UTILITIES FIRMS RISK BEING CAUGHT OUT BY ETHICS LAWS

Posted: Wednesday 27th April 2016

39% of global utility businesses do not, or do not intend to, have a plan in place to find out who is in their supply chain.

Global utility businesses are at risk of non-compliance with the Modern Slavery Act, after admitting failing to put in place safeguards to protect vulnerable workers in their supply chains.

Around one in five (19%) of utility firms admitted they don't have a way of finding out the name, address and contact details of their suppliers.

Further, over a quarter (26%) of firms admitted they do not have a plan in place to find out who is in their supply chain - a basic first step for identifying and ending potential issues. A further 13% did not plan to implement one, implying a lack of due diligence.

As a result, 42% of utility firms surveyed said it is likely they will be exposed by their suppliers in relation to mounting legislation and 26% say it is likely they will be exposed to reputational damage.

Results were revealed in a survey of 80 large utility companies across the UK, USA, Spain, Brazil, Asia, Australia, South Africa, The Nordics and the Middle East. Research was carried out by independent research agency IFF and commissioned by Achilles, a global supplier risk management company.

The Modern Slavery Act, introduced in 2015, requires any organisation operating a business or part of a business in the UK, with a turnover of £36+ million, must produce a slavery and human trafficking report each financial year. The statement must confirm the steps taken to guarantee that no slavery or human trafficking offences are happening in the supply chain or declare that no steps to confirm the existence of slavery or trafficking have been taken. With penalties resulting in a public shaming for businesses who fail to comply or being taken to the High Court, utility companies will not want to risk unwanted reputational damage.

However, without utility companies knowing who is in their supply chains, reporting on this process would be challenging.

Gavin Pickup, ‎Community Manager for Achilles UVDB community which manages 80 buyers and 7,300 suppliers said: "Whether utility businesses are above or below the £36 million threshold is a red herring - any responsible utilities company should be looking to ensure that their suppliers are operating ethically.

"We are helping utility customers ensure compliance by adding a short set of questions to our UVDB questionnaire which we require all suppliers to answer even if they do not fall under the criteria to provide a policy statement. This ensures compliance for all. Utility businesses should be looking to use supplier management communities such as this to ensure they are working with credible, ethical suppliers. This enables buyers to implement clear standards on ethics, which suppliers must meet to before they are even considered to provide goods and services.

"In the next stage, we anticipate firms will look into every tier of their supply chain to remove risks - mapping their supply chains to identify and eradicate rogue suppliers, creating a win-win situation for all parties." added Mr Pickup.




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