In this article, Action Sustainability provides practical supply chain management insights and case studies in relation to the Modern Slavery Act 2018 Draft Guidance for Reporting Entities Appendix 2 ‘How to work with suppliers?’. Case studies include Intel, British Land, Colgate, Migros, the French Government, Nestle or Rio Tinto.
Introduction – Real life examples on supplier management
A few weeks ago, the Department of Home Affairs published a Modern Slavery Act 2018 Draft Guidance for Reporting Entities for public comment. The aim of the Guidance is to support reporting entities in navigating the specific requirements of the Act.
As sustainable procurement and supply chain management experts, we believe the Act will provide an opportunity for businesses to reflect on the way they engage with their supply chains to address complex social issues. The situations of exploitation that constitute modern slavery call for an additional level of scrutiny from businesses – and strategic engagement with suppliers plays a critical part in mitigating these risks.
Appendix 2 of the draft Guidance is about ‘How can I work with suppliers?’. Fortunately for reporting entities, none of these concepts are new. All of the 3 principles and 10 considerations within the draft Guidance align very well with ISO 20400: 2017 – Sustainable Procurement.
However, the draft Guidance principles are quite high-level and it may be hard for individuals in charge of Human Rights and Supplier Management to fully understand what they practically mean when it comes to implementation.
In this article, we aim to provide practical insights and case studies for each of the 10 considerations of Appendix 2.
Consideration #1 – Provide support for your suppliers to improve their response to modern slavery, including training and awareness-raising.
Capacity-building plays a key role in ensuring that your suppliers understand what modern slavery is and how to detect and manage it. Most organisations tend to focus on supplier compliance (supplier code of conduct, evaluation questionnaires, audits…) and tend to forget that it may be insufficient to build a competitive supply chain on human rights.
The UK and Australian Supply Chain Sustainability Schools, which Action Sustainability founded and supports, have been leading the way in providing a platform for the construction industry to engage suppliers on the issue. Through e-learning modules training and resources specific to the construction industry, the Schools provide suppliers with a robust understanding of their responsibilities under modern slavery legislation – and by providing a collaborative solution, they generate cost savings for the industry. The School’s 2019 Sustainability Impact report shows that 71% of members increased their understanding of modern slavery through the School! Read more about the Schools’ Modern Slavery resources here (UK) and here (Australia).
> ISO 20400 Section 6.3.2 provides guidance on capacity building programs.
Consideration #2 – Avoid outsourcing compliance to your suppliers.
Under the UN Guiding Principles on Business and Human Rights, all businesses have a general responsibility to respect human rights and mitigate the impact their operations may cause, directly or indirectly as a result of business relationships, on human rights. In practice, this means that businesses should work with their supply chains to implement joint solutions addressing human rights risks.
Intel is a great example of a company that has been driving accountability on human rights throughout its minerals supply chain. In partnership with smelter and refiner facilities in the Democratic Republic of Congo, Intel implemented a minerals traceability program to validate the origin of minerals it used for its products. Over the years, the program evolved to become the Responsible Minerals Assurance Process – Conformant Smelters & Refiners Program, and helped give recognition to facilities that did not finance armed groups in the DRC. Learn more about Intel’s approach here.
> ISO 20400 Section 4.2 provides guidance on accountability.
Consideration #3 – Clearly communicate your expectations to suppliers and encourage honest two-way engagement.
Being clear about your expectations to your suppliers is fundamental to a trusting business relationship. Sending a clear message to suppliers will enable them to plan ahead for your requirements – so it will not only help you encourage competition, but will also allow your organisation to identify any barriers your suppliers may face and how you may be able to assist them (for example, through capacity building programs).
British Land has clearly set out supplier expectations in a Supplier Code of Conduct published on the organisation’s website. In support of the Code, British Land also published its Supply Chain Sustainability Risk Map, thus letting suppliers know what the organisations’ priorities are, and where they are expected to step up. Learn more about British Land’s supplier communications here.
> ISO 20400 Section 6.3.2 provides guidance on engaging supply chains.
Consideration #4 – Recognise suppliers may need to respond to different reporting requests.
Your organisation may have global operations, and so could your suppliers. It is likely that your contractors will be required to provide information in support of the Modern Slavery Act reporting requirement, or equivalent regulations overseas. Many data sharing platforms are available to reduce the compliance burden.
The AIM Progress program is a perfect example of how pre-competitive industry collaboration can enable brands to share their audited suppliers and mutually recognise audits. Other industry specific initiatives include Railsponsible, Together for Sustainability or the Ethical Toy Program. Learn more about the AIM Progress program by watching this short video.
> ISO 20400 Section 6.5.2 provides guidance on reducing the reporting burden on suppliers.
Consideration #5 – Consider how you can use existing supplier engagement processes.
Integrating sustainability into existing practices and processes is at the heart of ISO 20400. Organisations have many opportunities to engage with suppliers before, during and after the sourcing process, and can integrate modern slavery due diligence into the conversation. It is important to recognise that the supplier selection and contract management process may be too limited to solve complex human rights situations. Long-term business-to-business initiatives may be more relevant such as supplier development, supplier relationship management, and partnerships.
In the UK, the Supply Chain Sustainability School has been working with partners such as the National Grid and Costain to support understanding within the supply chain, engage and assess them and support continuous improvement. Learn more about the UK Supply Chain Sustainability School approach here.
> ISO 20400 Section 4.2 provides guidance on integration.
If you would like to get started on your modern slavery supply chain management strategy, please get in touch!
In the UK: Helen Carter – firstname.lastname@example.org
In Australia: Jean-Louis Haie – email@example.com
For more information on our approach, please visit our website.