As of 2021, the International Labour Organization estimates 19.9 million people were in forced labor. This number has increased significantly over the past five years, with forced and child labor happening in nearly every country and over 50% occurring in upper to high-income countries.
Not only does the use of forced labor threaten reputation and consumer trust, but emerging legislations will hold companies accountable for human exploitation anywhere in their supply chains. The world’s leading companies must implement best practices to identify and eliminate forced and child labor from their complex multi-tiered supply chain.
Everstream’s CEO, Julie Gerdeman, and special guest, Tim Nelson, CEO at Hope for Justice & Slave-Free Alliance, share the facts surrounding modern slavery and how multi-tier discovery and predictive analytics can uncover and reduce forced labor risk in supplier networks.
Julie Gerdeman
CEO Everstream Analytics
Tim Nelson
CEO Hope for Justice & Slave-Free Alliance
Lesley Hume:
Hello everybody. If I could ask our panelists to turn their cameras on now, that would be great. All right, there we go. So, hello everybody and welcome to our webinar on Reducing forced labor within the supply chain. Before we begin, I just have a few little housekeeping items that I’d like to remind everybody that’s attending this webinar.
One, everybody’s going to be on mute, but please feel free to send your questions in via the toolbox. There’s a little icon that says questions, and we’ll get to those towards the end of the session. We recommend that you close any extra windows to maximize your browser strength, especially with all the storms going on here in the northeast US. We’re going to be recording today’s session, so you’ll be getting a copy of that immediately after the session. So with that, let’s get comfortable and get ready for some risk busting supply chain insights from our very, very special guest today. So I am joined by two incredible executives. I’m going to let them introduce themselves. Sorry for that. All right. And starting with which, let’s start with you, Tim, our special guest today.
Tim Nelson:
It’s really lovely to be here. For those of you who don’t know me, my name is Tim Nelson and I am CEO of a charity called Hope for Justice. And Hope for Justice operates across the globe now, one of the largest NGOs in our sector, and we look to try and prevent all forms of exploitation, rescuing victims, restoring lives and reforming society. And as part of that, Hope for Justice has been going for somewhere in the region of 15 years, and we set up an initiative called Slave-Free Alliance. And Slave-Free Alliance works with major multinational businesses to help them understand the risks that they have and pinpoint and help them with trying to eradicate all forms of modern day slavery from their supply chains. We currently have over 104 major multinational corporations on board, including 14 of the FTSE 100 in the UK, but now expanded more laterally, into the US, into Norway and Australia.
Lesley Hume:
Very good. Julie, could you introduce yourself please?
Julie Gerdeman:
Sure. Thanks Lesley. And so great to see you again, Tim. I’m Julie Gerdeman, the CEO of Everstream Analytics. And at Everstream we help companies make their supply chains more agile, resilient, and sustainable. We use proprietary data, AI and graph technology to map complex global supplier networks and reveal hidden and future risks with the most precision and accuracy. And we also use human intelligence to enhance, curate and contextualize our insights to empower companies to make smarter and faster supply chain decisions.
Lesley Hume:
Excellent, thank you. Well, let’s dive right in. So Tim, can you tell us about this growing issue of child enforced labor within the supply chain?
Tim Nelson:
Well, I think the issue of modern-day slavery and child labor is growing internationally, and the recent figures from the International Labor Organization have shown a massive increase, somewhere in the region of 10 million more people globally in the last five years. And that’s significant for us in so many different ways. But particularly this issue of modern-day slavery thrives in businesses, it thrives in supply chains. And one of the ways they do that is by commodities being changed internationally, but a key way that they’re able to reduce costs is by shifting production to places where labor is cheaper. And invariably, there are places across the world where labor itself, the individuals are paid little or nothing for the work that they’re doing.
And one of the key areas that we see that happening is in child labor. And that’s where the children are used within the supply chains, manufacturing settings, they’re used in a range of industries across the globe. But one particular area, just to give you an example today, is around mica mining. Mica is a commodity that is mined primarily in two regions of India, but also in Madagascar. But it’s mined for a number of different uses. It’s mined for the use of, if anyone’s on, and they’re wearing makeup and they’re looking for that shimmer effect, it’s mica that’s used to create that shimmer effect. Or if ever you want pearlescent effect of your vehicle, it’s used there. But it’s also used in things like cabling. It’s used for the isolation of cabling or it’s used in cement or asphalt to be able to bulk out the cement or asphalt.
But what we’re seeing for mica mining is primarily it’s being done by five year old children. And this is well documented across the world, but in those key regions it’s because the little children can be sent down the chutes, sent down the areas to be able to pick and sort this commodity. But I think if more people were aware of it, they probably would do something around it.
Lesley Hume:
I think you’re right there, that’s for sure. So Julie, can you share your thoughts on some of these emerging supply chain laws and what that might mean for brands or for businesses?
Julie Gerdeman:
Sure. And I think we all agree that what Tim just shared with us is just absolutely horrifying and gut-wrenching. And governments are finally moving forward with legislation to address these types of abhorrent business practices, so they’re adopting legislation. And that way businesses can’t turn a blind eye to the exploitation and supply chain. So a couple of examples in the UK, the Anti-Slavery Act, in Germany, the German Supply Chain Act. In the US we have the Uyghur Forced Labor…
Lesley Hume:
Oh, I think we lost Julie a little bit. Oh, I’m sorry Julie, I think we’re losing you a little bit on audio. If you could maybe repeat those last two sentences, that would be great.
Julie Gerdeman:
Oh, okay. Can you hear me now?
Lesley Hume:
Yes, thank you.
Julie Gerdeman:
Okay, sure. So I was just saying that definitely governments are taking action and we see this across different countries, in the UK with the Anti-Slavery Act, in Germany with the German Supply Chain Act, in the US, the Uyghur Forced Labor Protection Act, UFLPA, and then of course the EU is going to pass here their supply chain act. So the regulations include diligence obligations to counter all forms of forced labor. And they hold companies accountable and responsible where these exploitive practices are found anywhere in their supply chains.
So I like to think of it, I was an English major, if anybody wants to think back to grammar school, elementary school, there’s something called alliteration. Think of words starting with the same letter and if just the letter R here, regulation. But then of course you think about responsibility, reputation, revenue, all of these things are tied together. So the regulations, they’re vague with the requirements and enforcement, but they share some commonalities, three common things.
One, they place the burden of interpretation and proof of compliance back onto companies. The second is that compliance requires visibility into a company’s extended multi-tier supply chain. And then the third is that they each require a process to continually monitor and assess networks for risk, so companies can quickly address issues when they’re found, because that’s what causes the impact to revenue, the impact to reputation. What we’re finding, the good news is that many companies are being very proactive with these regulations, they’re putting teams together, because they’ve already been looking to tackle supply chain disruptions over the past few years. Now they’re going to hit compliance head on as they tackle those challenges. So they’re better able to protect their network and their reputation while addressing these challenges in ESG and particularly forced labor.
Lesley Hume:
Fabulous insight there. So now, I mean, when we think about this, Tim, can you maybe share a story, put a face on this of something you’ve experienced within your organization?
Tim Nelson:
Yeah, by all means, and there are countless stories that we could share that would surprise and shock a lot of people who are listening to this. I mean, I think of a case that we worked on back in 2015, and actually the prosecutions from it only completed in September 2021. But we started doing some work to find individual victims through the charity. And the impact of the individuals that we were finding started to grow. We started with two and it grew significantly to where we’d find over 50 individuals initially. And working with the police, we started trying to work out what was happening because these were men, these were individuals that were working within the supply chains. So some major multinationals in the UK, the individual companies themselves were not aware of what was actually happening.
And to give you a bit of a background to this case, which is documented under Operation Fort, a Polish gang had been able to infiltrate a recruitment company in the UK and therefore they could bring people over from Poland and place them into the supply chains of businesses, effectively end-to-end processing. They could look after the bank accounts, they could withhold the passport details, they could beat the individuals, they could not provide the right level of support for these individuals. So companies themselves thought that they were paying a fair wage, but the traffickers had been able to embed themselves into their processes. And these are multinational companies within the UK. And in the end, when it came to court, the court were able to identify that there had been over 400 victims that were found just from that one case alone, which is the largest case in European history.
But it showed us how easy it was for traffickers themselves to embed themselves within businesses that themselves thought that they were doing the right thing. And that’s why we talk about this as being a complex issue and actually the ability to be able to pinpoint where red flags are, where there are issues within people’s businesses. We would say a good or bad business is, not about whether or not they’ve got modern slavery. It’s a question of if they’re prepared to look and what will they do if they find it.
Lesley Hume:
So in that vein, Julie, why has it been so difficult for businesses or brands or original equipment manufacturers to really spot these issues?
Julie Gerdeman:
Yeah, Tim just nailed it. I think there’s just been such a lack of visibility and awareness. He’s putting a face to these stories and making it so human for all of us as we’re listening to it. And if these organizations knew they had a problem, they would address it. But it’s been hidden so deep in the multi-tier of supply chain. There are lots of studies that show organizations have a view into what we call tier one, the first level of suppliers, somewhat of a view. But they have almost zero visibility to tier two, tier three, and down to the end tier. And it’s that lack of visibility that’s caused the problem. We have very complex and opaque global supply chains and companies may unknowingly source conflict minimal roles or have a situation that Tim just described or there might be a situation with children, they just don’t know. And so that visibility is really key.
What’s interesting is we’ve seen these examples where just they find out when the world finds out, in the media. So Hyundai, for example, we saw that their sub-tier suppliers were accused of using underage workers as young as 12. And New York Times published an article about essentially nearly every major automaker has ties to the Xinjiang region in China where the Uighur Act is targeting. So that’s the challenge. And even those organizations who’ve tried to tackle this in the past, Lesley, they did it in a manual way. And the tens of thousands of suppliers that are in a multi-tier, just can’t be tackled through a manual process.
Lesley Hume:
Right. So I mean, I think I’m going to know the answer to this question, Tim, but in that vein of technology and just manual practices of the past, what made you look at supply chain technology to advance this important work that you’re doing?
Tim Nelson:
Well, the sad reality of where we are is we’re not winning the battle. It’s a 150 billion industry, serious and organized crime, and they’re way better organized than most people would give them credit for. And if the sum total of every anti-trafficking organization that’s working globally isn’t seeing the numbers reduce, we have to find multipliers. We have to find ways where we’re going to be able to deconstruct the complex crime networks that have been set up that are enabling this to happen. And as we’ve looked, some of the great acts that have been brought in like, has been mentioned by Julie, the Uyghur Protection Act, we’re starting to see how can companies deal with this? If you take a scenario like polysilicate, which is produced in Xinjiang, polysilicate is a key ingredient in the manufacturing of solar panels. So as a result, the US government are now withholding solar panels coming into the US that are made from polysilicate being manufactured in Xinjiang.
Well, that’s led to 1,000 shipments so far since the act came in being withheld. Many companies have made strong climate change commitments based on being able to add solar to the premises that they have. But yet, most of the solar companies now that are providing solar panels that are not formed from polysilicate from Xinjiang, are back backed up till ’26, 2027. The demand order books has grown significantly. So how our companies going to address this? Yes, they can pinpoint within their own business what they need to do, but the visibility that we’re talking about, that Julie’s identifying, how do we get to the very bottom tier within a supply chain? It’s only going to be possible when we start to really look at complex technologies to be able to address this.
Lesley Hume:
So maybe you can talk about that a little bit further, Julie, as far as how Everstream’s technology is looking at under covering child forced labor risk?
Julie Gerdeman:
Of course. You know what’s so ironic, based on what Tim just said, there’s ESG, right? And so he just described how companies are trying to tackle the E with the solar panels, and addressing climate change and using different types of energy. But the irony is then the S is impacted because of how they’re going about trying to achieve that. It just dawned on me as you were describing it, Tim, wow, these two things, they don’t work together.
So at Everstream, we don’t use surveys. That is a practice of the past. It does not work. It’s too manual there. You can’t get the level of granularity and information that’s required to actually uncover the level of detail and information that you need to address what’s happening in the supply chain, but also comply. So it requires automation, it requires technology and a different approach. And that’s what we do at Everstream. We automatically map the multi-tier supply chain. We apply AI and graph technology to billions of open and proprietary data points, media mentions and supply chain interactions, and that uncovers the risk.
And what makes us a little unique here is we do it at the material level and the facility location level, not just at the supplier level. And then if you remember I mentioned earlier, these laws do require ongoing assessment and monitoring, so we also do that. This ongoing monitoring, tracking the assessment to give our customers the visibility into every level of their tier, every tier of their network. Components, ingredients down to that raw material worldwide. That’s really how we’re tackling it.
Lesley Hume:
So Tim, you’ve mentioned a couple examples and very impactful, but what do you see as some of the greatest risks, either at the country level or commodity level, beyond what you’ve already mentioned?
Tim Nelson:
Well, I think the greatest risks that we’re going to start to see go directly with the legislation that carries through. So if you’re a company and you’ve done nothing in this area, you’re not alone. There are many companies who’ve done very little to address the issue, but the legislation is coming almost like a tsunami and it’s coming with such a real threat to business. So it’s akin to what Sarbanes-Oxley was for businesses after Enron, or from a European standpoint where GDPR is. With the German legislation, it carries a 2% global turnover fine for any company that’s found to be complicit or compliant in this. So you only have to have a German subdivision or distributor or your supplying products in, that then make you liable to the potential fines that could come through.
So I think the game has changed. And I think for me, as I start to look across the board, I see the risks for many businesses where most of the companies we’re speaking to, they’ve got a good handle on their first tier supply chain. They might not always be able to say that they’re paying the right fair wages to the staff themselves, but they’ve got close enough link to them that they’re able to analyze them a little bit more than most.
But when you get down to the third and fourth and fifth tier, most companies have zero visibility. I spoke to a company last month who have 70,000 first tier suppliers and they’re conducting 200 audits a year on factories. So you’ve got to look at the scale and what Julie said about we’re not going to solve this all with consultancy, with individuals having a look at a risk in compliance. I think people need to really wise up to the fact that if you send a tick box exercise to companies in your supply chain to say, do you have any forced labor? They’re not going to tick that box to say that they do. It’s up to the individual companies themselves under their legislation that they need to be doing all that they can to address this.
And really that’s where technology comes in, I think, to really boost the internal capabilities that companies have, the desire that companies have to do this right and try and protect themselves. Because we’ve seen, there was just one article that ended up in a newspaper in the UK about this issue of modern-day slavery on a Sunday newspaper. And by Tuesday that company had over $2 billion that had been wiped off the value of their company because the share price dropped. This is something that ESG boards of investors are taking very, very seriously and don’t want to be linked to any company that’s not doing it right.
Lesley Hume:
Geez. Well, we have time for a few more panel questions before we open it up to the audience. And I do encourage all of you to put your questions into the question chat. So Julie, maybe a lot of companies are taking this wait and see approach. These laws are all new. Why is it important to do something now?
Julie Gerdeman:
Yeah. Honestly, if you listen to Tim, I hope everyone’s moved to do something now. And Tim’s right, it’s people, process and technology. It’s not just one of those, it’s all of them. And waiting and not tackling each of those three will set you back so much further. And in technology companies, we talk about the innovation curve. We talk about innovators and early adopters, early majority, late majority and laggards. That’s the curve. And in this one, you certainly need to be, if you’re not an early adopter and already doing it, you need to be in the early majority, as you look at that. This is not an area to be late majority or certainly not a laggard, because you will be blindsided, your shipments will be held up based on the new regulations, which Tim referenced and we’re already seeing. Customers are approaching us about how do you handle this? You will wake up to a newspaper article about your company without that diligence.
So waiting and seeing, to me, it’s not an option. It’s really important to adopt, put the team together, adopt the process, put the process in place and talk about implementing the technology, evaluating what your choices are. And the good and bad news is, supply chain has been in the headlines. So our C level contacts and the stakeholders are now, it’s a C level topic, they’re in the boardroom, they’re talking about this, they’re reporting about it on analyst calls. And that’s challenging, but it’s good because then they will take action. And as part of that, because this is such a key challenge in supply chain, it will be tackled as part of that overarching focus on addressing challenges in supply chain. It’s not just disruption, but it’s disruption and then these exploitive practices that need to be addressed.
Lesley Hume:
Right. Very good. So this is a question for both of you. I’ll start with you, Julie. So what are maybe some of the practical steps or best practices that companies can implement now, immediately, to evaluate their supply chain?
Julie Gerdeman:
Yes. So the companies that we’re working with have teams in place. It started months ago, months and months ago. So they got ahead of it, put a team in place and started evaluating where they are today. So if you haven’t done this and you’re listening to us, establish your baseline. Determine the framework. What measurements do you want to measure? Look at the regulation, look at where you are, but at least start. Establish that baseline so that you can start to put the process in place.
And that’s what we’re seeing. We’re seeing companies have the teams, do their evaluations and then put the evaluation as part of evaluating technology, because that piece becomes key to manage the scale. And in some areas, some customers are focusing on one particular area that they think is a particular concern and they’re addressing certain products, certain geographies that they’re concerned about. And then in the process they’re looking at the regulation and saying, okay, in Germany, it’s country and industry. And then they begin that process of the monitoring, the assessing. So you really don’t have to go it alone. I mean that’s why Tim and I are having this conversation with you today, Lesley. It’s really about putting that baseline in place, putting a plan in place, taking action now so that you know what’s available to you in potential partners like Slave-Free Alliance, like Everstream.
Lesley Hume:
Wow, there’s a lot of information there. Tim, I mean, you’re working also with companies on a regular basis. Anything you want to add to that as far as some experience and some best practice?
Tim Nelson:
Yeah. So I definitely would want to add to it in terms of most companies, they don’t know where they sit. So it’s an issue that then, because the Modern Slavery Act in the UK, it’s a regulation that requires the financial accounts to have a statement. So sometimes it sits with the CFO. You’ve got people who think it’s a company secretary requirement, some people think it’s a CEO requirement, some people think it’s a Chief Procurement Officer requirement. Many companies don’t know. So the first thing I would say is ownership is vital. For any company, they need to appoint one person who is principally responsible for this. We’ve seen many companies that are now moving to having ESG as a board seat within the C-suite level, because they’re saying this is so important and it’s not going away, it’s only growing.
Because I was with the OSCE, which is the Organization for Security and Corporation in Europe, and there were over 26 more countries that are looking to bring and embed more legislation in. So how do you address it and how do you deal with it? Well, get ownership first of all. What we would do at Slave-Free Alliance is we work with companies to do a gap analysis, which really identifies what are those areas that you need to put in focus? Different companies have different approaches. Some want to just hit regulation, some want to be best in class, but that’s up to the companies themselves to work with. We want to help everybody work with the regulations to ensure that they’re compliant. But from that place then, the adoption of systems, the adoption of processes, working with their suppliers to take them on a journey.
We know that you can’t boil the ocean. Companies have limited budgets to work with this. So you need to pinpoint where you’re going to put your focus and effort in so that you can make the biggest impact. So I would say ownership, leading to maybe understanding, understanding leading to action.
Lesley Hume:
Very good, very good. So I think we’re going to open up. We’ve got a number of questions from our audience. So is there any last points that either Julie, you or Tim would like, or I’ll start with you, Julie, actually. Any additional final comments that you’d like to make before we open up for questions?
Julie Gerdeman:
I just love what Tim just referenced, particularly start even if you have to start in a very focused fashion. And that’s what we are seeing many companies do. And then the second point he made, I really want to emphasize being best in class. We do have customers that believe this is actually going to lead to a competitive advantage. If you’re best in class here and you’re ahead of the game, you really will set yourself apart from your peers in your industry. And to me, why not use this not only to comply, but to really win in the market?
Lesley Hume:
Yep. Makes sense. Tim, any final comments before we open for questions?
Tim Nelson:
Yeah, I’d make two points. Just one on the back of what Julie you’ve just said. I think people need to know that as well as the stick of legislation, there is a carrot coming. Banks are looking at this for companies that have open and transparent supply chains, that they will offer discounts to lending policy. We’re seeing insurance companies now looking at things like procurement insurance and being able to offer discounts. So there will be carrots and incentives for the companies that are going to do this right. The one thing I would add to that is around the stick of legislation. So many people don’t know about the Weaker Protection Act in the US, but it is a game changer because it’s the first time we’ve seen where there is the presumption of guilt within a supply chain and the withholding of products based on the presumption of guilt.
And in the second quarter of this year, before the act came in, we saw on average for the three months in the second quarter on average, $38.1 million withheld. That had grown in August to $266 million. You don’t want to wait until you get a call from your supplier to say that your products have been held up in withhold release orders. You have to get ahead of this because if you don’t, you’re going to get a call from somebody very high within your organization that’s going to want to know what you’re going to do about it. And if you’re waiting until you get that call, it’s going to be too late.
Lesley Hume:
Right. Okay. Well, on that note, let’s take some questions from our audience. So I think Tim, maybe we can start with you answering this question and certainly Julie, feel free to jump in. So the question reads from Adam. Tim mentioned that the tsunami of legislation and regulation, that’s on the way. Is there also pressure from consumers and customers and nonprofits on the issue? Or will this change be led by the governments, by government?
Tim Nelson:
Well, I would say, Adam, thank you so much for your question. I think what we are seeing is the average person who’s buying goods and services is now more well informed than they ever have been. We get calls on a regular basis from individuals wanting to know, hey, I want to buy my sofa. Can you tell me who the best company is to buy that sofa from? Can you tell me which are the bad people that I should avoid on a regular basis? And I think you’re seeing certainly the next generation, we talk about the millennial generation, we’re seeing that millennial generation not just play passively on this, but actually really start to ask really pertinent and deep questions of companies that they’ve never had to answer before.
So I’d say certainly the consumers themselves, I think the investment boards that are investing into the companies now are far more aware of what a difficult issue this is. We’re seeing it around mergers and acquisitions where companies are now starting to ask the question of, have we done enough? I can share an open example from a company we’re not dealing with, but I went to a presentation pre-pandemic with Coca-Cola, and Coca-Cola have mapped now to a million farms that they have across their supply chain. But when they brought Costa on board, Costa was a company born in the UK that ended up merging into Coca-Cola. When it merged, there had been little or no work done around the coffee supply chains. So more people are aware of things like the issues in coffee, the issues in chocolate, what is being done. And I think people are genuinely making different choices at the supermarket based on what they know of those companies.
Lesley Hume:
Good answer. Julie, did you want to add anything to that?
Julie Gerdeman:
I couldn’t agree more. I’m a mom and anyone who has vocal children on this topic, you know from personal experience that what Tim said is absolutely true. I mean they will demand to know the background of a product before a purchase is made. And then the other thing I’ll say is we’re an enterprise business to business in what we do at Everstream, but at the end of every B2B transaction is the consumer. Ultimately there is an end consumer that’s being impacted and many of the stakeholders that we’re talking to have said they’ve spent more time customer facing on this issue to their own customers. Whereas they used to be sourcing supply side, it’s the other, it’s on the demand side, which is really an interesting shift.
Lesley Hume:
Excellent. So this next question comes from Ginger. So she asks, we’re a very small company working with overseas factories. Does the legislation and regulations apply only to large companies? Maybe Tim, if you could start with that.
Tim Nelson:
It all depends upon where you are supplying to and what you define as small. Because I know different companies will define themselves as small, but to someone else, they could be a large company. What we would say is the legislation itself holds the bigger companies more culpable. So where this German legislation comes in, it’s the very biggest companies that they’re approaching. If you look at things like in the UK, section 54 of the modern slavery bill talks specifically around this and around companies that have annual revenue above $36 million. The legislation in Norway is significantly lower. They lowered the bar. Section 10 of the Human Rights Act in Norway lowered the bar themselves to almost double the companies that the UK had as a percentage.
So what I would say is get access and information. As a small company it can sometimes feel overwhelming that there’s so much to do, and that’s where I would say technology and advice are the two things that are absolutely key to you in you understanding this and making the best choice. Because when you’ve probably got so many things that are on your desk every single day, Ginger, and I feel for you because it’s like, what do I put my effort into? And I don’t know if you ever played that child’s game, Whack-a-mole, but it seems like you’re going from one thing to the next and you’re trying to stay on top of it. But if you can get that advice, if you can get that support, then I truly believe that you can start to address this, even as a smaller company.
Lesley Hume:
Thanks Tim. I’m going to move to the next question because we’ve got quite a few. So this question is from Jasmine. Who’s handling the social due diligence in companies right now, especially with the mounting legislation? Is it the sourcing team? Is it the sustainability team? Should they hire dedicated people? Maybe Julie, do you have some thoughts on that to start? And then Tim, if you could add your comments.
Julie Gerdeman:
Yeah, we’ve just seen different structures in different companies quite frankly, and they are converging, however. So as this topic, it’s brought the teams together. So we’ve seen the sustainability teams, the sourcing team, all converging when we cover a topic like this. So everything in the supply chain. Tim made the point earlier about if you can have dedicated resources, it is an appropriate topic here to address with a dedicated team and a dedicated resource. And we’ve found that those companies that are doing that are addressing it more quickly, in a more expeditious manner.
Lesley Hume:
Thanks Julie. Tim, did you want to add anything to that?
Tim Nelson:
Just a brief comment on it. Most companies are looking at matrix management for planning this because of the nature of it sitting with different departments. I think it depends on how companies assess this on their risk register. So for most companies that have a risk register, they’re looking to mitigate the risks that sit there. It’s whether you perceive this as a supply chain risk or whether you see this as a regulation, regulatory risk. Because it might be in bigger companies might have an in-house legal council that’s responsible. You might have somebody who sits up… It literally is a lottery at the moment of where this sits. And I think probably if we look 10 years from now, they’ll be dedicated divisions in every company that will deal with this. Universities that will provide great courses that provide real help and support for companies. But at the moment, most companies are trying to play catch up with what they have and trying to add into areas where they see that need real help.
Lesley Hume:
Right. Very good. All right, so this next question comes from Wade. So Wade’s question is, my organization has a global presence but we source from a significant number of very small businesses. These businesses do not have the awareness, let alone the resources, to help us achieve or exceed our ambitions. Does this panel have suggestions or recommendations as to how we can engage and insist small businesses with this very necessary initiative? Thanks. So Wade, let’s start with you. I mean, excuse me. Sorry Tim, I’m sorry.
Tim Nelson:
That’s fine. I don’t mind, I’ll be Wade for today if needs be. But Wade, appreciate your question. I think it’s a complex issue that a lot of people deal with because it can also be that even if you’re a bigger company, maybe the amount that you’re buying from a company means that you’re only a small percentage of their total overall impact in use. And it can be really difficult to be able to get a shift when you’re only a small percentage of someone’s overall trade. So we’ve tried to address this in places like the UK where we’ve set up working groups. We’ve got Utilities Against Slavery that we’ve set up, where we have 35 major utilities companies that have come together not to form an oligopoly against competition, but actually saying that no one’s going to compete on human rights.
So I think in terms of working with companies, the first thing to do is they’re going to be worried that you’re thinking of pulling supply and moving it somewhere else. So you need to build trust and confidence in why you’re doing this. What is it really that you’re looking to do, and what will it give you to have a better informed understanding of what your supply chain is? So I would encourage you to reach out, first of all, so that they feel relationally good about this. I’d also try and coach it in more of a broader statement to all of your suppliers so that you’re tackling this so that they don’t feel that they’re being victimized because they’re in one country or they’re in one particular area, and try and standardize as much as you possibly can. Again, when you’ve got lots and lots of small individual companies that are supplying to you, it can be complex, but just know you can make an impact even when it’s smaller companies across the board.
Julie Gerdeman:
Yeah. I love that point around communication, Tim. I think you’re pointing out how critical it is to have consistency in communication, frequency. Over communicate in something like this. From the technology side, I would say we have customers who are talking to us about the tracking and monitoring that they could do at scale. 50,000, 80,000 suppliers, so that at least from a technology risk monitoring that they can start to embrace this just from that side. But I completely agree that this comes down to ensuring really good consistent frequent communication.
Lesley Hume:
Yeah. So thank you for that, both of you. The next question comes from Karen. The challenge with traceability beyond tiers one and two is that you’re relying on suppliers, suppliers willingness to share information. Does Everstream Analytics have AI capabilities that help overcome this? Julie, let’s start with you.
Julie Gerdeman:
Yes. That’s exactly what we do. So the capabilities that we have, relying on first of all the data that we’ve access to, and the way that the AI runs, that we do actually have the capability to uncover. It’s called Everstream Discover, it discovers for you down to the end tier. So that is literally the use case of why companies work with us, particularly on this topic.
Lesley Hume:
Yeah. Excellent. And do you want to add anything as far as just in general to that?
Tim Nelson:
Yeah, no, I just say that’s why you have to use a tech solution because if you’re only going to ask people to let you know, they’re going to be worried that you’re going to try and bypass them in the supply chain, that if you know who their suppliers are, then suddenly you’re going to start bypassing them to go directly to those individuals and cut them out. So you can struggle to get information unless it comes with a tech based solution.
Lesley Hume:
Right. Very good. So this next question comes from Lucy. So what are companies doing when they suspect there may be forced labor and how can they confirm or rule it out?
Julie Gerdeman:
Tim, that one goes to you because this is exactly why we’re partnering with Tim for this, because from a technology perspective we’re definitely uncovering it, the multi-tier, and then Tim we hand it to you. So could you talk about that?
Tim Nelson:
Yeah, no, there’s different approaches that companies can tick, but the first thing that we would say is if someone suspects that there is an issue of modern-day slavery, that doesn’t mean that you’re a bad person, that you’ve done the wrong thing. It can sometimes happen inadvertently. One of your suppliers can have someone so much further up the supply chain that they’re not aware of it, and the visibility of it is really important. I think you’ve got to understand the approach and that’s part of why we work with companies to try and help them because instantly, you get companies who say, if I find any form of forced labor or modern-day slavery, I’m going to cut that business off. Well, our approach is that actually doesn’t solve the issue. You get companies that just become Phoenix companies that they close one business down and open another. And actually we’re not getting to the issue of change, which is really what we want to see happen.
So companies like Apple, if they find any form of forced labor within their supply chain, they will allow that company to trade for up to 12 months after finding it. And they’ll work with that company and put real key stake markers in the sand to ensure that they bring change. For you as a company, you have to start understanding what are the steps that you can find? So that’s where Slave-Free Alliance comes in and what we try and do is work with the company to address it. And if we find it, we work with the companies to try and address it with those companies that are supplying.
If for instance, there’s things like individuals that have been inadvertently affected through this, people who themselves have been victims, then what is your company’s approach going to be around remuneration, taking care of those individuals? How many individuals are we talking about? How big of an extent does it happen within your supply chain? So we look from a bespoke perspective to try and help in any key area and then look to try and address whether or not this is an issue with a company you need to pull away with because actually they’re not willing to make changes within their supply chain? Or actually can we work with them to provide a real benefit and change? Because if we want to live in a world free from slavery, we’re going to have to work with some of the people who are doing this to try and help them stop doing this.
Lesley Hume:
Right. Julie, did you want to add anything?
Julie Gerdeman:
No. I mean, I’m just so excited to be working with Tim and the organization and honestly it creates this flywheel effect, that we’ll see the shift, we’ll see the change. As these practices get implemented, the demand will get less and it’ll change.
Lesley Hume:
So we’re nearing the end of time. I think we’ve got one more question that we can fit in. This one comes from Ty. What’s to be done about “China washing” to hide forced labor exposure in Western China? Tim.
Tim Nelson:
It’s not just an issue in Western China, so I don’t want to give anyone the impression that it’s just in one place. But the Uyghur Protection Act is something that has come in, enforced in the US and it’s likely that that is going to have to be mirrored in Europe and the UK. Both the Europe and the UK want a free trade agreement with the US and there’s no way the American government are going to allow Europe and the UK to be a backdoor into China if there’s a particular regulatory issue. I think there are things that are going to start to expose companies in a real way where they’re going to have to address this issue. An example would be there’s a company that have come up with a way of isolating the isotopes for cotton production and they can now say by analyzing your cotton shirt where the cotton was grown. And that is a game changer because up till now, that’s not been possible. So you could have cotton that passes through or trades through any region across the world and buyers wouldn’t have been able to understand it.
Now there’s going to be complete visibility that’s given to you and you’re going to see companies that are going to find it very difficult to address this issue. And if their products, they think they could be seized at customs, they’re going to want to try and find a resolve to it. So tied to your question, I don’t think we’re going to see a time where any country is going to be able to greenwash. I think now in the age that we’re in, the visibility is coming to a level where companies are going to have to clean up their acts or they’re going to be exposed and then consumers can make choices as to whether or not they want to buy from those types of companies.
Lesley Hume:
Right. Well, we have a few more questions and I’m sorry that we’ve run out of time for today, but we certainly will follow up with those questions via email after the session is over. So thank you both to Tim and Julie for your amazing insights on this very passionate topic, I think for most of us. And thank you to those that attended today, we certainly appreciate you joining us. And with that, we will see you at our next Everstream webinar probably next year. Take good care.
