How Britain’s retailers can solve the Syrian refugee supply chain quandary

That is the overarching view of various ethical supply chain and environmental law experts, who have given edie their views on the BBC’s investigation into child labour concerns which will be aired during the Panorama TV show on BBC One tonight (24 October).

The BBC investigation revealed that third-party suppliers in Turkey, contracted to the likes of Marks & Spencer (M&S), Next and ASOS, have been using children and Syrian refugees as cheap labour alternatives to make clothes that are sold on the British high street.

The Undercover: The Refugees Who Make Our Clothes programme will claim that seven Syrian workers have been found working in a Turkish factory that supplies directly to M&S. The refugees – the youngest of which is a 15-year-old boy – earn around £1 per hour.

Online retailer ASOS, meanwhile, told Panorama that the workshops in question weren’t facilities that it had officially approved, but that they were still producing clothes for them nonetheless. ASOS has reportedly subsequently inspected the relevant workshops, with the BBC claiming that 11 Syrian adults and three Syrian children were working there.

M&S has itself been quick to respond to the surprise revelations. A spokesperson told edie that the company was “acutely aware of the complexity surrounding Syrian refugees in Turkey”, but that it had previously found “no evidence” of Syrian workers employed in its supply factories.

“We have a local team on the ground in Turkey who have visited all of our suppliers there,” the spokesperson said. “They have also run supplier workshops on the Syrian refugee crisis highlighting the change in labour law and how to legally employ Syrian workers.

“We were very disappointed by these findings, which are extremely serious and are unacceptable to M&S. We are working closely with this supplier to take remedial action, including offering permanent legal employment, in support of any Syrian daily worker who has been employed in this factory.”

Statements of intent

M&S claims that ethical trading is “fundamental” to the company, and before this investigation came to light it would certainly appear that way: all of the company’s suppliers are contractually obligated to comply with the retailer’s ‘Global Sourcing Principles’, which cater to the International Labour Office’s (ILO) core labour standards.

As recently as last week, the company was recognised and praised for its human rights work, taking the top spot in a ranking of all of the FTSE 100 firms by Business and Human Rights Resource Centre for the proactive monitoring of and reporting on modern slavery in supply chains.

M&S does also boast a strong track-record of extensive supplier auditing processes. A company report released in June showed that it had conducted 1246 audits last year, raising 7,256 non-compliance concerns directly with the suppliers.

However, as a global company with more than 82,000 employees across 59 territories, it appears that the ethical standards of the Turkey facilities discovered by the BBC have slipped through the cracks in M&S’s supply chain auditing processes.

For the director of environmental law firm CLT Envirolaw and regular edie blogger Colleen Theron, carrying out audits and releasing statements is all good and well, but all companies need to be able to back this initiative up with “robust procedures”.

“I think it’s easy to point fingers,” Theron told edie earlier today. “But what the Panorama investigation has done is highlight the real difficulties that businesses face around these issues. The questions that need answering are ‘what kinds of remediation is in place?’ and ‘how quickly can this be dealt with and at what level?’.

“I know we hear the term ‘challenging’ all the time, but actually, this investigation just highlights the difficulties in how [retailers] are dealing with this internally. We’ve got statements coming out, but what needs to be underpinning these statements are robust procedures – what we see are these procedures being talked about, but failing. I think it’s quite depressing.”

Theron suggested that, while it would be tempting to say that the issue is “unconquerable”, many companies are already getting to the crux of supply chain management by investing in training and going to extra lengths to communicate with all suppliers.

Next is another retailer embroiled in the Panorama investigation, with tonight’s show set to reveal that one factory actually boasted of employing Syrian refugees and Turkish children while making clothes for the retailer.

But for Theron, Next has actually been one of the companies that have led the way on supply chain management. Since 2012, the number of factories supplying the company has fallen by 7%, while the number of audits it has carried out has increased by 26%. In total, 92% of Next’s products are now created in factories with an ‘acceptable’ audit rating of between one and three.

So, if these high-profile companies that have a track record of making positive progress in this area are being caught out, then what are the causes? And, perhaps more importantly, what remediation processes can solve these issues?

Not just a business issue

According to Theron, the humanitarian crisis – that has displaced an estimated 65 million people across the globe – has “added an extra factor to the complexity” of sustainable supply chain management.

But collaboration, Theron says, is the key catalyst to cut through this complexity. “I think that there has to be more collaboration and a focus on how businesses might tackle this issue as a broader collaborative piece.

“It’s not something that is simply going to go away and we can’t get rid of the humanitarian crisis overnight. The difficulties around immigration and humanitarianism are really complex matters, to the point where we need to see NGOs and governments involved. It’s not just a business issue and solutions have to come from all parties to try to tackle this together, collaboratively.”

Theron’s call for action over words echoes the sentiments raised by a recent report from NGO Students and Scholars Against Corporate Misbehavior (SACOM), which delved into the “hypocrisy” surrounding CSR commitments made by fashion retailers.

Zara – one of the companies linked to the Syrian refugee workers by the BBC – was listed alongside H&M and GAP in the SACOM report for setting human rights goals relating to supply chain worker pay and hours, but failing to actually enforce them. The report noted that Zara had more than 100,000 supply workers located in Turkey. Separate analysis conducted by global risk consultancy firm Verisk Maplecroft has since suggested that 2.7 million “vulnerable” Syrian refugees are located in the country.

In February, Verisk Maplecroft released another report which identified that integrating human rights and improving supply chain management were amongst the most significant effecting sustainability and CSR professionals.

For the firm’s principal analyst in human rights Dr Alex Channer, the challenge both in Turkey and globally is that most companies only have visibility over their ‘tier-one’ suppliers – which pass on products directly to the retailer. For Channer, this lack of transparency, combined with an ongoing struggle of governments to manage the flow of refugees across international boarders, will ultimately mean that business-driven collaboration will prove “crucial” in solving supply chain challenges.

“Audits are important, but they are not the only answer,” Channer told edie today. “The key is for brands to continue to support and train their Turkish suppliers so they are better equipped to provide Syrian refugees with decent work. Turkish garment suppliers have a great opportunity to be part of the solution because they can help to rebuild lost livelihoods.

“The ability of governments to enforce laws and uphold workers’ rights is a critical driver of the risk faced by companies when sourcing from their supply chains. Any issues which strain the state’s law-enforcement mechanisms – which are often already fragile – will make labour violations more likely. A ready source of vulnerable workers in unregistered factories or farms, invisible to company audits or state inspections, is now available.

“When businesses partner with their suppliers for the long-term, they can best fill the gap left by poor state enforcement. For example, supporting better recruitment practices and giving longer lead times for orders can help a supplier avoid turning to informal workers and hidden sub-contracting in order to meet demand. But how well governments enforce labour laws is critical, and business has a key role to play in lobbying governments to do their part.”

Left in the dark?

Turkey, which is one of the top 10 garment exporting countries alongside nations like India and Bangladesh, is ranked as ‘high-risk’ in Verisk Maplecroft’s latest Modern Slavery Index, but the issues of human rights and child labour is a much broader, global epidemic.

According to ILO, around 260 million children are employed across the globe. Of these, an estimated 170 million are subjected to ‘child labour’ working conditions – work that is considered inappropriate for those below the required minimum age. 

The trend is, however, improving. More figures from the ILO found that child labour has fallen by around 30% between 2000 and 2012. But with Goal Eight of the Sustainable Development Goals (SDGs) calling for all forms of child labour to be eradicated by 2025, there is certainly a pressing need for businesses to do more.

Global disclosure organisation CDP has previously reported that businesses are being “left in the dark” when it comes to climate risks within supply chains. For the company’s chief executive Paul Simpson, a lack of transparency is undoubtedly hindering progress to improve supply chain management.

For Simpson, collaboration between the brands and suppliers is also critical; as a means to ensure that company-enforced standards are actually being followed down the supply chain in order to eradicate human rights issues.

“Disclosure and transparency is the first step to management,” Simpson told edie today. “If you haven’t got accurate information and data about a specific issue, then you can’t manage it.

“If you want to understand your supply chain, then you’ve got to get your suppliers to provide data about what they’re doing. You’ve also got to work collaboratively with them so that they really understand what your expectations are. Often, they will need some handholding and training.

“Companies need to make sure they have very robust procedures and checks in place to ensure that their standards adopted are being adhered to. In a global supply chain, that can be complicated, but we’ve seen many companies across many sectors get to grips with this over the past few years and it should be more than possible to do that.”

While companies like M&S and Zara now move to tackle the issues highlighted by the BBC, they will also have to take steps to comply with the UK’s Modern Slavery Act. Introduced in October 2015, the Act requires all businesses with an annual turnover of £36m or more to produce statements on how they are addressing modern slavery in the supply chain.

In July, Theresa May announced additional measures to assist the Act’s implementation, including the creation of a dedicated task force to coordinate Government action, and a budget of £33.5m. However, as advisor EVORA’s sustainability consultant Louise Russel highlighted in a recent edie blog post, less than half of companies are currently meeting the minimum legal requirements under the Act.

In order to comply with the Act, Russel recommended that companies scope supply chains and assess risk; establish policies to address modern slavery, embed modern slavery within existing due-diligence processes, engage and seek assurances from service providers and/or contractors, audit responses, and publish a ‘Transparency in Supply Chain Statement’ each year.

Panorama – Undercover: The Refugees Who Make Our Clothes is on BBC One tonight at 8.30pm and will be available on the BBC iPlayer afterwards.

Matt Mace & Luke Nicholls