No excuse for poor practices

No excuse for poor practices
Mike Edmunds, co-founder and managing director of Trade Interchange
20/07/2017 - 07:00
Beyond a company’s ethical foundations, unlimited fines and reputational damage lie in wait for the unwary business if it falls foul of the latest legislation on modern slavery. Mike Edmunds, co-founder and managing director of Trade Interchange, looks at the risks.

One year after the changes to modern slavery legislation, many organisations are still at risk from noncompliance. What are the consequences and how can businesses improve the way modern slavery is tracked in the supply chain?

The past 12 months have heralded a lot of change. Before Theresa May became prime minister, one of her final acts as home secretary was to introduce stricter measures against modern slavery, in the form of the Transparency in Supply Chain Provisions clause.

The changes meant that any company operating in the UK with a turnover of £36 million or more must disclose all the steps it is taking to ensure modern slavery and human trafficking does not take place in any part of the business. This applies to the entire supply chain, creating a whole new level of complexity.

The government stated that it was no longer acceptable for any organisation to claim it was unaware of the occurrence of modern slavery or simply ignore the issue. It is now a legal requirement to publish a public statement summarising the steps an organisation is taking to protect against modern slavery. By not complying, companies run the risk of placing a spotlight on their clients’ entire supply chains.

It’s more than just an issue of ethical work practices. Recent research shows that 66% of consumers would stop buying from a brand or business if they learnt that its production used modern slavery. Organisations are well advised to put processes in place to avoid such a damaging reputational hit. And compliance is far more than a matter of due diligence; the legislation states that failure to comply could result in an unlimited fine.

This is undoubtedly a worst-case scenario, but businesses that are seen to be tackling modern slavery could, according to a government guide, benefit from an improved customer base. An increasing number of consumers are seeking out businesses with higher ethical standards, improved investor confidence and more responsive, stable and innovative supply chains.

The measures, put in place by the government in April 2016, aimed to increase competition and drive up standards throughout the entire business community.

The food, hospitality and catering industries and their supply chains, however, are considered to be more exposed than most to the risks of modern slavery. A number of industries close to the sector, including agriculture and seafood, for example, are globally recognised as being at greater risk of involvement in modern slavery.

Not only are they high-risk industries but they also often rely on transient workforces, which means labour may be sourced from irregular migrants, with workers being paid in cash or in kind.

In addition, the foodservice industry has increasingly complex and global supply chains. The sector often sources products from global producers, directly or indirectly, and some of these supplier countries have fewer protections in place to protect workers. Robust processes must be in place so as not to unwittingly involve exploitive labour in the supply chain.

With the foodservice industry particularly at risk, a vast number of suppliers must be audited as part of compliance assessments. Currently, many companies are using manual or semi-manual systems to manage their supplier databases, forcing an administrative burden on to supply chain and procurement teams.

Having an inefficient system in place can make complying to supply chain laws more difficult than necessary, so an increasing number of companies are investing in central data monitoring solutions, such as Supplier Information Management (SIM) software, to simplify the auditing and management process.

Trade Interchange’s ARCUS SIM software is designed to improve the way supplier-related risks are managed. Suppliers are required to complete tailored, comprehensive questionnaires and upload documents to support accreditation and audits.

By placing the onus on suppliers to complete the detailed surveys, businesses can help reduce the time and effort spent collating information. Automated reporting systems can help ensure complete compliance on issues such as meeting the Modern Slavery Act requirements, with the added benefit of a single dashboard giving an ‘at-a-glance’ overview of progress.

Slavery may seem unimaginable in the UK but, for larger operators in the catering and foodservice industry, it is an issue with the potential to keep chief executives and directors awake at night. It’s therefore important for all levels of the business to be aware of the potential implications, and have efficient and effective solutions in place to combat and monitor them.

For more on complying with the Modern Slavery Act in the foodservice sector, download a specialist guide at www.tradeinterchange.com.

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