UK Plans to Use Supply Chain Transparency to Combat Slavery

Most people would make a point of refusing to buy something known to be a product of slave labor. The problem is that sometimes consumers have no way of knowing that, particularly if the items includes a component made from by workers trafficked in and enslaved by the factory. The only way to effectively stop the sale of the products of such labor is to track all the parts used in the supply chain.

Now, the United Kingdom (UK) has set out its own guidelines, titled The Transparency in Supply Chains, etc: A Practical Guide, to help businesses to keep informed about labor sources. The guide help businesses be sure they in compliance of the Modern Slavery Act of 2015.  Though the law and guide are issued by the government, the transparency called for would function as a mechanism to let the free market work to push businesses in a positive direction.

The Home Secretary Foreword to the guide proclaims, “Organizations with significant resources and purchasing power are in a unique and very strong position to influence global supply chains.” The electronics industry includes many such companies. Another axiom for the law is that today “it is not acceptable” for any business to absolve itself of responsibility on the basis of ignorance or to claim that looking into labor conditions from suppliers is too demanding.  The law calls for reports about just what businesses are doing to become aware of the conditions and to address problems.

Like the California law described in Transparency Combats Human Trafficking & Slavery in the Supply Chain, the smallest businesses would be exempt if they do not hit the minimum threshold for commerce. For the UK law that's a “total annual turnover of £36 million or more.” Those that falls into that category would be obliged to generate a “slavery and human trafficking statement” each year. The statement has to show what steps the business takes to ascertain that its supply chain remains free of slave labor. If it has not taken such steps, it would have to admit that in the statement in order to maintain transparency.  

Rather than government regulating what businesses should do, they rely on the free market forces to have a positive effect. The requirement to publicize what they do or do not do will motivate businesses to do whatever they can to reduce the market for slave labor. In the words of the guide, it would “create a race to the top by encouraging businesses to be transparent about what they are doing, thus increasing competition to drive up standards.”

Businesses who fail to issue the required statements would be considered in violation of the law and subject to fines. However, there are no fines for statements that admit not taking any steps to cut out suppliers who rely on slave labor. Instead, the government is relying on pressure to come from market forces and other organizational bodies to motivate the desired outcome.

As the guide says,  “It will be for consumers, investors and Non-Governmental Organizations to engage and/or apply pressure where they believe a business has not taken sufficient steps.”  The assumption is that transparency will lead to improvement because once people know where the company stands on the issue, they can make their own informed choice about supporting it, avoiding it, or pressuring it to change its ways.

What do you think of the UK's approach as a solution to the problem of modern slavery?

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