Environmental, human rights abuses in UK supply chains costing £4.4bn a year

Costs of abuse and regulation

The Fabian Society report estimates that supply chain abuses cause £4.4bn in annual costs to the UK economy. It says the figure covers harm within the UK and is likely to be an underestimate.

A human rights, environment and due diligence law would cost about £0.4bn, the report says. That estimate includes businesses’ compliance costs and funding for an independent regulator. Marcus Johns, a senior researcher at the Fabian Society, said weak regulation creates costs for taxpayers, responsible businesses and the wider economy. He argued that businesses treating workers and the environment well should not be undercut by imports or less responsible companies.

Pressure for new rules

The Labour government began reviewing responsible business conduct policy through its Trade Strategy, published last year. The review’s outcome was expected at the end of March but has not been made public.

Campaigners had hoped the review would lead to mandatory human rights, environment and due diligence requirements. Such rules would require companies to measure and address supply chain problems affecting people and the environment. The article says the case for ethical trade has gained attention amid cuts to UK and global official development assistance and the continuing climate emergency.

Climate and supply chain risks

Recent disruptions have exposed supply chain vulnerabilities, including the Covid-19 pandemic, Russia’s invasion of Ukraine and the escalating climate crisis. These events have affected food and energy prices.

Dr Carley-Jane Stanton, climate lead at the Fairtrade Foundation, said climate change and an approaching super El Niño are adding pressure to global food supply chains. She said environmental and social production costs are often shifted onto farmers and workers.

Stanton said due diligence rules could prompt companies to work with suppliers on climate risks. She added that producer organisations with long-term sourcing relationships tend to invest more in adapting to climate change and may be better prepared for El Niño over time.