New report finds Modern Slavery Act is galvanising leadership action in progressive companies

Twice as many CEOs and other senior executives have become actively involved in addressing modern slavery in global supply chains since the Modern Slavery Act came into force on 29 October 2015.

The Ethical Trading Initiative (ETI) and Hult International Business School investigated corporate leadership responses to modern slavery within leading companies ahead of the first anniversary of the Act. Their survey and report, Corporate Leadership on Modern Slavery, involved 71 prominent brands and retailers, including in-depth interviews with 25 companies.

In addition to CEO and senior executive engagement with modern slavery doubling in the past year, the report found that:

• 97% see the reputational risk of finding modern slavery in the supply chain as the biggest driver for change
  
  
• 86% see corporate action on human rights as a critical business responsibility (regardless of reputational risk or exposure)
  
  
• 79% cite senior leadership passion and engagement as the strongest enabler of effective corporate action
  
  
• 67% of CEOs and Senior Executives have received training on modern slavery in the past year
  
  
• Investor interest has increased as a driver for companies - from zero in 2015 to 25% in 2016

Companies are making significant progress in addressing modern slavery. More companies know what they need to do, but are finding some activities harder to put into practice:

• 82% of companies know that addressing human rights within their core business model is the most significant strategic indicator of corporate leadership on modern slavery. Yet they are finding it challenging to put into practice
  
  
• 90% of respondents saw due diligence on core labour standards as crucial to tackling modern slavery. Leading companies are increasingly conducting human rights risk analyses by country, sector or type of labour and prioritizing their salient risks accordingly. 71% had these processes formalized and embedded in their operations
  
  
• Companies strongly believe effective engagement and action in partnership with governments, NGOs and charities, and other local stakeholders is critical for significant change
  
  
• All companies interviewed state that one of the most effective interventions is involving workers directly in managing and mitigating the risks of modern slavery. Whilst some companies are engaging with trade unions to raise worker voice, only 31% see them as critical stakeholders in addressing modern slavery

Quintin Lake, co-author of the report and Research Fellow at the Ashridge Centre for Business and Sustainability at Hult International Business School said, “We wanted to know what ‘good’ looks like for companies seeking to address modern slavery, to help those who are just starting to look at the issues to make faster progress. Though there is much more work to do, it is encouraging to see the steps leading businesses are taking.”

Within leading companies, the report reveals that the conversation has shifted from a sense that the problem is “out there”, to “this is our problem”. Companies also recognize that addressing modern slavery is not about short-term risk management, but about changing the way the business thinks about human rights, and what systems need to be in place to change practice in the long term.

Cindy Berman, report co-author and Head of Knowledge and Learning at ETI acknowledged that most companies struggle to meet the demands of the Act, as indicated by recent research carried out by the Business and Human Rights Resource Centre. “At the strategic level, senior leaders in progressive companies are stepping up to the plate and recognizing their responsibilities. But even for these companies, their journey to tackle endemic human rights risks in their business is just beginning, and none can confidently say they have cracked the problem,” she said. “But we were pleased to see a recognition by companies that in addition to getting their own house in order, they need to work with others, engage with governments, and call on independent advice and expertise.”

The report finds that companies face several significant barriers and tensions in addressing modern slavery, and that the work needed to improve corporate practices and policies should not be underestimated. That includes addressing the policy and legal environment, changing the mindsets of investors and consumers, and changing the culture of businesses itself, particularly around worker representation.

Cindy Berman said: “What’s most important is ensuring that workers have choices over who they work for, free from threat, coercion, abuse and exploitation. When workers can negotiate the terms and conditions of their working arrangements, the likelihood of modern slavery is minimal. That’s why trade unions exist. It’s also why civil society organizations that support migrant and vulnerable workers and who have expertise in managing and mitigating risks are critical to addressing the problem in the long term.”

Over 40% of respondents highlight supply chain complexity as one of the strongest barriers and the report states that a key tension is how best and how long to work alongside suppliers to improve working conditions. Companies are also beginning to see risks in new areas as they start to map their supply chains including in logistics, warehousing, catering and cleaning services and labour recruitment agencies amongst others.

Quintin Lake concluded: “The companies we spoke with believe addressing modern slavery is becoming a business-critical issue – for credibility with customers, investors, NGOs and the public. Companies want to be rid of modern slavery, and senior leaders have a crucial role to play, in partnership with others, to achieve this.”

Download the report here.

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