Effective ethical sourcing: part 1
- timnicolle7
- May 29
- 4 min read
In a recent post we explained:
how ineffective ethical sourcing policies could be increasing risks for business and not reducing them; and
that delivering a good ethical sourcing policy effectively could mitigate the risks and potential liabilities.
This first post on the dangers of a poor policy or one that is delivered ineffectively is here:
So what does "effective" mean?
There are three posts in this series, this is the first.
Why might your ethical sourcing policy increase your risk?
As a reminder, if you, as a business:
make public statements about the importance of ensuring your products and services are free from worker-rights-abuses, and
you don't back up those statements with effective policies
you are open to class actions from workers if things go wrong.
There are cases already going through the courts in the UK and in the US that highlight these risks and the potential liabilities that can follow.
The process that migitates the risks and liabilities is a considered ethical sourcing policy delivered effectively. This means both words and actions.
Important point: take care
What does effective mean? There is no single answer to this question - it is a judgement, and it is a specialist topic.
Any organisation wanting to review this area would be wise to look for specialist support - which is not expensive if you go to the right people.
Our global implementation partner at Ask the workers is Slave Free Alliance (click here). They have the expertise and depth of consulting bench that can provide the right level of support. There are also other organisations we work with too - contact us if you would like to know more or you would like an introduction to Slave Free Alliance.
An ethical sourcing policy has both internal and external components
There are five main elements:
Assessing and mapping risks (in the widest sense) and then designing and documenting policies that cover:
How your own organisation is expected to behave
Standards for how workers (in the widest sense) should be treated
The practical actions and steps to deliver the policy
Responsible Purchasing Practices and internal training - for example,
training for your own procurement teams to ensure that buyer-leverage with suppliers is not used inappropriately; and
training your employees on how to spot and respond appropriately to signs that workers are not being treated appropriately
External communication to suppliers and labour-providers based on perceived risk-levels
Appropriate due diligence and follow up based on salient risk-levels
Escalation processes designed to identify root-cause and deliver remedy
Most organisations are able to deliver appropriate internal training and deliver the internal components of an ethical sourcing policy effectively. These are very important processes, but fully under the control of the organisation, and so not the focus of this article.
This article focusses on the more difficult area, which is understanding how suppliers treat workers and extending the impact of an ethical sourcing policy into the supply chain.
What does "effective" mean for ethical sourcing policies with suppliers?
Let's assume the ethical sourcing policies have been published, suppliers have been properly informed of them, and suppliers have signed up.
How workers are treated in your supply chains and locations is now publicly important to you.
Practioners will advise you, amonsgt other things, that assessing what needs to be done by you to migitate risks and liabilities is a balancing act amongst four factors:
Factor 1: the risks that workers might experience harms
Factor 2: what is "reasonable" for you to monitor those risks
Factor 3: what you do about harms that are detected
Factor 4: how you talk about what you are doing
It is the coordination of these four factors which is important and the linkage between the words and the actions:
Make sure your statements reflect what you actually do
In this part 1 of our 3 part series, we pick up Factor 1, the risks to workers.
Factors 2, 3 and 4 are covered in part 2 and part 3 of this article.
Factor 1: the risks to workers
There is an often-quoted statement in the UK government guidance on transparency in supply chains:
Modern slavery is so prevalent that if businesses are not identifying risks and cases, they are probably not looking hard enough.
What are the potential harms to workers?
While modern slavery describes one of the most acute forms of exploitation, all worker rights should be covered in an ethical sourcing statement.
Employment is freely chosen
Freedom of association
Working conditions are safe and hygienic
Child labour shall not be used
Living wages are paid
Working hours are not excessive
No discrimination is practiced
Regular employment is provided
No harsh or inhumane treatment is allowed
The risk of harms is ever-present, even in well-established businesses that operate with perceived "safer" standards.
Do the risks to workers vary? Can we grade suppliers?
Risks will vary based on context. It makes sense to grade suppliers and locations to distinguish between:
Lower risk environments
Higher risk environments
There are many factors. Some of the main risk factors, in no particular order, are:
type of work being done (lower-skilled workers are typically more at risk than higher-skilled)
source of labour (migrant workers can be more vulnerable to abuses than permanently-employed workers from local sources)
workforce demographics (mixed nationalities, religions, genders in workforces can lead to cohorts of workers being treated unfairly)
country (countries where the rule of law is not well-enforeced can be more open to worker exploitation)
transparency (countries without a free press or where reliable information is hard to come by can be higher risk)
Once suppliers have been graded and the risks to workers assessed, it is then possible to think about what is reasonable to do about monitoring their compliance.
There are two more posts in this series.
In the next post, we dive into the second factor:
In the final post, we look at the final two factors and put all of this into context.
These are really interesting topics - and we are keen to talk to human rights specialists, ethical sourcing teams, worker organisations, social auditors and consultancies.
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