ethics and modern slavery in the supply chain deborah ... speaker prese… · slavery and human...

Ethics and Modern Slavery in the Supply ChainDeborah Ramshaw

5 July 2016 - Leeds

Agenda

• Introductions

• “Ethics” in procurement – what do we mean and why does it matter?

• Dealing with ethics in procurement processes

• Modern Slavery

• Dealing with modern slavery in procurement processes

• Q &A

Introductions

Welcome from Darren Webb – Chair of Yorkshire Branch and Deborah Ramshaw – Bond Dickinson

Ethics in Procurement

What do we mean?


Oxford Dictionary definition of “ethical”:

1. Relating to moral principles or the branch of knowledge dealing with these;

2. Morally good or correct;

3. Avoiding activities or organizations that do harm to people or the environment: an expert on ethical investment; switching to more ethical products;

What do we mean?


CIPS definition of “ethical procurement”

“procurement processes which respect fundamental international standards against criminal conduct (like bribery, corruption and fraud) and human rights abuse (like modern slavery), and respond immediately to such matters where they are identified and, result in progressive improvements to the lives of people who contribute to supply chains and are impacted by supply chain decisions”

[CIPS – Ethical and Sustainable Procurement guide]

What do we mean?


Why does it matter?

Dealing with Ethics in Procurement

• An organisation needs to be able to identify risks in its supply chain to be able to prioritise its actions

• Review the supply chain - identify risks in terms of both product and supplier – identify production processes where may be more likely to have poor labour standards

• Use of visits, questionnaires, existing work carried out

Identifying risk


• Assess risk against importance to the organisation (e.g. is the product low importance or a key item? NB beware non-strategic products such as promotional goods which can nonetheless have a high reputational impact if found to be non-ethical)

• Identify high risk areas: risks associated with particular countries, human rights abuses, production processes?

• Consult local and international experts

Identifying risk


• Use of migrant workers in production – potential modern slavery issues?

• Economic situation of workers: living wage? Able to influence terms of employment? Have they paid a fee to get the job? Have they borrowed money for travel and recruitment fees? Impact on forced labour?

• Are laws updated and enforced?

• Are there any relevant initiatives to improve worksites?

• What standards or codes of conduct are used?

High risk?


• Identify which issues your organisation can take responsibility for and which you can prioritise

• Specification - include a standard or code?

• Is time and resource needed to work with a relevant organisation in the country of production?

• How will you monitor compliance with ethical requirements and mitigate the risk of corruption/bribery?

Develop Ethical Policy / Code of Conduct


• Selection Stage: if following EU regulations then certain mandatory and discretionary grounds already pick up some relevant areas: e.g. conspiracy, corruption, bribery, fraud, drug trafficking, Modern Slavery Act offences, violations of environmental, social or labour law, grave professional misconduct

• Private sector buyers: incorporate ethical and sustainability requirements into selection processes

• Both – relevant policies and standards of supplier?

Evaluate and Shortlist Suppliers


• Set the award criteria for selection of preferred bidder: EU procurements – relevant, proportionate, objective etc.

• EU rules allow use of environmental and/or social criteria and criteria can now be related to production processes and provision or trading of those works, supplies or services – make use of freedoms

• Sub-supplier practices and conditions?

• Compliance with contract conditions / specification – e.g. UN Universal Declaration of Human Rights and ILO conventions

Preferred Supplier Selection


• Consider ethical and/or sustainable procurement targets –use of KPIs?

• Adherence to standards and KPIs – how will this be monitored? Don’t put the contract away and forget about it…..

• Implement accountability measures and strive for continuous improvement

• Ensure adequate exit strategies in place (considering impact on vulnerable workers)

Contract Management


1. Employment is freely chosen

2. Freedom of association and the right to collective bargaining are respected

3. Working conditions are safe and hygienic

4. Child labour shall not be used

5. Living wages are paid

6. Working hours are not excessive

7. No discrimination is practised

Sample Code of Conduct – ETI Basecode


8. Regular employment is provided

9. No harsh or inhumane treatment is allowed

Companies must also follow all relevant national and international law and these are minimums only which companies are encouraged to exceed

Sample Code of Conduct – ETI Basecode


• CIPS members must commit to maintain the CIPS Code of Conduct as long as they are members

• Sets out principles of integrity, professionalism, high standards, promotion of eradication of unethical business practices, optimal use of resources and compliance with legal and other obligations

The CIPS Code of Conduct

Modern Slavery

“The increase in global sourcing opportunities has highlighted some serious issues in procurement practices, in particular the occurrence in the supply chain, unwittingly or otherwise, of modern slavery. From every perspective –reputational, financial and ethical – this is not acceptable in the 21st century”

Joint statement by CIPS and the Walk Free Foundation

Modern Slavery

• Affects over 29 million people around the world (2013 figure)

• Exploitation so severe that people are unable to leave their place of work – people are effectively “owned” by their employers and are controlled through a variety of means including huge recruitment fee debts they cannot pay off, threats of harm if they attempt to leave

• Significant characteristic is that it involves one person depriving another person of their freedom

What is modern slavery?

Modern Slavery

• Evidence suggest risk affects almost every industry – high tech, steel, automobiles, agriculture, seafood, mining and minerals, garments and textiles, shipping and transportation

• Modern slavery is illegal in every country in the world but still occurs in every country in the world. Even highly developed economies have informal or “black” markets operating outside the reach of regulation

What is modern slavery?

Modern Slavery

• Where workers have fewer protections through inadequate laws and regulations, weak or non-existent enforcement, poor business and government accountability

• Where there are high levels of poverty among workers

• Where there is widespread discrimination against certain types of workers (e.g. women and ethnic groups)

• In conflict zones, and

• In some specific high risk industries (typically involving raw materials)

Indicators of modern slavery – risks most pronounced:

Modern Slavery

• MSA recognises role of businesses in combating crimes of slavery and human trafficking

• Section 54: requires commercial organisations with a global turnover of above £36m to publish an annual slavery and human trafficking statement for each financial year on or after 31 March 2016

• Statement must disclose what steps the business has taken to ensure human trafficking is not taking place in any of its supply chains or business, or state that it has taken no such steps

Modern Slavery Act 2015

Modern Slavery in Procurement Processes

• Consider use of drafting in commercial agreements to prohibit forced or trafficked labour

• As per general considerations for ethical procurement

Practical Issues


• For public sector organisations note the amendments made to the Public Contracts Regulations 2015 so that mandatory exclusion grounds now include certain offences under the MSA – remember to update standard PQQ document

Practical Issues

Private Member’s Bill

• 23 May 2016 the Bill had its first reading in the House of Lords – formality. Second reading (substantive debate) –8 July 2016

• Purpose of Bill “to require commercial organisations and public bodies to include a statement on slavery and human trafficking in their annual report and accounts; and to require contracting authorities to exclude from procurement procedures economic operators who have not provided such a statement; and for connected purposes”

Modern Slavery (Transparency in Supply Chains) Bill


• Excellent report by Amnesty International “The Ugly Side of the Beautiful Game”

• Workers have suffered systematic labour abuses including living in squalid living conditions, confiscated passports, high recruitment fees and forced labour

• Criticism of delivery body, government and FIFA

• Urging leading clubs and sponsors (Adidas, Coca-Cola etc) to pressure FIFA to get the Qatar government to reform conditions before construction work peaks in 2017

Qatar 2022 World Cup

Finally…

“my life here is like a prison. The work is difficult, we worked for many hours in the hot sun. When I first complained about my situation, soon after arriving in Qatar, the manager said “if you [want to] complain you can but there will be consequences. If you want to stay in Qatar be quiet and keep working”. Now I am forced to stay in Qatar and continue working”

Deepak, metalworker on Khalifa International Stadium, FIFA 2022 World Cup venue, May 2015

Questions?

T:E:

Contact us

Deborah RamshawHead of Procurement Team

0191 279 [email protected]

www.bonddickinson.com

Thank you

ethics and modern slavery in the supply chain deborah ... speaker prese… · slavery and human...

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