Role of Business in Prevention of Modern Slavery

In this episode, Fuzz Kitto explores the first of three legs of the society stool - business, and its role in preventing modern slavery. The episode highlights the need for traceability, transparency, and a change in corporate mindset for transformative change. Kitto discusses the complexities of global supply chains and the many tiers within these chains. The episode showcases the transformation of companies, like Kathmandu, that subscribe to the B-Corps model that balances profit and purpose. By supporting businesses striving for positive change and to be a force for good, listeners can actively contribute to the movement, envisioning a slavery-free world.

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G’day! And welcome to the Slavery Unravelled Podcast. I’m Fuzz Kitto, Codirector of Be Slavery Free

In the last podcast we looked at how prevention is better than cure. It’s better to build a fence at the top of the cliff than running a ambulance service at the bottom and as Carolyn Kitto says let make it that the road goes nowhere near the top of the cliff.

We often talk about a society is like a stool with 3 legs.

One leg is the government, the other leg is civil society including consumers and the final leg is business. So, over these next 3 podcasts I am going to look at each of these legs and see what each can do to help prevent modern slavery.

So today we are going to look at business and its role when it comes to preventing modern slavery.

Be Slavery Free started as a campaigning organisation and like many NGOs and charities that majored on advocacy we took at name and shame approach. When a journalist, an NGO or a government scheme came across modern slavery, we would trace it through to the company that was selling these goods or services and we would run a campaign that said: Shame you have slavery in the production of these good or services. What you need to do company is to stop this and either stop using those farms, mines, factories, or fishing boats – shame! Shame! Shame!

We started campaigning with these companies and saying: You need to have traceability and transparency! Then a few companies started coming around and saying that they thought we could be right so how could they do that?

When that started to happen we felt like the dog who had been chasing their tail, caught it and thought “what do we do now?” Then we realised if we were asking companies  to have traceability and transparency then for us to have integrity we needed to upskill and find out how we could help them do it.

This formed a much closer relationship with many companies and as we communicated more closely they started to ask questions like how come all you NGOs, charities and journalists do, is find the bad and when you do and we realise we need to change and then we do change – you never mention what we are doing?

Since then we have changed.

We realised we had to hear that and it was like we were being campaigned back – and we had to take that. We were not alone in this. Matt Friedman from the Mekong Club got the same questions and we both realised we had to change, so we both shifted from a Name and Shame approach to a Name and Fame approach.

The reality of modern slavery is that there are some really bad things happening and there are some good things. There is bad and good. Since we have done that, we have found that not only have companies, consumers governments and leaders got to see what needs to change but they have also got to see what good looks like.

 It is much easier to see how you can change from bad when you can see what good looks like! No one has worked out all the answers to solving modern slavery. There is no silver bullet – if there was we would have solved it by now! What we need in the prevention area is to learn from each other. 

We often say: there are things that we know – and we share that. There are things that others know and we refer people to them. And there is what none of us know and we have to work together to learn, innovate, be ready to fail and to give each other a hand up.

We were meeting with a large company about their modern slavery approach. The 2 team leaders told us they had come from the Occupational Health and Safety in their corporation. They were in construction. They told us that each year 8-10 people or more, would die on their construction sites. They would say – well it’s a dangerous industry and these things happen. Then they thought, but that is not our values – we value people. So, they started to bring in systems and preventions that meant the workers would get awareness training, safety systems were overhauled and applied, safety equipment and clothing was invested in and now they said we have no deaths on our sites!

We are behind when it comes to modern slavery but we know how to bring about change from what we learnt from occupation, health and safety – so we think with some help we can change. So, we did some awareness training we had sessions with key executive staff and now they are well on the way on making a difference in modern slavery.

By working together with business – we can find that when we can help them to “get it!” and they prioritise changes it can take as little as 10-100 days and they are into it and investing in it.

The biggest preventative that businesses can do is to to get to know and check their supply chains! Dr Darian McBain who is the chair of the Be Slavery Free Board and a world leader in helping businesses work on being slavery free says: “How do you find modern slavery? Well you have to look for it!”

With the global economy supply chains can be long and complex. This helps to blind companies to what is really happening. Even if they look it is easy for modern slavery to be hidden and covered over and in the supply chains of goods, parts, raw products, transport and multinational logistics there are so many places to look.

We talk about tiers in the supply chains. A supply chain typically consists of several tiers or levels that represent different stages or entities involved in the production, distribution, and delivery of goods or services.  The number of tiers in a supply chain can vary depending on the complexity and nature of the industry. Here are some common tiers that you often find in a typical supply chain:

Tier 1 Suppliers: Also known as primary suppliers, tier 1 suppliers are the companies that directly provide the raw materials, components, or products to the manufacturer. They have a direct contractual relationship with the manufacturer and play a crucial role in ensuring the supply of essential inputs.

Tier 2 Suppliers: These are the suppliers that provide goods or services to tier 1 suppliers. They are often involved in manufacturing processes, providing support, or contributing specialized parts or services to the primary suppliers.

Tier 3 Suppliers: Tier 3 suppliers provide inputs to tier 2 suppliers, meaning they are one level further back in the supply chain. These suppliers may provide specialized components, raw materials, or services that are further refined or integrated into products by tier 2 suppliers.

Manufacturers: Manufacturers are the entities that transform raw materials and components into finished goods. They often work closely with tier 1, 2, and 3 suppliers to ensure a steady supply of materials and components required for production.

 Distributors/Wholesalers: Distributors or wholesalers act as intermediaries between the manufacturer and retailers. They purchase goods in bulk from manufacturers and sell them to retailers or sometimes directly to the end consumers. 

Retailers: Retailers are businesses that sell products directly to customers. They can operate physical stores, online platforms, or a combination of both. Retailers play a vital role in making products available to consumers and often have established relationships with distributors or manufacturers.

Customers/End Consumers: This tier represents the final destination of the supply chain. Customers purchase and consume the end product, driving demand and creating the need for a well-functioning supply chain.

These tiers illustrate how different entities collaborate and interact to ensure the smooth flow of goods or services from their source to the end consumer. Effective coordination and communication among these tiers are crucial for an efficient and reliable supply chain.

Knowing who is doing what? In what country region or tier ss complex and able to hide modern slavery, yet it can occur in almost every tier.

What is needed is a changed mindset in some companies. Clothing company Katmandu, describes how it happened with them in their Modern Slavery Statement:

Our approach to Modern Slavery remains the same as it was in 2020. A new mindset is necessary as we seek to find solutions to challenges that our old mindset created.

Kathmandu is moving away from a model of social compliance based on Corporate Social Responsibility (CSR). CSR is an attempt by a private company or publicly listed corporation to take some responsibility for the wider social and environmental issues within which it does business. In Addressing Modern Slavery, authors Nolan and Boersma state that one of the limitations of both Modern Slavery disclosure laws and Corporate Social Responsibility (CSR) programs, is that although well meaning, “they are aimed at treating the symptoms of the problem rather than tackling the underlying causes: the very nature of the business model”.

Nolan and Boersma go on to explain that unless there is a significant change in the way we see the world (our mindset) and operate as corporate entities (our actions), none of the strategies submitted by Kathmandu (or for that matter any other entity as part of the Australian Modern Slavery Act reporting requirements) are going to work in any meaningful or sustainable way.

Nolan and Boersma write, “The dominant view of the primary purpose of companies is that they have a fiduciary obligation to make profits.[A Fiduciary is someone who manages money or property for someone else] In other words, it is their main duty to create as much value as possible for their shareholders. This fixation on shareholder value is mirrored in corporate decision-making processes. For example, the quest to maximise shareholder returns justifies driving down costs through outsourcing and legitimises cutthroat competition among suppliers. As we have seen, such scenarios create ideal conditions for modern slavery to thrive. 

Essentially what the authors are saying is that unless there is a fundamental change to the way in which we do business, traditional CSR will remain a completely ineffective, inauthentic and outdated paradigm. “Responsibility” is an externally imposed duty, burden or obligation that we are required to fulfil. As long as CSR is externally imposed, it will always be something we reluctantly feel obligated to comply with. It relies on extrinsic (external) motivation, the root of which is fear. Fear that if I don’t do this thing that I am responsible for, I will feel bad, I will look bad, I will be punished in some way - and in this context, it will damage my business and my brand.

 It is therefore unsurprising that CSR most commonly expresses itself in social compliance and auditing, a billion- dollar industry they say is plagued by deception and corruption. Such audits are typically not designed to assess or measure many of the social challenges that threaten the wellbeing of workers in vulnerable circumstances, such as bullying and abuse, sexual harassment, forced labour and other forms of Modern Slavery.

A new mindset and a new business model is necessary as we seek to find solutions to challenges that our old mindset created, which is why in 2019 Kathmandu became a Benefit-Corporation or a “B-Corp”. A B-Corp is a new way of seeing and doing business, one that balances purpose and profit. Through a business structure that considers all stakeholders, B Corps endeavour to make decisions that balance profit and purpose, to benefit more than just the bottom line.

B-Corps are now a rapidly growing community of leaders, and one approach that is driving a global movement of people using business as a force for good.

The very real threat of social and planetary collapse has convinced many that any sense of maintaining the “business as usual” model is delusional. The Covid-19 pandemic has only reinforced this fact. What this means in practice for Kathmandu is that as a B-Corp we are required to consistently consider the impact of our decisions on our customers, wider community, the environment and the workers in our global supply chain. Kathmandu say that they believe that the “Benefit Mindset” that lies at the heart of the B-Corp movement, is required to effectively respond to the social challenges of our time, including and especially, Modern Slavery.  

They say this “Benefit Mindset” provides a map and a compass for helping us all make subtle yet profound shifts in the way companies choose to do business.

It is one company and one way that businesses can become more effective in helping prevent modern slavery in their supply chains. And this is why I wear Kathmandu clothes and am investing in clothing companies like Outland Denim who are innovating new approaches to doing business.

So what can you do?

Support companies that are trying to make a difference and tell others about what you have found what they are doing and why you are buying from them!

Well this has been Fuzz Kitto from Be Slavery Free

And may you have a slavery free day!

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Prevention by Government

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Is prevention better than cure in modern slavery?