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Use the market to clean up supply chains – don’t wait for legislation

Source: Thomson Reuters Foundation - Tue, 3 Dec 2013 06:45 PM
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Anti-Walmart protesters walk to a City Council hearing from City Hall in New York, February 3, 2011. REUTERS/Brendan McDermid
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Global supply chains are riddled with human trafficking, slavery and sexual harassment but if we wait around for legislation to make a difference, we could be waiting a long time. 

If we use the market as a force for good, however, we could see change – and at a much faster pace. 

That was the message from a panel on rooting out slavery in supply chains at the Trust Women Conference

While politicians in the United States, the United Kingdom and around the world draft and implement legislation to fight trafficking and labour abuses, the panellists noted that the laws that eventually make it onto the statute books often lack teeth and are difficult to enforce. 

But get suppliers and consumers on board and show companies how a contented workforce can boost productivity – and how a blot on their brand can hit their profits – and you can make real progress in wiping out abuses.

The best example of this came from Laura Germino, co-founder and anti-slavery director for the Coalition of Immokalee Workers, a Florida farm workers’ initiative. 

The coalition started the Fair Food Programme that works for better wages and fair conditions in the state’s tomato fields and has eradicated forced labour from the industry – a practice that had been around for 300 years, according to Germino.

“Why is it all successful? It’s due to market consequences and market incentives,” she told the conference. 

Consumers demand to know they’re eating produce from corporate suppliers that are doing everything possible to avoid exploitation in their supply chains.

If there is forced labour in the suppliers’ field or violent sexual harassment or child labour, there are zero tolerance policies with market consequences meaning no longer can those tomatoes be sold to suppliers participating in the Fair Food Programme,” she said.

“Growers who are properly motivated with the right incentives become very effective at policing their workforce to ensure human rights are respected,” she added. “We can’t wait around for corporations to wait for legislation to be drafted when there are already market solutions.”

Some suppliers working with the programme have seen a 60 percent reduction in worker turnover, showing the policy also makes great business sense, Geronimo said. Similarly, productivity increases when workers are not being abused or exploited.

QUICK DECISIONS

Benjamin Skinner, an investigative journalist who is the co-founder and senior vice president of Tau Investment Management, which generates returns for investors by cleaning up supply chains, agreed the market could be a powerful force for change.

Skinner referred to two articles he’d written as an investigative journalist – one on sex trafficking from South Africa into Nigeria and one on slavery and debt bondage in the New Zealand fishing industry.  

In the case of South Africa, the government pledged to create legislation in the wake of his story but it took three years to pass a law. In New Zealand, significant change came within 48 hours because a major company made a decision about its supplier.

“Governments can take years to pass laws and then never enforce them while a major corporation has the capacity to switch suppliers and can make a market impact and change the lives of millions of individuals by virtue of how they decide to source – this is very exciting,” he told the conference.

But while the market may move faster than governments, cleaning up supply chains remains a lengthy process, the panellists said. Germino said it took two decades to wipe out slavery on Florida’s tomato farms. 

And Carl Graziani, senior vice president in charge of supply chains at supermarket chain Safeway, said the word ‘chain’ doesn’t come close to the scale and complexity of the problem. 

Graziani believes supply ‘web’ is a more appropriate term. Safeway, for example, has some 1 million links in its supply web, once you add up its thousands of manufacturers, each of which can have up to 1,000 suppliers.

“The supply chain is also very dynamic,” he said. Safeway buys flowers from 20 to 30 farms in South America but for Valentine’s Day and Mother’s Day, this increases to 60 to 100 farms. “There isn’t any clear path for certification.”

Graziani said the industry needed to come up with a way to use technology to map and monitor supply chains, in a similar way to the use of bar codes. But, make no mistake, he said, cleaning up supply chains “is definitely a marathon.”

Read more on the TrustWomen Conference

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