Ethics and Modern Slavery in the Supply Chain Deborah Ramshaw 5 July Leeds

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1 Ethics and Modern Slavery in the Supply Chain Deborah Ramshaw 5 July Leeds

2 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

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

4 Ethics in Procurement What do we mean?

5 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;

6 Ethics in Procurement 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]

7 Ethics in Procurement Why does it matter?

8 Dealing with Ethics in Procurement Identifying risk 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

9 Dealing with Ethics in Procurement 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

10 Dealing with Ethics in Procurement High 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?

11 Dealing with Ethics in Procurement Develop Ethical Policy / Code of Conduct 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?

12 Dealing with Ethics in Procurement Evaluate and Shortlist Suppliers 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?

13 Dealing with Ethics in Procurement Preferred Supplier Selection 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

14 Dealing with Ethics in Procurement Contract Management 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)

15 Dealing with Ethics in Procurement Sample Code of Conduct ETI Basecode 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

16 Dealing with Ethics in Procurement 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

17 Dealing with Ethics in Procurement The CIPS Code of Conduct 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

18 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 21 st century Joint statement by CIPS and the Walk Free Foundation

19 Modern Slavery What is 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

20 Modern Slavery What is 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

21 Modern Slavery Indicators of modern slavery risks most pronounced: 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)

22 Modern Slavery Modern Slavery Act 2015 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

23 Modern Slavery in Procurement Processes Practical Issues Consider use of drafting in commercial agreements to prohibit forced or trafficked labour As per general considerations for ethical procurement

24 Modern Slavery in Procurement Processes 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

25 Private Member s Bill Modern Slavery (Transparency in Supply Chains) 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

26 Modern Slavery in Procurement Processes Qatar 2022 World Cup 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

27 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

28 Questions?

29 Contact us Deborah Ramshaw Head of Procurement Team T: E:

30 Thank you

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