We’ve been hearing about the potential for government procurement to improve the incentives for more sustainably (note, not ‘sustainable’, I mean ‘more sustainable’, given the moving goalposts) sourced goods and services for a couple of decades now. Progress has been made, in fits and starts.
But the wheels of government turn slowly, and are of course at the whims of politics. By which I mean treasury departments slashing budgets and listening to lowest common denominator whining from recalcitrant lobby groups, of which there are alas, still many.
I spent yesterday discussing sustainable business trends that matter, and how to respond to them, with half a dozen senior managers at one of the world’s biggest companies.
They have a huge sourcing footprint, and whilst they are not bad at all at basic risk management, the question of where to dive deeper, is vexing them mightily, as it should.
How do you choose, when so many issues are ‘material’ and all equally dangerous from a reputation perspective? (cont. below)
One area we discussed is forestry and how things may be changing there, in terms of the bar being raised relating to the enforcement of the EU’s timber regulation.
The other area that vexes this company deeply, as so many others, is the title of this post.
“Human trafficking, slavery and exploitation”, possibly the scariest sentence outside “we’ve got a major financial problem” an internal company meeting can hear.
Large companies, and some smaller ones, have tried to address this issue for years.
I created a conference and published a lot on this, starting back in 2002 (feeling old now). The issues around audits haven’t changed much since. The fraud seems to have got worse, and become an industry all of its own.
No companies can make the kind of commitments businesses are boldly making on areas like forestry and palm oil. You can’t credibly commit your company to be say, “100% zero Human trafficking, slavery and exploitation free by 2017” in public statements. Lidl tried, and failed, in this humiliating episode.
Obviously there are two problems there. First, you would be tacitly admitting you have that problem currently (even if indirectly, which may be a legal risk and is definitely a reputation one) and second, you can’t actually do it, given the range of the challenge and the subjectivity within it.
So that, and creeping government interest and regulations around transparency, are deeply concerning large companies, as they should be.
The latest report from the U.S. Department of State demonstrates the scale of the challenge. (Although oddly, they don’t cover their own nation)
They claim its a $150 billion a year industry. I’m not sure how they worked that out, but guesstimates are all we have.
What’s significant about this report, current legislation in both the U.S. and U.K. , and David Cameron’s remarks today in Vietnam, is that now this area is finally on the political agenda. Governments see it as a moral issue they can campaign on.
It’s an area they can agree on across parties and so legislate on, and most significantly, they can lump the responsibilities onto business using transparency demands over say, actual inspections.
(Which is probably the way to go, after all, intelligence-based or technology enabled checks aside, how many trucks and shipping contain can customs officials properly inspect?)
What does all this mean for business?
Well, transparency regulation and NGO/media attention is creating incentives to invest more resources in making sure the worst elements of human trafficking, exploitation and slavery are minimised in the supply chain.
This raised level of attention will mean more examples, rightly or wrongly, of companies having their names dragged through the mud.
My recent post looked at this in the African context, and how stakeholder engagement will be a partial solution.
Other solutions will come from tracking and tracing and monitoring technologies, of which there are many and improving offerings.
Pressure via membership groups and NGOs on government investment in local capacity will be vital, and so will the pre-competitive intelligence and data sharing platforms and collaborations already being used by many large companies.
The excellent New York Times has been running a series of articles highly relevant to this, looking most recently at the seafood sector.
You can bet your bottom dollar that a “Slave Fish!” campaign is being prepared against some large company by some NGO, if not now, then very soon.
We’re trying to make our own contribution to moving the debate forward towards practical solutions with a few upcoming events.
I won’t pitch them all here, except to say the most focus in this area will be at our joint event with the Ethical Trading Initiative on Octover 19-20 in London, for which more than 70 companies have already signed up. Other ads, all relevant, are below.
Upcoming relevant business meetings by Innovation Forum:
How business can tackle deforestation – A make or break issue for Asia’s corporate reputation
28th-29th September 2015, Singapore – For full agenda and speaker list go here.
Ethical Trade and Human Rights Forum (with ETI)
Transforming supply chains for responsible business at scale
October 19-20, London – For draft agenda go here, contact Boris.Petrovic@innovation-forum.co.uk
How business can tackle deforestation
Innovation in sustainable forestry: Technology, risk and collaboration
November 2-3 London – For more information go here.
Sustainability: Why current consumer engagement fails – and how to fix it
November 9th-10th 2015, London – For more information go here.
Sustainable seafood sourcing
How business can manage global risk and collaborate for sustainable improvements
November 25-26 2015, London – For more information go here.
How to engage with – and improve the lives of – smallholder famers
March 2016, London – For draft agenda contact Boris.Petrovic@innovation-forum.co.uk
For general inquiries contact: Charlenne.Ordonez@innovation-forum.co.uk