Despite the existence of the Modern Slavery Act 2015, businesses do not have to do much to demonstrate compliance with these standards when they bid for public contracts

While sustainability and human rights legislation in the UK has increased, companies face little real pressure to address these issues in their supply chains. Our research finds that the state could be asking far more of its suppliers in the way of ethical procurement.

The power of the public sector to negotiate prices and standards

The UK’s public sector routinely uses its collective strength to negotiate competitive prices and standards for the diverse goods and services it buys from suppliers. Spending over £250bn a year, these range from IT equipment to the provision of cleaning staff. Yet this formidable buying power is not among the tools that the state uses to ensure that companies are meeting light touch ethical and sustainability standards set out in law.

How effective is the Modern Slavery Act 2015 in practice, and how can we monitor complex issues in supply chains?

Despite the existence of the Modern Slavery Act 2015, businesses do not have to do much to demonstrate compliance or even show any future intention to comply with these standards when they bid for public contracts. Companies with poor records of managing the risk and real instances of modern slavery continue to be able to supply their goods and services to public organisations.

Sustainability issues across the world are becoming more acute. The climate crisis is intensifying, and our understanding is growing of the complexities involved in identifying and remedying cases of modern slavery. There is also increasing recognition of the links between such issues. Climate change is making parts of the world more difficult to sustain human life, creating migrations which make those leaving their traditional regions vulnerable to exploitation. From measuring carbon emissions to identifying areas of modern slavery risk, understanding the origins of goods is key to monitoring these issues in a product’s supply chain. There is therefore a growing imperative to address these issues in procurement, and the public sector could be playing a leading role.

What our research tells us

Our research found a general lack of recognition of the links between these sustainability issues among public sector buyers and suppliers. Funded by the Modern Slavery and Human Rights Policy and Evidence Centre (PEC), our research team at the Business School, the universities of Bath and the West of England, the London Universities Purchasing Consortium, and modern slavery charity Unseen UK, conducted interviews and focus groups with public buyers, suppliers, and consultants with experience of modern slavery. We found that with neither legal mandate, nor resources to manage ethical and sustainability risks among suppliers, many public buyers are reliant on third party expertise in the private sector. Public sector organisations are then having to pay for self-reported supplier sustainability data. Of those companies known to have poor environmental and modern slavery records, only the rare few to have been prosecuted can be blocked from bidding for public contracts.

Ensuring companies comply with legislation using the strength of public sector purchasing

Sector-wide purchasing consortia already deliver the public sector excellent value for money in procurement. Developing their supply chain sustainability risk management expertise could deliver further savings to the taxpayer. As well as being less reliant on costly self-reported supplier sustainability data, greater confidence in better value consortia could in turn drive their uptake by public buyers. Along with a legal mandate to disqualify badly performing companies from public bids, the collective strength of purchasing consortia could be used to drive up supplier responsibility.

In practice, forcing suppliers of cleaning services, for example, to carry out proper, ongoing checks, developing expertise in identifying and dealing with cases as they arise, and creating relationships with the police and other relevant organisations would raise the bar for other firms in that industry. It would also differentiate responsible firms from those which failed to take such issues seriously. In driving up sustainability and human rights standards in supply chains, public buying power will be key to realising the “race to the top” envisioned by the Modern Slavery Act.

Further information: https://modernslaverypec.org/resources/climate-change-modern-slavery-public-procurement