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| Lessons from California: why compliance is not enough | Lessons from California: why compliance is not enough |
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| California's Transparency in Supply Chains (Tisc) Act, which took effect in 2012, is widely acknowledged as a step forward in addressing the global problems of human trafficking, slavery and forced labour. While commendable, the act still lacks teeth. | California's Transparency in Supply Chains (Tisc) Act, which took effect in 2012, is widely acknowledged as a step forward in addressing the global problems of human trafficking, slavery and forced labour. While commendable, the act still lacks teeth. |
| In the UK, lobbying efforts to see provisions on supply chains included in the proposed modern slavery bill recognise this point and appear to have made some headway. In June last year a private member's bill was brought before parliament by Michael Connarty MP, which was modelled on the California legislation. It was talked out at that time, but incorporating its provisions in the proposed modern slavery bill is now being considered, and the signs seem reasonably positive. To exclude supply chains legislation from the bill would be entirely self-defeating. | In the UK, lobbying efforts to see provisions on supply chains included in the proposed modern slavery bill recognise this point and appear to have made some headway. In June last year a private member's bill was brought before parliament by Michael Connarty MP, which was modelled on the California legislation. It was talked out at that time, but incorporating its provisions in the proposed modern slavery bill is now being considered, and the signs seem reasonably positive. To exclude supply chains legislation from the bill would be entirely self-defeating. |
| The Tisc-style legislation would be welcome, but it can only be seen as a starting point. Large parts of the debate about its impact have rightly lamented its minimalist requirements. On its own, it is not nearly far-reaching enough to change global supply chains for the better and deter trafficking and slavery in the global economy. We need to go further and be more ambitious. For firms, as well, the message has been loud and clear: in the words of the influential organisation Verité, 'compliance is not enough'. | |
| Verité and many other commentators have made it clear that if firms are serious about eradicating these problems, considerably greater levels of commitment and effort will be needed than the minimalist letter of the Tisc legislation demands. | Verité and many other commentators have made it clear that if firms are serious about eradicating these problems, considerably greater levels of commitment and effort will be needed than the minimalist letter of the Tisc legislation demands. |
| Why so? Of the many reasons, let's consider three. First, the thrust of the act is to require companies to disclose what they are doing to address problems in their supply chains, relative to a company's own standards for ensuring adequate labour conditions. | Why so? Of the many reasons, let's consider three. First, the thrust of the act is to require companies to disclose what they are doing to address problems in their supply chains, relative to a company's own standards for ensuring adequate labour conditions. |
| It requires them to verify and audit their supply chains and certify the products that are used in them, and to provide training to employees and managers. But none of these provisions gets to the heart of why trafficking and slavery are so deeply entrenched in the global economy in the first place. It doesn't require them – or society at large – to grapple properly with the root causes of the problems. | It requires them to verify and audit their supply chains and certify the products that are used in them, and to provide training to employees and managers. But none of these provisions gets to the heart of why trafficking and slavery are so deeply entrenched in the global economy in the first place. It doesn't require them – or society at large – to grapple properly with the root causes of the problems. |
| Part of the answer to that question lies in the way global supply chains themselves are organised and how they function. The strategies of leading companies and suppliers are based on increasing profit by fragmenting the production process and offloading risk and commercial pressures to other participants in the supply chain. | Part of the answer to that question lies in the way global supply chains themselves are organised and how they function. The strategies of leading companies and suppliers are based on increasing profit by fragmenting the production process and offloading risk and commercial pressures to other participants in the supply chain. |
| Across many manufacturing, agricultural and extractive sectors, these strategies often rely heavily on cost-cutting through extensive arm's-length outsourcing and subcontracting arrangements, which are all about maintaining relentless pressure on labour costs and ensuring limited regulation. Slavery and trafficking are most common in sectors where levels of outsourcing are highest, and occur mainly in outsourced parts of production processes. Particularly in labour-intensive industries based on cut-throat price competition, the incentives to suppliers and producers to improve labour conditions can be often practically non-existent. | Across many manufacturing, agricultural and extractive sectors, these strategies often rely heavily on cost-cutting through extensive arm's-length outsourcing and subcontracting arrangements, which are all about maintaining relentless pressure on labour costs and ensuring limited regulation. Slavery and trafficking are most common in sectors where levels of outsourcing are highest, and occur mainly in outsourced parts of production processes. Particularly in labour-intensive industries based on cut-throat price competition, the incentives to suppliers and producers to improve labour conditions can be often practically non-existent. |
| In these conditions, it is the business model itself that is the problem, and 'business as usual' won't do the trick in dealing with the conditions in which trafficking and slavery occur. | In these conditions, it is the business model itself that is the problem, and 'business as usual' won't do the trick in dealing with the conditions in which trafficking and slavery occur. |
| Second, the Tisc act prioritises self-regulation by firms as the way forward. Self-regulation is undoubtedly a critical part of any strategy for dealing with trafficking and slavery. Yet an arsenal of evidence and experience shows that relying on corporate social responsibility alone doesn't work as a blanket model. Some firms have energetic and innovative CSR strategies, and Tisc-style legislation may well be effective in encouraging them to go even further. But basic social compliance strategies have never been effective in driving wider change across supply chains. | Second, the Tisc act prioritises self-regulation by firms as the way forward. Self-regulation is undoubtedly a critical part of any strategy for dealing with trafficking and slavery. Yet an arsenal of evidence and experience shows that relying on corporate social responsibility alone doesn't work as a blanket model. Some firms have energetic and innovative CSR strategies, and Tisc-style legislation may well be effective in encouraging them to go even further. But basic social compliance strategies have never been effective in driving wider change across supply chains. |
| Social compliance strategies are particularly ineffective in picking up trafficking and forced labour. The parts of the supply chains in which trafficking and slavery most often occur are not covered by conventional company audits and codes of conduct. Nor are the most vulnerable workers. Basic compliance with the Tisc act's auditing requirements will therefore not reach the right parts of supply chains, the right firms, or the right workers. A much more expansive approach is needed. | Social compliance strategies are particularly ineffective in picking up trafficking and forced labour. The parts of the supply chains in which trafficking and slavery most often occur are not covered by conventional company audits and codes of conduct. Nor are the most vulnerable workers. Basic compliance with the Tisc act's auditing requirements will therefore not reach the right parts of supply chains, the right firms, or the right workers. A much more expansive approach is needed. |
| Third, the act assumes that consumer pressure will motivate companies to comply and embrace the agenda. Consumers are supposedly the driving forces behind change, and consumer pressure can in some contexts be very effective. But the available evidence is much more mixed than is often assumed, both about levels of concern among consumers about labour standards, and about how effective consumers can be in driving change in supply chains and firms' business models. Consumers also lack the information and means to monitor the ethical credentials of firms and products consistently. | Third, the act assumes that consumer pressure will motivate companies to comply and embrace the agenda. Consumers are supposedly the driving forces behind change, and consumer pressure can in some contexts be very effective. But the available evidence is much more mixed than is often assumed, both about levels of concern among consumers about labour standards, and about how effective consumers can be in driving change in supply chains and firms' business models. Consumers also lack the information and means to monitor the ethical credentials of firms and products consistently. |
| So, what more is needed? The first thing is that we need to recognise that the problems of trafficking and slavery are not isolated instances of violations by a small number of rogue firms or employers. Tackling them goes to the heart of corporate strategies, business models and labour practices all the way along supply chains. We need approaches that are not just 'add-ons' to business as usual, but instead encourage different ways of thinking about how supply chains can be organised and regulated so as to remove the conditions which allow some firms to profit from grossly exploiting workers. We can't leave the job solely to individual firms and corporate self-regulation, important as that is. We need a combination of private and public governance mechanisms, and a combination of carrots and sticks. That takes political courage and conviction. | |
| We have examples where such combinations have proved very effective. One is in Brazil, where a system of public regulation has been established to deal with problems of slavery, providing incentives to businesses alongside functioning enforcement mechanisms and sanctions. Its federal labour inspection system is also vital to that effort. | We have examples where such combinations have proved very effective. One is in Brazil, where a system of public regulation has been established to deal with problems of slavery, providing incentives to businesses alongside functioning enforcement mechanisms and sanctions. Its federal labour inspection system is also vital to that effort. |
| Brazil's is nevertheless a national scheme, when the problems are often rooted in globalised supply chains. If we are serious about tackling the issues, we need to think innovatively about how to develop national and transnational mechanisms for governing global supply chains. That is our collective challenge, and it is as much as a political one as a logistical one. | Brazil's is nevertheless a national scheme, when the problems are often rooted in globalised supply chains. If we are serious about tackling the issues, we need to think innovatively about how to develop national and transnational mechanisms for governing global supply chains. That is our collective challenge, and it is as much as a political one as a logistical one. |
| Nicola Phillips is a professor in the department of politics at the University of Sheffield. She tweets as @phillipsnicola1 | Nicola Phillips is a professor in the department of politics at the University of Sheffield. She tweets as @phillipsnicola1 |
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