Out of the shadows

Written by: Maxine Perella | Published:

Waste management companies, especially those with extended international supply chains and those depending on cheap workers, may be unwittingly using forced or trafficked labour. But thanks to a new law, ignorance is no longer a sound defence. By Maxine Perella

Modern slavery may seem like a fringe issue for waste, but environmental crime is a serious and growing international problem – the impacts of which transcend national borders. In the UK, many associate waste crime with activities such as fly-tipping, tax evasion and illegal sites. However, questions are being asked whether this definition is broad enough given the industry’s reliance on foreign workers and material exports, and the potential risks this throws up around labour policies, human trafficking and exploitation.

Last year it was reported that the Environment Agency arrested six suspects for illegal waste dumping across various sites in England. The syndicate behind the operation, who employed migrant workers, were suspected of using forced labour. This is likely not an isolated incident within the industry, given that victims of modern slavery are often unwilling to come forward to law enforcement or public protection agencies.

The true extent of modern slavery is unknown, but the UK Modern Slavery Act 2015 is a pioneering piece of legislation which obligates many large companies, including waste operators, to conduct greater due diligence on labour and recruitment activities, both within their internal business and their external supply chains. While the majority of the Act extends to England and Wales only, certain provisions also extend to Scotland and Northern Ireland, which are both covered by additional legislation.

Under the Act, commercial organisations with a global turnover of more than £36 million supplying goods and services in the UK are obliged to publish a ‘slavery and human trafficking statement’ for each financial year, disclosing the steps they have taken to ensure that slavery or human trafficking is not taking place in their own operations and supply chains.

Global awareness

According to environmental lawyer Esther Kiddle, a partner at Thomlinson Kiddle Law, the Act aims to have an impact not just in the UK, but across the global reach of a UK business. This, she says, is significant for an industry that trades across borders.

“Although we are currently unaware of any cases or examples from within the UK, given the economics involved, the amount of materials traded, the length of supply chains around the globe and the number of people affected, we have little doubt that the waste and resources industry will have links to slavery, servitude, forced and compulsory labour and human trafficking, even if UK businesses are unaware that they have.”

Kiddle says the areas most at risk for the waste sector are those focused on low profit margin, avoidance of high material processing cost in the UK, and those with little or no developed infrastructure, making them more reliant on cheap labour. She adds that operations that deal with high-volume work, with several supply chain intermediaries, are also more exposed in terms of risk.

“If the ultimate end destination of a material or waste is out of sight and out of mind, it may well be costing someone somewhere their dignity,” she says. “Vulnerable sectors are likely to be the material recycling markets and hazardous materials handling and disposal.”

Independent waste consultant Phillip Ward echoes this view, having visited several MRFs in the UK that have picking lines largely staffed by Eastern Europeans. “I suspect the agency worker route is the most likely to cause problems for reputable companies with UK-based operations,” he says. “I have no evidence of any actual cases of abuse, but it would seem only common sense for a waste business relying on agency labour to ask tough questions about terms and conditions applying to workers taken on by this route.”

Some of the larger corporates RWW spoke to are already taking their obligations under the Act very seriously. FCC Environment is a case in point – the company employs nearly 2,500 staff across more than 200 UK sites.

Implementing robust measures

FCC’s head of legal services, Carol Nunn, says compliance means ensuring the company is “in the best position” to satisfy disclosure requirements by underpinning its slavery and human trafficking statement with stated actions. “We are conducting a ‘root and branch’ review of our existing policies, procedures and approach to supply chain transparency to identify where we might have exposure to risk. I am pleased to say our processes and procedures are being tested and we are committed to ensuring they remain robust.”

Viridor’s HR director Simon Catford says his company welcomes the Act’s aims.

“It’s raises the standard across the industry. It’s not just about getting our statement, it’s about going into the supply chain. Our procurement function for instance has written to every one of our suppliers asking what steps they are taking to address this.”

Catford says a particular focus for Viridor will be on any supplier that operates outside of the EU, and audits are planned in this respect. “We already audit a number of key suppliers for a range of other things like health and safety, quality and performance. This is just adding onto something that already exists, rather than being a new piece of work.”

Looking ahead, he also sees wider benefits for compliance – especially in terms of stakeholder engagement. “More and more of our customers and stakeholders are demanding this – the CSR agenda is pushing [the industry] in this direction. The whole industry is becoming much more aware of its social obligations and social responsibility. It’s another piece that legitimises what we do as a sector, as an industry, and what we do as a company. So we see this as very positive.”

Questions remain however over the obligated level of due diligence involved, especially for monitoring suppliers. Kiddle points out that the legislation is “somewhat imprecise in its wording” and says it will take dedication and commitment from companies to ensure supply chains are not just dishonestly ticking a compliance box.

Due diligence reporting

“With regard to monitoring a supply chain, the legislation does require specific steps or enquiries to be made, but leaves it to each organisation to design and disclose their due diligence,” she explains. “Here there is an obvious difficulty – which supplier when asked the question ‘Do you use enslaved, bonded, forced or trafficked labour in your process?’ is going to say ‘Yes’?”

Given the amount of time and resources it takes for companies to audit supply chains, greater levels of reporting and transparency are likely to be required. Kiddle warns it is not an area in which to under-perform.

“It is not just a matter for HR policy, but one for procurement and management teams to push and promote throughout the supply and demand for waste and resources,” she says. “Responsibility, reporting, procurement, contracting, engagement and inspection will be key to ensuring the industry complies.”

The Act is also likely to impact smaller, non-obligated firms, especially if they form part of an obligated company’s supply chain. Going forward, SMEs are likely to face greater scrutiny on such issues from their customers, yet recent research from the Chartered Institute of Procurement & Supply (CIPS) found that nearly two-thirds of UK SMEs were unaware of the Act, let alone its impact.

The survey, conducted among 263 UK businesses with turnovers under the £36 million threshold, also found that three-quarters of SMEs would not know what to do if modern slavery were to be found in their supply chains. Of those surveyed, just one in 10 had ensured all their UK workers were in receipt of the minimum wage and that robust immigration checks were in place.

CIPS CEO David Noble advises SMEs to start mapping their supply chains to understand where there is highest risk and exposure to modern slavery.

“Partnerships between larger corporations and smaller SMEs will be instrumental in driving out malpractice,” he adds.

For obligated companies that fail to prepare an appropriate statement each year, the prospect of legal sanctions looms.

“The secretary of state may get a court order requiring the company to prepare the statement. This sort of sanction is likely to be a significant reputational fail and exclude companies from public sector contracting,” says Kiddle. “Ultimately, if a company falls foul of the provisions regarding the use of slave or trafficked labour, there will be criminal sanctions.”

Maxine Perella is a freelance journalist

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