1200 word report

Coursework report: Company Reporting and Modern Slavery

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Coursework report: Company Reporting and Modern Slavery

Executive Summary

This report evaluates the Modern Slavery Statements of ten companies operating within the Automotive, Machinery, and Heavy Electrical Equipment sector, as they comply with the UK Modern Slavery Act, and asseses the effectiveness of their actions against modern slavery present in their supply chains. The companies analyzed include Xerox (UK) Limited, Jardine Motors Group UK Limited, BMW (UK) Ltd, Volvo Car UK, Motus Holdings (UK) Ltd, Senior plc, Vertu Motors plc, John Deere, Stellantis (Vauxhall Motors)& IBC Vehicles Limited and Mitsubishi Corporation International (Europe) Plc (MCIE).

The results show that most companies have very high executive commitment to tackling modern slavery, with some, such as Xerox (UK) and BMW (UK), completing risk assessments and audits to address it. These companies have built strong processes for evaluating their suppliers, particularly those deemed risky. Nevertheless, there is substantial potential for improvement, particularly in the risk assessment of second and third tier suppliers. The level of transparency also differs, as Volvo Car UK and Xerox (UK) are quite transparent about their supply chains while both Jardine Motors and Motus Holdings fall short on providing requisite details about their supply chain structure. Moreover, although some companies detail remediation measures for dealing with noncompliant suppliers, there are some instances where the effectivness and implementation to these insistance measures remain unclear.

The report suggests some ways by which the supply chain transparency, risk assessment, remediation practices, training programs can be improved. These are important steps to bring closer alignment with the UK Modern Slavery Act, as well as to improve the overall level of social sustainability in the sector.

Introduction

Modern slavery still remains a major challenge in today’s global economy, particularly in industries with highly complex and spanning supply chains such as Automotive, Machinery and Heavy Electrical Equipment sector. In recent times, with the increase in corporate responsibility and ethical sourcing, firms in this sector need to be more transparent and take the right initiatives to ensure that there are no risks of modern slavery.

The report specifically explores the Automotive, Machinery and Heavy Electrical Equipment sectors, which play an important role in the modern infrastructure and technology. These sectors maintain global supply networks between different areas and face high risks of exploiting people through slavery.The methodology used in this report involved reviewing the Modern Slavery Statements of ten large organizations belonging to these sectors. These companies have been selected based on their size, their global spreads, and legal compliance on their modern slavery policies under the United Kingdom Modern Slavery Act. The analysis looked at how compliant the companies were with the Act, whether they had transparent supply chain, and the quality of their risk management and remediation processes. This approach gives an insight into their strengths and weaknesses in addressing modern slavery and possible improvements that could be made to enhance their effectiveness.

Analysis of Modern Slavery Reports

The ten companies chosen for this report have created numerous Modern Slavery statements explaining how they address the issue of Modern Slavery in their operations and supply chains. These companies operate as key players in the Automotive, Machinery and Heavy Electrical Equipment industry. Some of the several parameters that were used to evaluate these organizations are; reporting requirements compliance, supply chain management disclosure, risk evaluation, audit procedures, due diligence practice, training and awareness initiatives, and remedial measures.

1. Compliance with Reporting Requirements

All the ten companies were compliant with the UK Modern Slavery Act and published statements which included how they had identified and prevented modern slavery risks in their supply chains. Often, these statements were signed by the top executives of the company, indicating that modern slavery was a high level issue within corporate governance. For example, Xerox Corporation (UK) and Volvo car UK gave detailed description of the actions and policies it had adopted to comply with the reporting requirements. This is evidence of the commitment toward the legal and ethical responsibility.

2. Transparency of Supply Chains

One of the most pressing problems in exposing modern slavery is the level of transparency companies have in their supply chains. For instance, Volvo Car UK cited the global nature of its supply chain and employed a wide ranging approach to supplier engagement on its Code for Business Partners. By focusing on assuring that their suppliers respect ethical labor practices, Volvo is making a big step in the direction of transparency. However, companies like Motus Holdings (UK) and Vertu Motors could increase transparency by giving more information about the geographical locations of their suppliers, in particular with second- and third-tier suppliers. Although these companies suggest engaging with suppliers at-risk sectors, they don’t provide sufficient detail in their supply chain beyond first tier suppliers.

3. Risk Assessments

Many companies had done risk assessments in order to identify possible modern slavery issues within their supply chains. Xerox (UK) and BMW (UK) had strong risk assessment procedures using third party audits and Self Assessment Questionnaires (SAQs) to assess suppliers. For example, Xerox conducted risk assessments based on location and other risk-based criteria, then required high risk suppliers to undergo an annual review. Vauxhall Motors (Stellantis) also used risk assessments, though their focus seemed to be restricted to large suppliers rather than less obvious areas of risk. In FY2021, MCIE also performed a maturity assessment of its human rights and modern slavery efforts, which will be used as a starting point to improve future practices.

4. Audit Processes

One important means of ensuring that companies stay onside with their anti-slavery policies is through auditing. Xerox (UK), Volvo Car UK and John Deere, for example, had regular supplier audits to look for any signs of modern slavery. Xerox and BMW (UK) used both internal and third party auditors, whereby Xerox audited over 100 suppliers and issued corrective action for any violation. These audits are very important to validate compliance and correct issues whenever they occur. In contrast, companies such as Jardine Motors Group UK and Motus appear to have less comprehensive auditing and some suppliers are only audited periodically.

5. Due Diligence Practices

In the case of modern slavery risk, due diligence is important to identify and mitigate risks. Both Volvo Car UK and Senior plc implemented detailed due diligence processes which included extensive supplier onboarding procedures and individual supplier compliance checks. Volvo Car UK relied on the Responsible Business Alliance (RBA) risk assessment platform to vet its suppliers for human rights compliance. MCIE conducted a maturity assessment and acknowledged that their efforts of due diligence needed to be more formalized, particularly with regards to assessing high risk suppliers and taking appropriate appropriate corrective measures when required. Other companies including Jardine Motors and Vertu Motors also did due diligence but did not name particular tools or platforms for assessing the supplier’s sustainability or compliance beyond basic risk reviews.

6. Training and Awareness

Training employees and suppliers in regard to modern slavery issues is essential in raising awareness and preventing violations. For example, Xerox (UK), and John Deere, both imposed mandatory training for employees—especially those in procurement and supply chain roles. John Deere’s Supplier Code of Conduct training and a modern slavery courses to its employees were successful in educating staff about the risks and signs of modern slavery. Similarly, Motus Holdings included training into employee induction to help staff understand the company’s zero tolerance policy. But some companies, like Vertu Motors, could widen their training by deepening programs for the whole of their workforce and all of their suppliers.

7. Remediation Measures

Xerox (UK) and Volvo Car UK were among most companies that outlined the remediation steps in case modern slavery was found. Such steps include working with the suppliers to correct the violations or terminating relationships with noncompliant suppliers. Xerox specifically detailed corrective actions taken with suppliers who were not meeting its standards, and Volvo Car UK highlighted the significance of remediation by engaging with suppliers in order to improve its labor practices. Motus also announced a zero tolerance policy, adding that any breach of their policies would lead to the termination of their contracts. In addition, MCIE has committed to supporting suppliers in improving their practice, however, more formalized remediation processes need to be established. In some companies, however, further elaborate remediation plans could be introduced, especially those companies with less efficient compliance monitoring.

Reflection on Findings

Having analysed the ten selected companies’ Modern Slavery Statements, it is apparent that some strengths and some weaknesses exist in the way the companies comply with the UK Modern Slavery Act and are addressing modern slavery in their operations and supply chains.

Strengths

One of the major strengths identified in the reports was a strong commitment from the top management. For example, companies such as Xerox (UK), BMW (U.K.) and Volvo Car UK demonstrate robust executive support for their anti modern slavery policy, and this is important to ensure that compliance is taken seriously throughout the organisation. The reports also describe meticulous due diligence procedures such as SAQs and third party audits. These tools, used by Xerox (UK) and BMW (UK) help determine high risk suppliers and assure that modern slavery issues are being continually monitored and dealt with. According to Voss et al (2019), compliance with the modern slavery Act reporting requirements is a key first step in bringing business activities onto a transparent and accountable path.

Another strength is in integrating modern slavery principles across a company’s broader operations. For example, Volvo Car UK’s inclusion of human rights in its corporate culture via its Code of Conduct and People Policy Assessment shows a strong current commitment to social sustainability. By aligning with broader frameworks of human rights such as the United Nations Global Compact, companies can be assured that the fight against modern slavery is being approached in an added capacity within a broader sustainability program. Companies like John Deere and Motus Holdings have also strengthened their internal accountability through whistleblowing systems and training programs and ensured that employees and suppliers are aware of the fact that they are responsible to prevent modern slavery.

Weaknesses

However, the analysis also revealed several weaknesses. One of the biggest Challenge to most companies is transparency in supply chains. However, some, such as Xerox (UK) and Volvo Car UK, make available (in detail) the list of suppliers and supply chain practices; whereas, others, like Jardine Motors and Motus Holdings, are not transparent with the gamut of their supply chain operations. This limited visibility impedes the identification and solution of modern slavery risks, in particular, outside first tier suppliers​. Bloomfield and LeBaron (2018) note that even transparency legislation like the UK Modern Slavery Act, while a useful accountability measure, does not always include enough enforcement mechanisms to encourage widespread compliance and efficacy.

Another significant weakness is the scope of risk assessments. While many companies conduct initial risk assessments, the depth and frequency of these assessments vary. Companies like BMW (UK) and Xerox (UK) conduct regular audits and updates, ensuring ongoing monitoring. However, companies like Motus Holdings and Vertu Motors could benefit from extending these risk assessments to include second-tier and third-tier suppliers, where the risks of modern slavery may be more prevalent but harder to identify​. According to LeBaron (2019), most corporate efforts to combat modern slavery tend to focus on first-tier suppliers while neglecting the more opaque and vulnerable lower tiers of the supply chain, where exploitation is often more prevalent

Additionally, the effectiveness of remediation plans is often unclear. While companies like Xerox (UK) and Volvo Car UK outline specific steps for addressing non-compliant suppliers, the overall implementation of corrective actions and remediation processes remains vague in some statements, particularly for those suppliers who fail to comply with modern slavery policies​. Voss et al. (2019) argue that companies should move beyond high-level commitments and ensure that their remediation actions are substantial and sustainable

Recommendations

To improve Modern Slavery reporting and enhance business social sustainability, I propose the following recommendations:

1. Enhance Supply Chain Transparency: Companies should expand their disclosures to provide greater visibility into their entire supply chains, including second- and third-tier suppliers. This would help them to better identify and deal with the problem of modern slavery. Also, the use of blockchain technology for traceability and third party verification might help to increase transparency and liability more.

2. Strengthen Risk Assessments: Regularly, the risk assessments must be updated and all tiers of the supply chain must be considered. In order to consistently assess potential risks to modern slavery, the companies should use standardized industry tools, such as RBA (Responsible Business Alliance) Risk Assessment Platform across all suppliers.

3. Implement More Robust Remediation Plans: Companies need to have more compelling and actionable remediation plans in place for those suppliers who do not embrace modern slavery standards. It should involve supporting suppliers to improve their practices, instead of instant termination of working relationship with the suppliers, which may place the workers at stake.

4. Expand Training Programs: In order to achieve higher performance, companies need to augment training programs covering all employees and suppliers, especially in high risk areas. These training programs should focus on modern slavery risk identification and reduction and instilling the right ethical responsibility.

5. Regular Audits and Third-Party Engagement: Audits should be carried out more often, targeting high risk suppliers and regions. In addition, companies should seek out the objectivity of third party auditor’s assessment in an attempt to further bolster the credibility of their findings.

References

Bloomfield, M. and LeBaron, G. 2018. “The UK Modern Slavery Act: transparency through disclosure”. E-International Relations. Available at: https://www.e-ir.info/2018/09/21/theuk-modern-slavery-act-transparency-through-disclosure-in-global-governance/ Hsin, L. 2019. “Five ways to work out if a company is serious about tackling modern slavery”. The Conversation, 23rd October. LeBaron, G. 2020. Combatting Modern Slavery: Why Labour Governance is Failing and What We Can Do About It. Cambridge: Polity Press, pages 82-87 and 166-171 Voss, H. et al. 2019. “International supply chains: compliance and engagement with the Modern Slavery Act”. Journal of the British Academy 7(s1): 61-76.

Appendix: List of Companies and Rationale for Selection

The companies selected for this report include:

1. Xerox (UK) Limited

2. Jardine Motors Group UK Limited

3. BMW (UK) Ltd

4. Volvo Car UK

5. Motus Holdings (UK) Ltd

6. Senior plc

7. Vertu Motors plc

8. John Deere

9. Stellantis (Vauxhall Motors)

10. Mitsubishi Corporation International (Europe)

The choice of these companies is based on the fact that they are dominant players in the Automotive, Machinery and Heavy Electrical Equipment sectors, which are known to have complex and global supply chains. Given the size and international nature of their operations, these companies are especially relevant to modern slavery risk assessment, as they are obliged to comply with the UK Modern Slavery Act due to their turnover exceeding £500m. Furthermore, these companies are leaders in their respective fields and have done a lot to publish their practices of modern slavery. Their Modern Slavery Statements for the year 2021 are publicly available and can be used to evaluate their methods of eliminating modern slavery.