The Transparency in UK Company Supply Chains Bill: three lessons

Our guest post for this week has been written by Nicola Phillips; Professor of Political Economy at the University of Sheffield, UK. Professor Phillips currently holds a Major Research Fellowship from The Leverhulme Trust, which was awarded in 2010 for three years, for work on forced labour and human trafficking in the global and UK economies. She writes and speaks extensively on these issues, and is working on a book on the global political economy of forced labour and human trafficking which (she hopes!) will be completed by the end of this year.  

The issues of human trafficking and slavery in global supply chains have been somewhat in vogue of late, particularly in the United States. The state of California brought into force its innovative Transparency in Supply Chains (TISC) Act in 2012, obliging large firms doing business in or with California to report on the steps that they are taking to address trafficking in their supply chains. The focus on supply chains was central to US President Barack Obama’s major statement on trafficking in September 2012, and labour rights made a strong showing in the United Nations’ Guiding Principles on Business and Human Rights, endorsed in 2011.

Interest in these issues travelled across the Atlantic to the UK. In October 2011, Prime Minister David Cameron stated in Parliament his ambition for the UK to ‘lead the world in eradicating modern-day slavery’. A Transparency in UK Company Supply Chains (Eradication of Slavery) bill – to all intents and purposes a replica of the California TISC legislation – was brought before Parliament in 2012 as a Private Members’ Bill, first by Fiona McTaggart MP and then by Michael Connarty MP. It began to attract attention and support from various quarters. Yet, predictably perhaps, the debate was deferred and failed to be heard before the end of the session of Parliament in mid-2013, and consequently the bill was not passed. It was less voted down than kicked quietly into the long grass while the parliamentary window expired.

I myself have been critical of the TISC model and sceptical about its likely impact, as have other contributors to this blog. That is not because it is undesirable in its own terms, but because there is clearly a dissonance between the narrowness of its provisions and the expanse of its aspirations. It applies only to the largest firms; it requires from them nothing more than a process of reporting on what they are doing to address the issue, within companies’ own standards for ensuring adequate supply chain conditions; it imposes no direct penalty for non-compliance. One could go on. The point is that it stands little chance of generating tangible outcomes, if those outcomes are intended to be the ‘eradication’ of trafficking and slavery or an appreciable reduction in their incidence. It can only be seen at best as a first (and very timid) step, although not an unworthy one.

But that is in a sense a different question from the one I want to focus on here: what does the experience of the UK TISC legislation tells us about the problems of trafficking and slavery in the global economy and where we are in developing approaches for dealing with it? Let me suggest three points.

The first lesson is that the primacy of private, voluntary governance in the global economy has a very firm political grip. This orthodoxy has been continually on show in debates about slavery and trafficking in supply chains. Parliamentary consideration of the proposed UK TISC legislation, for instance, was an exercise in hand-wringing about the need to avoid any interference with the principles of corporate self-regulation. The authors of a report issued by the Centre for Social Justice, a centre-right think tank, were almost apologetic in their support for TISC legislation, signalling that they ‘understood’ the government’s aversion to ‘over-regulating’, reassuring it that the legislation leaves undisturbed the principle of self-regulation by business, and suggesting that the TISC bill could be offset by a parallel package of deregulatory reforms to make it more ‘politically agreeable’.

The irony is that the TISC model does nothing to disturb the primacy of private governance. It is fully consistent with the ideas of corporate self-regulation, relying on the idea that the legislation requires firms to report not to governments, but to their consumers, that incentives for compliance will come from the fear of consumers’ displeasure, and that any sanctions for non-compliance will likewise be imposed through consumer markets. There is scarcely any role for governments in this model. That even this legislation should have been opposed in the UK, on the grounds that it supposedly departs from the principles of voluntary self-regulation, is surely an interesting insight into the ideological stranglehold that private, market-led governance has come to exert.

The second lesson is that trafficking, slavery and labour exploitation are still seen as lying outside the mechanics of ‘normal business’ in supply chains. They are aberrations, the domain of ‘rogue suppliers’ and the result of ‘illicit subcontracting’, which large corporations struggle to control. That is the account we are offered in many of the statements that have been issued to comply with the reporting requirement of the California TISC Act, and it is of course the claim routinely made by firms when problems are exposed in their supply chains. It is indicative of a wider view, which Jill Esbenshade has written interestingly about: one which sees social compliance in supply chains as the norm, so the task becomes one of rooting out delinquent firms and instances of non-compliance. Yet we know that, after decades of company codes of conduct and the growth of a massive ‘compliance industry’, non-compliance remains the norm rather than the exception, and tangible change in relation to labour standards has been unremarkable. The point is that the business model for very many firms in global supply chains is built on subcontracting, illicit or otherwise, and that is precisely the reason why global supply chains were constructed in the first place as the primary means of organising production and trade.

To be sure, some large firms have energetically bought into the TISC agenda in California, and supported the bill in the UK. The advantages for large brand firms are clear in relation to securing their ‘social licence to operate’, as it is termed in the jargon. Yet the point is that this legislation is not all that hard to buy into for such firms – it demands little, costs little, can be a useful PR exercise, and fits well with the stated ethical values of some high-profile firms. That is not to say that it is always and necessarily just window-dressing. But the key is that buying in involves no substantial change to prevailing business models – and certainly no requirement for change – not least because trafficking and slavery can be framed as ‘aberrations’ to be rooted out through better auditing and monitoring. They are not, in other words, the result in some contexts of the ‘business as usual’ of relationships between firms and their suppliers, where labour exploitation on this scale is driven to an important degree by the commercial and social dynamics of global supply chains.

The third point follows from this. The experience – and ultimate demise – of the UK TISC bill points clearly to a reluctance among political elites and firms themselves to tackle slavery and trafficking through economic channels. In fact the reluctance runs deeper: there is an aversion, still, to understanding the economic roots of the forms of slavery and trafficking that occur in global supply chains and mainstream economic activity. It is only recently that trafficking for labour exploitation has come to receive attention comparable to trafficking for sexual exploitation, but fortunately it is now firmly on the agenda. The problem is that public and policy debate has still not been broadened to encompass the necessary questions about how the economy works and where and how the possibilities arise for people to profit – massively – from grossly exploiting workers. Instead, the focus remains for the most part on criminality or non-compliance as the problems, and law enforcement or better monitoring as the solutions – again, picking up the ‘bad guys’ or the ‘rogue firms’, rather than seeing the problem as structural or systemic.

An arresting further indication of what I’m talking about here is provided by the early decision to shift responsibility for handling the UK TISC bill – a bill aimed at UK companies and their production operations at home and overseas – away from the Department of Business, Innovation and Skills to the immigration authorities in the Home Office. The message could not be more direct, nor more wrong-headed: slavery, trafficking and labour exploitation in global supply chains – whether they occur in the UK or any other part of the world – are not economic issues, nor labour standards issues, but issues relating to the movement of people over national UK borders. The logic is bizarre, and it is plain to see how it disrupted the serious debate that we needed to have about the TISC bill, and still need to have about the problems of slavery and trafficking in supply chains.