted 2 months ago

What role does the UK play in Modern Slavery?

Currently, the UK’s laws on human rights are defined in the Modern Slavery Act of 2015 (the MSA), holding the UK at the forefront of tackling both human trafficking and modern slavery issues within and beyond Europe. However, the major drawback of the MSA is that its due diligence provisions are not mandatory.

Recently, there is even greater pressure on the UK to strengthen the MSA given the proposed due diligence rules in the EU, which could impact trade with the UK in a post-Brexit world.

The European Commission’s eagerly awaited proposal for mandatory environmental and human rights due diligence has been welcomed by Anti-Slavery International as significant progress towards achieving what they have been campaigning for since 2017.[i] Announced on 10 March 2021 the new EU laws – voted by a huge majority – rule that companies must implement “environmental and human rights due diligence within their value chains.”[ii]

There are three major areas of ESG which the proposed due diligence would affect: Environmental issues causing climate change, human rights, and governance to prevent corrupt practice.[iii]

Briefly summarising the legislation relating to human rights, the regulations apply to all products which have used forced labour in any stage of the supply chain and would extend to all sizes of business – where ‘forced labour’ would include compulsory work encompassing forced child labour.

According to the International Labour Organization, forced labour increased by 11% between 2016 and 2021, explaining its increasing importance.[iv]

What specific issues does the industry face & how can Nutral help?

Delving into any supply chain is both labour-intensive and time-consuming, especially for large, extensive supply chains. This workload is only exacerbated by relatively recent issues like modern slavery.

Achilles’ recent Ethical Business Trends report suggests that although many companies have modern slavery policies in place, these are not being put into practice. Achilles hoped to combat this oversight by completing two types of audit, one on operational sites, the other focussing on company processes.[v] These audits have recognised that specific poor practices act as a gateway for more serious types of labour abuse. For example, it’s been identified that supply chain governance policies are lacking in areas like freedom of association for workers, navigating cultural differences in global supply chains and the allocation of sufficient resources to address modern slavery risk. Additionally, Utilities and Industrial (U&I) companies are recommended to do more to engage their current workers.

Most U&I companies lack visibility beyond Tier 1 of their supply chain, an issue which can easily be mitigated through the use of a managed service provider like Nutral, who work hard behind the scenes to relieve business’ daily risk.

Currently, power imbalances within the supply chain are recognised as preventing issues like modern slavery from being discussed. This disparity was purported to deter most U&I companies from discussing issues like modern slavery with their (sometimes prospective) suppliers.[vi]

Therefore, although it is widely acknowledged that supply-chain visibility can be increased through collaboration, this is unlikely to be a successful solution to the problem in this industry.

Which is where Nutral comes in. As a neutral service, Nutral expertly manages risk and assures complete transparency all the while saving companies’ money, time, and the hassle of potentially uncomfortable discussions.

So, what has the industry done to tackle this so far?

The University of Nottingham’s Rights Lab recommends that Utility and Industry companies enact the following:

  • Link due diligence results to action and intervention
  • Measure and report using a standardised framework
  • Include modern slavery expectations in contracts
  • Introducing remediation processes which are worker-focused
  • Risk-mapping

In 2016, NGO ShareAction founded the Workforce Disclosure Initiative (WDI), which aims to improve workforce transparency, informing on the working conditions of the companies which signatories hold shares in.[vii]

The data collected in WDI’s survey has been anonymised and published. Its findings point to a number of themes – in the Responsible Sourcing area of research, it was discovered that clauses on modern slavery were usually located in codes of conduct rather than in contracts, since some companies felt that contract clauses would “be detrimental to supplier relationships.”[viii]

It was also found that Modern Slavery at Board level was placed behind day-to-day operational actions, an oversight at managerial level. Similarly, audits often focused on issues such as health and safety, and not one company audited further than Tier 1 of their supply chain. In supply chain data and reporting, the pattern continues, remaining within the limits of Tier 1.[ix]

Once more – how can Nutral help?

Nutral’s technology facilitates ease of transparency across the entire supply chain. Since its formation, Nutral has had success streamlining the recruit to hire process, creating specialist supply chains which are agile and efficient. We make the sophisticated simple.

Not only is it morally the right course to take, but the new legislation will also bring numerous benefits, including improved visibility throughout all tiers of the supply chain. This great feat is a challenge many industries have not yet overcome, and once managed by Nutral, compliance with current legislation will bring benefits like efficiency and push opportunities, securing your business’ success ahead of the competition by foreseeing potential future hurdles.

[i] Anti-Slavery International, The EU proposal for mandatory due diligence: our initial review, https://www.antislavery.org/the-eu-proposal-for-mandatory-due-diligence-our-initial-review/ accessed on 25 Nov 2022.

[ii] Michael R. Littenberg, Samantha Elliot & Adwoa Hinson, “European Commission Proposes Sweeping Regulation to Ban Products Made with Forced Labour,” ESG, CSR & Business and Human Rights, Ropes & Gray, 22 Sep 2022.

[iii] Stephanie Pong, “EU Set to Introduce Mandatory Environmental and Human Rights Due Diligence Law,” Morrison & Foerster LLP, 23 Mar 2021.

[iv] Professor Alexander Trautrims, Dr Oana Burcu, Faiza Zafar and Charlotte Lush, “Addressing modern slavery in long and complex supply chains,” Assessing understandings of effective supply chain governance, Modern Slavery & Human Rights, University of Nottingham Rights Lab, Nov 2022.

[v] Achilles, Ethical Business Trends report

[vi] Professor Alexander Trautrims, et al., “Addressing modern slavery in long and complex supply chains,”

[vii] Ibid

[viii] Ibid

[ix] Ibid

 

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