Fairly and ethically traded: supply chain conditions and worker exploitation
This guidance is concerned with the procurement of products, services and works, where there may be concerns regarding human rights, working conditions and worker exploitation in the supply chain.
Its focus is on behaviour that is exploitative and concentrates on circumstances where human rights may be infringed.
It is part of a series of guides which support the sustainable procurement duty tools to help public sector organisations embed sustainability into their procurement processes.
Description of risk or opportunity
- are there potential concerns about human rights and worker conditions/exploitation anywhere within the supply chain? (supply chains can be local, regional or global)
- are there potential opportunities to mitigate human rights risks and prevent worker exploitation within the supply chain by working with the market?
Concerns regarding compliance with International Labour Organization (ILO) conventions or conditions where human rights may be infringed or conditions that could foster exploitation might include:
- slavery and human trafficking statements not published by suppliers (where required under section 54 of the Modern Slavery Act 2015)
- poor pay and conditions, e.g. under/delayed payment of wages or excessive/illegal wage deductions
- excessive working hours, compulsory/excessive overtime
- charging illegal/excessive fees for recruitment, accommodation, health checks, documents, equipment, etc.
- restrictions on movement (workers unable to change employer) or identity documents withheld
- forced or child labour and human trafficking
- low health and safety standards or hazardous working conditions
- restrictions on trade union membership or other representation/no route to lodge concerns or activity or workers ill-informed about terms
Risks may be more prevalent where there is a reliance on labour supply from recruitment agencies, migrant or seasonal workers, or temporary/agency staff.
Almost every industry is at risk, especially where there is a complex supply chain or lack of transparency in the supply chain, labour intensive production processes and low skill and low pay occupations. These can include:
- electronics and high technology
- steel and automobiles
- manufacturing including garments, textiles, footwear, surgical supplies
- food processing
- primary production, e.g. agriculture and seafood
- extraction, e.g. mining and minerals
- shipping, transportation and storage
- recycling/waste disposal
- service work – catering, cleaning services, hospitality, care, domestic service
Role of procurement
The relevant National Outcomes and Indicators within the National Performance Framework focus our activity around ‘creating a more successful country, with opportunities for all of Scotland to flourish, through sustainable and inclusive economic growth’.
This includes tackling supply chain condition and worker exploitation through relevant procurement processes.
The Procurement Reform (Scotland) Act 2014 (the Act) places a Sustainable Procurement Duty on a contracting authority before they buy anything, to think about how they can – though their procurements - improve the social, environmental and economic wellbeing in Scotland, with a particular focus on reducing inequality.
The Act also requires organisations to develop an organisation procurement strategy and report against its delivery at the end of each year.
This includes a requirement to include a statement of the authority’s general policy on the procurement of fairly and ethically traded goods and services and report on progress.
Contracting authorities are likely to have different social and ethical policy objectives, for example tackling labour standards or workforce exploitation within supply chains.
If a buyer intends to incorporate ethical policy objectives into their procurement they must ensure these are clearly articulated.
A clear policy objective in the commodity strategy aligned with their organisational procurement strategy will help demonstrate how the requirement is relevant to the subject matter of the contract.
The public procurement regulations allow a contracting authority to exclude companies from tendering for public contracts for not meeting certain conditions for example, breach of any obligations in the fields of environmental, social or labour law; and select the most suitable bidders based on technical ability and previous experience in relation to the subject matter of the contract.
This is done through the European Single Procurement Document (ESPD (Scotland)). The public procurement regulations also permit contracting authorities to ask for tenderers to be registered under a certain social label scheme - as long as the circumstances outlined later in specification development and award apply.
There is frequently a perception that procurement has a limited ability to apply control or influence throughout the supply chain beyond tier one suppliers.
The procurement process provides opportunities to map supply chains, incorporate relevant and proportionate criteria and specification requirements, and it is possible to work with suppliers to improve social and ethical performance.
Risks and opportunities for sustainable procurement can be identified by undertaking in depth market and supply chain analysis and for example, through the appropriate use of the sustainability test and prioritisation methodology, and the application of relevant and proportionate contract requirements.
Further information on how to tackle risks/opportunities at various stages of the procurement process is provided in this guidance.
The contents of this guidance is not to be construed as legal advice or a substitute for such advice, which you should obtain from your own legal advisers if required. Scottish Government is not and shall not be held responsible for anything done or not done by you as a result of this guidance.