Labor Lessons: Supply Chain Standards for Sustainable 21st Century Businesses

P-Cubed: Elevating the Power of Partnerships

by Hanne Dalmut and Cory Adwar

More needs to be done to encourage and support companies seeking to clear their industry of labor trafficking, according to a roundtable discussion co-hosted by Concordia and the Nomi Network that took place at the IESE Business School in New York on July 14th. A cross-sector approach that includes clear legislation and a nuanced public discussion on the capacity of the private sector is necessary. Labor trafficking and modern day slavery will continue without strengthened collaboration across industries and sectors.

The 2-hour discussion focused on lessons transferrable across industries and drew on expertise from representatives of the private and public sector, as well as nonprofit human rights and academic institutions. The curated, invite-only participation under Chatham House Rules encouraged experiential sharing and frank comments on what worked, and what didn’t.

The conversation identified several concrete steps or actions, which will be further developed by Concordia and the Nomi Network into a white paper for presentation to the Luxury Council at a closed-door session in the fall. Key findings will also be shared at the 2016 Concordia Summit’s Strategic Dialogue to Address Labor Trafficking.

There is a need to develop and agree upon a set of human rights metrics that are informed by both the local population and the international community. These metrics should also be tied to meaningful social impact. 

Sixty-three percent of investors use environmental, social, and governance (ESG) styles of investing to help manage their investment risks, showing the importance of social impact from an ethical and profitability standpoint. The conversation of ESG should be more clearly extended to include supply chain security and slave labor. Participants discussed several human rights metrics in need of further development, such as integrating purchasing decisions with companies’ CSR departments, giving workers leverage and a voice to defend their rights, improving the capability of a state’s justice system to address labor trafficking, ending recruitment fees, and allowing for independent audits. At the same time, metrics could adopt a population-centric methodology for each point in the supply chain, to include a more profit-oriented framing as appropriate. Ultimately, the metrics must be tied back to actual social impact so that everyone — governments, industries, human rights organizations, and consumers — can clearly identify their role in the solution.

Public discourse needs to celebrate successes and encourage progress while advocating for continued abolition efforts. 

To encourage companies to continuously improve their supply chains small achievements need to be celebrated with “five seconds of praise,” rather than focusing only on their failures. Examining and identifying the bright spots hidden within otherwise disconcerting data can help to recognize success. This reemphasizes the need for more meaningful, impact-oriented metrics. Others agreed that shaming companies will only make them reluctant to participate in industry-wide dialogues about supply chain issues, even if they want to address those issues. At the same time, it’s important to not swing the conversation too far in the other direction; public and legal pressure for good industry governance needs to remain constant.

It’s not enough to just say “fix it”. Companies would benefit from a “here’s how” conversation.

There was consensus that coordination between companies, suppliers, consumers, and workers across industries could provide a set of valuable resources to help companies adopt best practices. Positive examples of companies making progress should be highlighted for emulation by others and integrated into a media partnership that resonates with consumers. Where appropriate, specific steps taken should be shared to advance the industry as a whole. Peer-to-peer sharing of best practices is, of course, difficult to implement or enforce. It can take a company years to develop relationships with suppliers and fill governance gaps. For a company to hand this information to a competitor, absent a major carrot, would be highly unlikely.

Finally, more can be done on the consumer side to encourage industry changes.

Consumers don’t want to pay a higher price for a sustainably-sourced product unless they receive instant gratification through an obvious, tangible impact. Toms Shoes and Warby Parker eyewear were identified as companies who successfully understood this customer psyche. More media coverage could increase public awareness of how products are sourced to help consumers outgrow their need for instant gratification. Additionally, the millennial generation — a powerful consumer base — has the potential to leverage vast sources of digital information to exercise greater consumer demand for change. But it’s more than just buying power; the group could see young millennials increasingly choosing to work only for responsibly sourced companies, which could become an even faster driver of change than consumer demand.

The roundtable uncovered many opportunities for increased cross-sector collaboration in the anti-trafficking space. Concordia’s Campaign Against Labor Trafficking will continue to amplify the subject matter while working through partnerships to meaningfully move the needle on an issue of true global importance.

For more information on the roundtable session, or the Campaign, please contact Concordia’s Director of Social Impact Hanne Dalmut at hdalmut@concordia.net.