Recent news reports have once again brought into focus the problems for many organisations with a complex supply chain. The issues they face are now covered by regulation but is that enough to foster ethical behavior?
The motoring industry has been in the news this week with Vauxhall, BMW, Audi and Volkswagen all tarred with allegations that child labour is being used for the extraction and sorting of mica.
All the organisations cited have policies that publicly state their committment not to use such labour.
Volkswagen “Child labour is prohibited by our sustainability standards and is not tolerated by the Volkswagen group…”
Vauxhall “ these expectations are outlined in GM’s standard purchase contract terms and conditions, which re-inforce our zero tolerance policy against the use of child labour….”
It is possible that after further investigation all the organisations mentioned will be able to verify that the mica they use has not been sourced from a mine that uses child labour and that their supply chain is compliant.
It is a requirement of the Transparency in Supply Chain Provisions (Modern Slavery Act 2015) that all businesses over a certain size publish an annual statement confirming the steps they have been taken to ensure that slavery and human trafficking are not taking place in the business (or in any supply chain) or to declare that no steps to confirm the existence of slavery or trafficking have been taken.
However, there are no legally binding requirements to conduct due diligence on supply chains and there are no criminal or financial penalties for non-compliance. So in this type of situation the organisation’s response that nothing untoward has been flagged in their own audit reports is likely to be sufficient, from a legal perspective.
One of the key issues this type of expose flags up is that when looking at ethical business behaviour regulation is not sufficient. At the IBE’s 30th Anniversary the point was well made by Simon Thompson. The summary notes for the event state “lawmakers are in fact rarely leaders as by the time they pass laws and regulations it is usually only a codification of what is already generally accepted in civil society.” I wholeheartedly agree. I’m not suggesting we don’t need some regulation but I don’t think we can wait for regulation to make people ethical. It will only make them legal.
There are huge issues associated with policing large complex supply chains, the motoring industry is not the only one in this situation. Organisations, particularly those working across international boundaries, are often in a situation where the only way of gaining commitment to the organisation’s standards is through influence and persuasion. There is only so much that can be done to force third party organisations to adhere to standards they have not signed up to. However, we can always try harder and one way is to ensure the values of the organisation are communicated throughout the organisation particularly to those who deal directly with the suppliers or other external bodies. For many of these employees, who may at times feel more aligned to the supplier organisation, then their employer it is requires constant effort to ensure the values of the purchasing organisation are reinforced and that they underpin individual behavior.