HR can play a vital role in tackling the problem, say Quintin Lake and Cindy Berman

Addressing modern slavery is becoming a business-critical issue for companies – both in terms of meeting their legal obligations and in establishing credibility with customers, investors, NGOs and the public.

This is no easy task – the problem is widespread. According to new research by Hult International Business School and the Ethical Trading Initiative, 77 per cent of companies think there is a likelihood of modern slavery occurring in their supply chains. Reputational risk, resulting from public exposure to worker abuse found in the supply chain or company operations, came out as the biggest driver for action, cited by 97 per cent of businesses surveyed.

Some progress has been made. The research analysed what 71 companies – which are leading the field in this area – are doing and learning, with a view to sharing the lessons with organisations that are just starting to look at the issue. It found that the UK Modern Slavery Act has been a ‘game changer’; it is galvanising leadership engagement, with twice as many CEOs and senior leaders actively engaged with addressing modern slavery since the Act was passed.

Most new work in this area has focused on factors the Act suggests should be included in an annual slavery statement such as communicating modern slavery expectations with suppliers (58 per cent); training and awareness-raising for board members and senior executives (67 per cent); carrying out risk assessments (45 per cent); and implementing policies and systems to manage their approach (39 per cent).

The steps leading businesses are taking are encouraging, but most companies are finding it challenging to understand what they need to do to address such a complex issue. Many recognise their role as just one of many actors on modern slavery, and feel they cannot deal with its risks alone. They are collaborating, and want to partner more, with other companies, suppliers, governments, trade unions and NGOs to develop effective solutions to address modern slavery.

HR also has a key role to play in helping to address this issue, by showing vision and leading the way in the creation of workplaces that are safer and happier for all staff and workers.

Among this group of companies with more experience in tackling labour exploitation, a high degree of consensus emerged about what good practice looks like, and they highlighted several examples, including:

Senior leadership engagement

The engagement of senior leaders was seen by all companies as crucial in driving effective responses and overcoming critical challenges, and most organisations have made training and awareness-raising for senior leaders a priority. Culture change was also highlighted as being extremely important; communicating and clarifying the values, attitudes and understanding of modern slavery helps to embed policies and make them effective.

Addressing fundamental business models and sector-specific challenges

More than four-fifths (82 per cent) of companies said addressing human rights within their core business model was key to success. Issues being examined included sourcing decisions, pricing, last-minute changes to orders, short lead times and sector-specific challenges such as seasonal labour recruitment practices.

Due diligence

The vast majority (90 per cent) of respondents saw due diligence on core labour standards as crucial. Leading companies are increasingly conducting human rights risk analyses by country, sector or type of labour, and prioritising their salient risks accordingly. Nearly three-quarters (71 per cent) had formalised and embedded these processes within their operations.

Ultimately, minimising the risk of modern slavery in your business is about addressing the human rights risks to people – whether they are directly employed, agency workers or working in the supply chain.

HR policies and practices are more important today than ever before. Companies with good HR systems and skills in place have efficient, productive and engaged employees that feel protected, valued and treated with dignity and respect. But organisations also have a responsibility to protect employees from abusive and exploitative modern slavery practices, or they could be liable for criminal prosecution – not only in relation to their own employees, but throughout their supply chains.

Quintin Lake is a research fellow at Hult International Business School, and Cindy Berman is head of knowledge and learning at the Ethical Trading Initiative