Examining sustainability issues from economic, religious and financial angles A different shade of GREEN ISSUE 18 FIFTYFOUR DEGREES Lancaster University Management School | the place to be What price a greener planet? 22How well are UK companies reporting on modern slavery? 6Faith and sustainability in family businesses 10
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FIFTY FOUR DEGREES | 3 Using social media to bridge inequalities Through his work in Pakistan and Ghana, Dr Uzair Shah is looking at how social media can help female entrepreneurs bridge social inequalities. In this issue... 30 Gambling with Public Health Dr Carolyn Downs outlines her work looking at the extent of problem gambling in Lancashire. 10 What price a greener planet? Professor Dakshina De Silva and Dr Anita Schiller investigate if people will pay more for green products. 46 Tackling the Imposter How can employers help employees with Imposter Syndrome. Nia-maria Quinlan explains. 42 It’s Witchcraft Take a trip into the world of modernday online witches with PhD researcher Sophie James. How well are UK companies reporting on modern slavery? Dr Mahmoud Gad’s reveals how far UK companies are complying with modern slavery reporting regulations. 6 Educating for Sustainability Find out how Professor Jan Bebbington is introducing the next generation of accountants to sustainability practices. 14 Cybersecurity: When soft skills are as important as software Dr Robyn Remke describes how business can better train their workers to tackle cyber security issues. 26 Faith and sustainability in family businesses Dr Allan Discua Cruz studies how Christian business leaders apply their religious beliefs to their operations. The Practice of Wisdom Dr Sylvia D’souza outlines her work on how we come to make ethical decisions. 38 Wake up and smell the sustainability The work of Professor Linda Hendry finds out why Brazilian coffee companies take up sustainable business certifications. 18 50 22 34 A Greater Responsibility The Work Foundation’s Trinley Walker discusses their recent report on employer-employee relationships amid the cost of living crisis.
FIFTY FOUR DEGREES | 5 Professor Claire Leitch is the Executive Dean of Lancaster University Management School c.leitch@lancaster.ac.uk In this issue, we focus on one of the three key areas in which we have built a reputation for research excellence – sustainability. We can all be guilty at times of thinking too narrowly when it comes to sustainability. This is not a subject restricted to environmental sustainability – there are economic, social, institutional and cultural considerations as well. Our researchers constantly impress me with their diversity of work encompassing them all. Much of this research is conducted by members of the Pentland Centre of Sustainability in Business. Since its formation in 2015, the Pentland Centre has been a home for academics – and, more recently, our non-academic colleagues in LUMS – who want to collaborate with and impact businesses in their operations. Under the leadership of Jan Bebbington, the Pentland Centre continues to grow and evolve, with members across all our departments – as well as within the University’s other faculties – working on areas as wide-ranging as modern slavery reporting, social inequalities and digital technologies, sustainable oceans, and resilience in family businesses. If we were to include them all here, we would need a physical tome far weightier than this magazine, though for those wanting a broad overview of Pentland’s activities, I can point you in the direction of their excellent Transforming Tomorrow publication. Here, we have a selection of the School’s most recent work, a collection which spans sustainability’s connections with religion, accounting, economics, and more. You might be wondering how all these spheres tie in with the overarching subject. And you would not be alone in that regard. This is something Jan as Director of the Pentland Centre recognises, and she has worked with the Institute of Chartered Accountants in England and Wales (ICAEW) to help inform and educate the next generation of accountants about how their work influences the future of the planet. If accountants can help to shape strategy within companies, can we change individual consumer habits as well? This is what Dakshina De Silva and Anita Schiller investigate when they look at how much more people are willing to pay for products if they are better for the planet. It is a situation all of us are going to encounter, and a decision we will all have to make – we cannot go on consuming the same things at the same prices if we are to expect a wider change to the environment. These decisions, and their economic consequences are hard, and many factors come into play. For some business owners, those considerations have a religious angle. Allan Discua Cruz brings us his insight into the connections between religion and sustainability when it comes to Christian owners of family businesses. Reading his work, it is fascinating to see the many overlaps between theology and the green agenda. Do these agendas only apply in the western world? Linda Hendry has studied why coffee suppliers in Brazil pursue sustainability agendas, and finds that pressures from customers with their own priorities is only part of the picture. The problem is that the suppliers are so rarely given the chance to voice their own reasons. Mahmoud Gad’s work on modern slavery reporting in UK companies tackles an area where people are left voiceless for other reasons. It would be nice to think that recent government legislation and regulation had led to businesses fulfilling their requirements, and yet Mahmoud and his colleague Steve Young have found this is far from the case. Mahmoud recently spoke at a Parliamentary event highlighting issues around reporting which must be addressed if we are to successfully combat modern slavery practices and their inherent human rights abuses. Hopefully, these articles will open your mind to new dimensions of sustainability, and as a School we aim to continue to bring them to light. Until next time, enjoy this edition. Foreword It is my pleasure to welcome you to another edition of Fifty Four Degrees, shedding light on the high-quality research that takes place every day within Lancaster University Management School. Subscribe online at lancaster.ac.uk/fiftyfour SUBSCRIBE
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FIFTY FOUR DEGREES | 7 Faith and sustainability in family businesses How can businesses balance profit and sustainability? Could religious beliefs among owner-managers play a role in the approach to sustainable practices? Focusing on Christianity as a major world religion, Dr Allan Discua Cruz reveals how Christian family firm leaders drive sustainability practices while maintaining a viable business.
The drive for business sustainability is a growing concern. Family businesses – those where family and business objectives operate in tandem – are increasingly judged on how they impact the environment. Family firms are ubiquitous. They come in all shapes and sizes and are involved in all industries – from small purveyors of coffee or tea, to multinationals supplying the technology and services that make daily life easier. Since family businesses participate in all industry sectors, they have had – and continue to have – a key role in the diverse concerns of sustainability, from waste disposal to climate change. One of the key features of family firms is their heterogeneity. Firms will differ in how they balance family and business objectives to address sustainability concerns. What we have found is that family business leaders who integrate religious beliefs into their business operations have developed idiosyncratic ways to adopt sustainability practices. But what shapes the adoption of these sustainable behaviours in the first place? Some of the world’s largest corporations can be defined as family businesses, such as IKEA, Walmart and Samsung. Other family firms may be well – or less well – known for their long-standing integration of religious principles, or their heritage in sustainability. Our studies suggest that religion can be a source of competitive advantage for family businesses. Examples include helping develop closer family relationships, a shared vision in business, and ethical decision-making. Religious beliefs and values have been found to provide family members with a source of fulfilment and satisfaction. Religious values related to caring, generosity, honesty and integrity, and forgiveness may drive family businesses to behave ethically while creating a unique culture around sustainability within the organisation. Our recent studies focus specifically on sustainability and Christianity in family firms. Sustainability is impacted by the personal values of business owners and managers, and Christian principles influence sustainability efforts and dayto-day decision-making – through which products, markets, and business opportunities may be eventually pursued. The central premise of a Christian sustainability perspective is that leaders choose to serve God first and foremost. BIBLICAL INFLUENCE The basic principle that directly relates to sustainability for family business owners who adhere to and practice the Christian faith is the existence of God revealed by Scripture. The ultimate Christian guideline is thus the Bible. The Bible calls for man to care for the earth and God’s creations in nature. Its narrative on sustainability is often overlooked. In Genesis I, one argument can be found: “So God created humankind in His own image […] and God said to them, ‘Be fruitful and multiply; fill the earth and subdue it; have dominion over the fish of the sea, over the birds of the air, and over every living thing that moves on the earth.” However, ‘subdue’ and ‘dominion’ do not grant permission to deplete any part of God’s creation. Instead, subduing the earth involves harnessing the power of various resources through advances in science and technology. Dominion integrates ownership and stewardship for responsible actions that reject abuse and misuse of environmental resources. Therefore, Christians are called to sustain and preserve the natural environment to ensure renewal and sustainability. 8 |
A CALLING TO BE MORE THAN STEWARDS From a Christian perspective, sustainability and stewardship are closely interrelated. Our traditional understanding of stewardship relates to conservation. The Bible calls for stewardship of the land and the search for shalom – the Hebrew word meaning peace. Shalom also relates to the practice of responsibility and accountability for the community and the environment. Christians are, therefore, encouraged to pursue sustainable practices. Christian values can encourage family business leaders to act as stewards of God’s creation and demonstrate environmental responsibility. This involves balancing interests involving responsibility to God and one’s fellow man when addressing sustainability concerns. Some Christian business leaders may reject introducing products whose production or marketing work against Christian principles related to sustainability. For others, Christian principles can constrain alternatives, making some decisions off-limits. Longterm thinking may include an unwillingness to invest in industries perceived as producing ‘unethical or harmful products.’ Christian leaders of family firms may choose to improve industry practices to support the environment. They may procure the best ecological solutions while exercising careful responsibility for God’s creation. Examples exist in companies such as Hobby Lobby, Cardone Industries, Tom’s of Maine, Chick-Fil-A, and Herman Miller. SIX DIMENSIONS Based on recent studies and a stewardship perspective, a Christiancentred view of family business sustainability practices is interrelated into six dimensions. Humility: There are significant limitations to man’s knowledge and actions. Man’s power to harness the environment is also limited. The multifaceted issues in the natural environment are poorly understood. Christian leaders of family firms should avoid the temptation to discredit the needs of diverse stakeholders concerned about the environment, or who need help dealing with environmental issues. Respect: Respect is required to show humility towards each other and the earth. The environment has divine value for everyone. Christian leaders of family firms should produce products and services that affirm sustainable practices and remind people that the earth was not created for humans alone but for humans and nature to live in a respectful balance. Selflessness: Christians should limit desires and make sacrifices if they respect the earth and the God who created it – especially where actions can negatively impact the environment. Firm leaders should reduce their impact on the earth. New products and services should be checked for potential threats against nature and/or people. Moderation: Christians should guide others to use what is needed, tempering materialism and consumption and providing checks on economic growth that threatens the environment. Christian family business leaders should stand in contrast to society’s unrestrained materialism and consumerism. Business practices must restrain the selfish tendency for satisfaction from nature. Mindfulness: A Christian perspective calls for thoughtful choices, considering the impact of every action on local communities and society. When the environmental impact of actions is known, and where alternatives are available, Christian family business leaders should revisit business policies concerning packaging and disposable products. Responsibility/Accountability: There is a challenge to correct inadvertent damage to the environment. Christians are responsible for using all available means to recover God’s balance of nature. Firm leaders must offer solutions in industries that harm the environment. Initiatives could prompt engagement in corporate social responsibility (CSR) to enhance a shared sense of responsibility towards each other and the environment. A MORAL IMPERATIVE If Christian family business leaders recognise the current environmental crisis as moral, ethical, and faith-based, one response may be to engage in specific sectors and avoid others. Another response may be a gradual change in business approaches and processes, targeting wasteful production practices while adhering to and improving respectful and responsible practices. This approach does not dismiss secular, widespread movements, such as CSR. Instead, it allows them to be adopted, as Christian principles and sustainability go hand in hand. FIFTY FOUR DEGREES | 9 Dr Allan Discua Cruz is a Senior Lecturer in the Department of Entrepreneurship and Strategy and Director of the Centre for Family Business at Lancaster University Management School. This article is based on Family firms: The impact of a Christian perspective on environmental protection and sustainability practices, by Dr Allan Discua Cruz, of Lancaster University, and Professor Miriam Isabella Cavalcanti Junqueira, of LeTourneau University (USA), forthcoming in the book Faith Traditions and Sustainability: New Views and Practices for Environmental Protection. And Exploring a faith-led open-systems perspective of stewardship in family businesses, by Dr Angela Carradus, of Manchester Metropolitan University; Dr Ricardo Zozimo, of Nova School of Business and Economics (Portugal); and Dr Allan Discua Cruz, of Lancaster University, published in the Journal of Business Ethics. a.discuacruz@lancaster.ac.uk
10 | If we are to mitigate against climate change, each of us needs to contribute. But are we, as individual consumers, willing to pay a premium for products that can help make a difference? Dr Anita Schiller and Professor Dakshina De Silva examine how much extra people are happy to fork out for goods that are better for the planet. WHAT PRICE A GREENER PLANET?
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The world is facing a climate change crisis. Extreme weather is more common; sea levels are rising; numerous species are facing extinction. At the heart of the crisis is human consumption of scarce ecological resources. Mitigating climate change requires changes in consumer behaviour – be it eating less meat, transitioning to electric from petrol-powered vehicles, flying less, or becoming more energy efficient. Greenhouse gas emissions generated indirectly by purchased goods and services make up a sizeable portion of an individual’s ecological footprint (EF). EF is a broad measure of human demand on the Earth’s ecosystem which offers a greater scope than the more narrowly defined – if better known – carbon footprint. People need to shift to environmentally- conscious purchases to limit further environmental damage. Policy-makers must understand the drivers for such changes if they are to encourage it. Our study investigated how much of a price premium consumers are willing to pay for green goods. This willingness appears to be increasing, and we looked specifically at the impact of increasing the prices of goods and services traditionally associated with higher carbon and other emissions if they were produced in a more sustainable way but at a higher cost. HOW MUCH WOULD YOU PAY? The law of demand shows that when a good or service goes up in price, it diminishes a consumer’s willingness and ability to pay. But how much does this apply to green products? Our data comes from the Netherlands, where the Dutch National Bank Household Survey collects data from a cross-section of the Dutch population, including using questions on climate action. As part of the survey, respondents are informed of a potential policy change, such as “Meat production is one of the main sources of greenhouse gas emissions. Suppose a global deal was made to make meat production less burdensome for the environment which 12 |
would increase the price of red meat by 1, 2 or 5 euro per kg.” They are given similar data for energy usage in their homes, fuel for their cars, and airline ticket prices. Each respondent is randomly assigned one of the three price variables and a variable indicating if the charge was voluntary or obligatory. Voluntary meant there was a conventional substitute available at the current price; obligatory meant there was no substitute. The results we analysed showed that for ecologically-friendly meat and energy, those willing to pay more in the voluntary category were in the majority up to the highest price increase, showing a willingness to pay a premium up to a point. However, for fuel and flights, most respondents were unwilling to pay the premium across all the price variables. The proportion of people willing to pay extra for fuel showed particularly minor variation across the different price increases. As prices increase for meat, electricity and air travel, our results indicate individuals were less willing to purchase or consume them. Respondents were indifferent to price hikes on fuel for car travel, however, possibly because prices are highly inelastic in any case, and alternatives to car travel often lack the convenience. This suggests that mitigating the environmental impact of car travel may have to come from other factors. For example, increasing the accessibility and viability of alternatives such as electric cars, through schemes such as the UK’s Plug-in Car subsidy payments of up to £3,000 for consumers buying an electric vehicle, which saw a growth in the market. A COMPLICATED ISSUE One way to encourage consumers to engage in environment-conscious purchases would be through a ‘carbon tax’, increasing prices of products with a higher environmental impact. Imposing a tax on the consumption of meat, air travel or household energy, for example, targets not only those keen to take measures to protect the environment, but also those who will reduce their demand to save money – for them, environmental benefits are a positive by-product. However, many governments worldwide have implemented some form of carbon tax, and the overall impact has been modest. Consumer budget constraints play a significant role in the purchase of green products, as many of them are expensive. It is possible that people on lower incomes have strong preferences towards green goods, but cannot afford to purchase them, and therefore choose the standard alternative. In turn, consumption taxes tend to be regressive and have potentially dangerous welfare repercussions, disproportionately impacting low-income individuals. This is problematic, as our results show it is higher-income earners who have a far greater impact on the environment. Instead, targeted policies, such as a carbon tax aimed at high-income individuals, would be needed. TARGETING THE RIGHT PEOPLE These findings have important implications for policy-makers, as interventions to reduce individual environmental impact can be more effective if they are tailored to diverse groups in society. Policy changes that increase the price of goods might motivate people to commit to more ecologically responsible consumption practices, as paying higher prices is less attractive. That people were willing to pay a price premium for sustainably produced meat and household energy presents policy implications for those products. Persuasion campaigns might be a promising avenue, as they demonstrate a positive voluntary response, and they might be particularly successful when targeted at higher-income homes with the means to switch to green energy. There is no blanket solution, but our results show where taxation, price increases or premiums might work to make a real difference. FIFTY FOUR DEGREES | 13 Dr Anita Schiller is a Lecturer in Economics, whose research interests include the impacts of natural hazards on societies, the effects of renewable and nonrenewable energy policies on local economies, and environmental economics. Professor Dakshina De Silva works in the Department of Economics, specialising in Industrial Organisation, Environmental and Natural Resource Economics, Regional and Urban Economics, and Applied Microeconomics. This article is based on Ecological footprint and willingness to pay for green goods: Evidence from the Netherlands, by Professor Dakshina De Silva and Dr Anita Schiller, of Lancaster University Management School; Tiffany Head, a BSc and MSc Economics graduate at Lancaster University, now an Economic Analyst at London Economics; and Professor Rachel Pownall, of Maastricht University. anita.schiller@lancaster.ac.uk; d.desilva@lancaster.ac.uk
14 | Everyone has a role to play when it comes to sustainability – especially accountants! Professor Jan Bebbington, Director of the Pentland Centre for Sustainability in Business, explains how a new programme developed with the Institute of Chartered Accountants in England and Wales provides the resources to ensure the next generation are ready for the sustainability challenges ahead. Educating for sustainability
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It can be too easy to limit our thinking around sustainability to the obvious action areas. Solar or wind power provision – check. Recycling methods and technologies – check. Carbon reduction – check. Accounting practices – oh, what would that entail? Yet accountants have a critical part to play in a holistic approach to tackling the environmental and social problems facing our planet. Many are already climate change activists. Contrary to popular perceptions, accountants do much more than deal in just spreadsheets and numbers, tax returns and billing. They have a major influence on actions and policies across businesses large and small – and as a result they can shape how companies approach their sustainability strategies and behaviours, playing a part in ensuring business operates within planetary boundaries. This might include working towards the United Nations Sustainable Development Goals (SDGs), addressing modern slavery reporting practices, or working with the seafood industry works towards more sustainable oceans. Accountants are everywhere. You can see examples in our own work here in the Pentland Centre for Sustainability in Business where researchers are at the heart of these exact topics – and Mahmoud Gad and Steve Young’s work around modern slavery features in these very pages. If future generations of accountants are to have a positive influence in these areas, then we need to recruit more of them with a sustainability mindset. We must ensure that aspiring accountants are aware of the issues facing the planet, and how they might play their part in addressing them as early as possible. If they do not know about these opportunities, these options, how can we expect them to take the responsibility and do what needs to be done? There are many ways to gain this sustainable development knowledge. This is why I have been working with the Institute of Chartered Accountants in England and Wales (ICAEW, a professional accounting membership body) on the development of the novel ICAEW Fundamentals of Sustainability Programme. PROVIDING INSIGHT The ICAEW have recognised the problems I mention above. They wanted to put together an educational resource for undergraduate and Master’s students – those who are at the very start of their professional journey into accounting. This is our chance to reach them when they are open to new ideas, not set in the ways of their profession. Younger generations have also been brought up as climate change, global heating, plastic pollution and mass extinctions have been more talked about – they have a base level of knowledge on which we can build, and expand into the world of accounting. The aim of the programme we have developed together is to provide insight into the nature of sustainable development concerns combined with an introduction to how accountants can play their part in tackling sustainability challenges. It provides an entirely free resource for students (and for lecturers should they wish to use it) to incorporate sustainability knowledge alongside their existing studies. Across the programme, we introduce key concepts in the sustainability domain, describe the ecological and social justice components of sustainability, and identify how accountants/accounting has responded to a sample of sustainability challenges, with a focus on climate change and forced labour. Even over a short course like this, you can make an impact on thought processes and behaviours – much as we as a business school look to influence organisations both private and public through our research, engagement and expertise. It is relatively easy to talk about these areas in general terms, but we all know the importance of demonstrating how it works in practice. Taking an abstract idea and turning into reality is vital not only for making an actual impact in the world but for inspiring others to follow. This is why the programme includes interviews with accountants in practice who are integrating sustainability into their work. In addition, my work as part of the SeaBOS (Seafood Business for Ocean Stewardship) project is also reflected in the final module on the programme where I bring sustainability aspects together. Just as accountants are but one part of the greater solution to our climate challenges, so I am one of many figures involved in SeaBOS. The initiative unites academics from many disciplines, from ecologists to accountants, to collaborate with nine of the largest seafood-producing corporations in the world. 16 |
Together we are working to champion ocean sustainability across a whole range of issues, including illegal fishing, forced labour in supply chains, antibiotic use in seafood production, plastic pollution in the oceans and the response to climate change. When aspiring accountants see examples like this – and hear from practising accountants – they can start to plot their own paths and imagine their roles in forging solutions. A SOUND FOUNDATION It has been a pleasure to develop our partnership with the ICAEW to develop this resource, and I am very excited to think that students across the globe are able to access the materials for free and develop sustainability literacy. Already, students who have taken the programme have spoken of how it has opened their eyes to the responsibility they have in supporting sustainable development. This is exactly what we were aiming for when we set out on this journey. I hope that in years to come there will be many more accounting voices in boardrooms and offices worldwide raising sustainability concerns and helping shape practice in positive ways. Maybe then, accounting will be more widely seen as a key part of saving the planet – because it really is. FIFTY FOUR DEGREES | 17 Professor Jan Bebbington is Director of the Pentland Centre for Sustainability in Business, and the Rubin Chair in Sustainability in Business in the Department of Accounting and Finance. The ICAEW Fundamentals of Sustainability Programme is a free resource available for students, and for university academics wishing to include the content in their programmes. The programme is online so it can be accessed and completed at a time that suits individual students. In total, it should take around 8-10 hours to complete. j.bebbington1@lancaster.ac.uk
18 | It is easy to assume that businesses in developing countries only pursue sustainability agendas because of pressures from customers in developed economies. But Professor Linda Hendry’s work with coffee producers in Brazil reveals there is much more to it than that – and we would know this if only we gave the businesses themselves a voice. Wake up and smell the sustainability
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The argument over the importance of sustainability is already won. Minority voices may continue to shout into their echo chambers, but there is acceptance across government, business, and society at large that this is a crucial sphere. Yet there is also a tendency to believe that sustainability is championed only in developed economies. Often, we see it that businesses in the western world are the ones pushing the agenda, bringing – if not dragging or forcing – companies in the rest of the world to follow suit. During my work with Brazilian coffee farmers, it has become apparent this is not the case. Our study looked at Brazilian coffee global suppliers, all located in the Cerrado Mineiro region. The Brazilian market supplies around 32% of the world’s coffee, the largest producer globally. Around 4,500 of these suppliers are in Cerrado Mineiro, supplying companies such as Nespresso and Illy. Each of the 20 companies we studied and spoke to are export-oriented and have adopted one or more sustainability-related certification. Buyers usually require this certification to improve trust and strengthen relationships, and it is easy to make assumptions as to the motives for suppliers pursuing this agenda. It has become increasingly important to me to give a voice to the Global South when it comes to sustainability. There are many companies in that part of the world who are supplying global supply chains, and whose behaviours have the potential to impact other companies. We impose our own thoughts and structures upon them, without listening to and learning about their beliefs and practices. From our perspective in the west, we might look at what happens with these coffee companies – and similar organisations across the many industries that operate as worldwide suppliers from the Global South – and think the only reason they are changing their practices is because we are forcing them to, to match our own beliefs. How wrong that would be. What we have found is that the western perspective of thinking ‘oh, they are all hard done by. Somebody is making them do it’ does not apply. Actually, what the people out there are saying is ‘we have some dignity here. We are not just being pushed; we want to do this. We are professionals. We are professionals who care about these things. We are not just doing them because someone is making us.’ FEEL THE PRESSURES As sustainability legislation in developed countries has grown stricter – and consumer attitudes have hardened – certification adoption has increased in value. For emerging economy suppliers, these pressures add to buyer requests to participate in certification schemes. Rather than this coercive pressure being the main driver in certification adoption – as has been widely assumed previously – we found that a desire for professionalism (what we refer to as normative pressure) and benchmarking against companies in the same field (mimetic pressures) are crucial motivators. Normative pressures are related here to suppliers’ relationships with other suppliers through cooperatives. Most participants achieved and maintained certifications supported by these cooperatives. Managers highlighted the existence of ‘group certification’ organised through associations or cooperatives, which led to crucial information and experience sharing. Beyond this collaboration and cooperation, the companies invested in research and innovation to respond to sustainability challenges, enabled through partnerships with research centres and universities. Mimetic pressures link to suppliers’ goals to improve process management. Owners would see how processes worked at other producers and wanted to improve in similar ways. There was benchmarking among members of the same field. The aim was to produce sustainably and to continually improve. 20 |
Compared with coercive pressures, these two factors were more central in influencing supplier certification adoption and improvement towards sustainability. These companies are adopting certifications because it is the right thing to, not because someone has made them do it. They also gain from it in many areas. ADDED BENEFITS Managers recognise the certifications as giving them competitive advantages – both in terms of sales and their internal organisation. They recognise the need to be sustainable if they are to carry on being successful, and if they want to be competitive in international markets. When suppliers obtain certification, we found they developed new competences across the business. This went beyond what we typically talk about with social, economic, and environmental sustainability to dig into other things, like cultural and institutional sustainability. Sustainability certification has the potential to improve a company’s reputation, build trust with other companies, increase employee wellbeing, reduce costs and environmental impacts, increase productivity, and enhance resilience by preparing them for a crisis. But for these competencies to develop, they must be a part of a wider company strategy and become ingrained in the overall culture. You must have systems and processes in place in your organisation that enable you to do these other things. Without that, you might use less water today, treat your workers better today, but then forget about it tomorrow because you do not have that institutional sustainability. Competences developed during the certification processes included: better financial management – leading to reduced costs; better management of environmental resources; better human resources management – leading to greater worker retention and motivation; an improvement in the sustainability culture across the organisation – positively affecting buyer trust levels; strengthening sustainability strategies; and improving management of processes, negotiations, organisational learning and inter-organisational relationships. We found evidence of a virtuous circle of sustainability learning. If you have good initiatives, if you have drivers that make you do things, then you get outcomes. If those outcomes are positive, that reinforces the drivers. You have a reason for doing something, you achieve something, and then that makes you want to do it more. A CHAIN REACTION As we can see, certifications result in new knowledge and skills. This can enable sustainability improvements across the supply chain – with the direct impact felt by those companies who work with the certified firms directly. This can help emerging economy suppliers to be better prepared to respond to international market demands around sustainability. Environmental damage can be reduced, labour and social conditions improved, information shared across the supply chain, and trust built further among partners. This is the type of effect that may be assumed if people think of certification as being driven solely by pressures from these partner firms in different countries. But, as we show, this is not the case. We have given a voice to the producers themselves and found their motives are much more than just responding to coercive pressures. These are people who, A. do not often have a voice, but B. are often impacted directly by sustainability issues. Often, they must deal with the consequences, so it is important to understand the perspective of these emerging economy suppliers and not just assume that western attitudes can be applied without a second thought. FIFTY FOUR DEGREES | 21 Professor Linda Hendry is Head of the Department of Management Science, and a Professor of Operations Management, with a main research focus on Sustainable Supply Chains Management. The article Developing global supplier competences for supply chain sustainability: The effects of institutional pressures on certification adoption, by Assistant Professor Michele Oliveira Pereira, of the Institute of Human and Social Sciences, Universidade Federal de Viçosa; Associate Professor Minelle Silva, of Excelia Business School, La Rochelle; and Professor Linda Hendry, is published in Business Strategy and the Environment. l.hendry@lancaster.ac.uk
22 | How well are UK companies reporting on modern slavery?
FIFTY FOUR DEGREES | 23 Legislation means all UK companies must publish modern slavery reports every year in a bid to tackle a pressing global issue. Dr Mahmoud Gad reveals how his research shows not all companies are entirely transparent, and the importance of full and accurate reporting in combatting practices which adversely affect millions of people around the world.
Modern slavery is a global problem. Millions of people suffer because of it, and it generates billions of dollars for criminal networks worldwide. It also poses a serious risk for businesses that may have modern slavery in their operations or supply chains, damaging their reputation and profitability. The UK’s Modern Slavery Act of 2015 marked a significant step in addressing this issue. It mandates companies to publish annual modern slavery and human trafficking statements signed off at the board level. However, recent research by Professor Steve Young and myself, working with the Financial Reporting Council and the UK Independent Anti-Slavery Commissioner reveals varying degrees of transparency in reporting practices among companies listed on the London Stock Exchange (LSE). We analysed the quality of reporting practices for a sample of 100 LSE-listed companies, across the FTSE 100, FTSE 250, and Small Caps. Our analysis covered reporting in the latest available modern slavery statements and annual reports as of June 2021. Our assessment framework is based on a disclosure template developed by the Business and Human Rights Resources Centre to evaluate FTSE 100 companies’ modern slavery statements published in 2018. The template covers six areas of reporting recommended by the Modern Slavery Act: organisation structure, policies, due diligence, risk assessment, training, and effectiveness. We added additional dimensions of reporting practice, such as readability, accessibility, cross-referencing, etc. We measured the quality of reporting at three levels: no/immaterial disclosure, some/moderate disclosure, and comprehensive/full disclosure. REPORTING ISSUES Some of our main findings in the modern slavery statements are: • Around one in ten companies did not provide a modern slavery statement at all. • Only one third of modern slavery statements were clear and easy to read. • Less than half of companies provided a clear and comprehensive discussion of modern slavery concerns in their organisational structure, operating and supply chains. • Only a quarter of companies disclosed results against their key performance indicators (KPIs), and just 12% confirmed they have made informed decisions based on those KPIs. • Only a third of statements clearly identified emerging issues or a long- term strategy. • Most companies provided a link to their modern slavery statement on the Home Office’s online registry, but many failed to provide a direct link to the document or to link to their most recent statement. For annual reports, some of our main findings are: • Reporting on modern slavery issues was surprisingly minimal. • Only 13% of companies referred directly to forced labour and slavery issues in their section 172 statement 24 |
(where companies describe how directors have considered the long- term consequences of their decisions, including their impacts on the community and the environment). • Only 15% of companies discussed modern slavery in the context of principal risks and uncertainties facing the business. • Only 18% of companies referred to performance indicators in the context of slavery and human trafficking. • Only one company included modern slavery KPIs in their section 172 statement. Surprisingly, our analysis revealed minimal reporting on modern slavery issues in the annual reports. Though the UK Corporate Governance Code does not explicitly address modern slavery, it requires companies to disclose risks and opportunities related to the success of the business. With the complexity of global supply chains and the potential economic and reputational damage caused by human rights abuses, modern slavery risks are – or certainly should be – a significant concern for businesses across all sectors, and thus in need of reporting beyond specific modern slavery statements. In fact, only 14% of the annual reports we studied provided a direct link to the corresponding modern slavery statement. This lack of cross-referencing not only reduces transparency on modern slavery issues but also undermines efforts to address the risks. Companies that consistently fail to crossreference their approach to modern slavery will likely struggle to receive recognition for their work in this area. Not all patterns in reporting practices were the same across all the companies in our sample. We found some crosssectional variation according to company size, sector, and business complexity. For instance, FTSE 100 companies tend to report more information on modern slavery than FTSE 250 and Small Caps, but the difference between the latter two groups is not significant. We also found that companies operating in sectors with higher modern slavery risk, such as those working in basic materials, utilities, and consumer staples, tend to provide more detailed disclosure than companies in low-risk sectors, such as tech and financial services. Finally, multi-sector companies tend to provide more transparent modern slavery disclosures than single-sector companies, reflecting their higher operational complexity and greater supply chain diversity. EFFECTIVE ACTIONS The research also highlights areas of concern in modern slavery reporting, including due diligence processes, risk assessment and management, and the effectiveness of actions taken by companies to address the issue. It is crucial for businesses to disclose modern slavery risks in their operations and supply chains, and measure the effectiveness of their actions to promote transparency and accountability. To ensure progress in the fight against modern slavery, companies must take a proactive stance in assessing and managing the risks associated with their workforce and supply chain. Boards must provide oversight and implement effective policies to drive real action in addressing modern slavery. Furthermore, companies should demonstrate the effectiveness of these policies through comprehensive and transparent reporting. Accurate and thorough modern slavery reporting is essential in the battle against human rights abuses. By promoting transparency and accountability, businesses can contribute significantly to the eradication of modern slavery and foster a more ethical and sustainable global economy. FIFTY FOUR DEGREES | 25 Dr Mahmoud Gad is a Lecturer in the Department of Accounting and Finance, and a member of the Pentland Centre for Sustainability in Business. The report Modern Slavery Reporting Practices in the UK: Evidence from Modern Slavery Statements and Annual Reports, was authored by Professor Steve Young and Dr Mahmoud Gad, of Lancaster University Management School, and commissioned by the Financial Reporting Council (FRC) and the UK Independent Anti-Slavery Commissioner (IASC). m.gad1@lancaster.ac.uk
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FIFTY FOUR DEGREES | 27 Across the Global South, there are women from less privileged communities who work hard to earn money that can make a major difference to their families. And yet, their businesses do not always reach their full potential. Dr Uzair Shah outlines his work in Pakistan and Ghana to explore how these entrepreneurs might use social media to expand their businesses and reach new customer markets, boosting their income and helping themselves and their families progress. Using social media to bridge inequalities
Not all businesses are created equal. Nor do all entrepreneurs share a level playing field. In my work, I look at social and digital inequalities and how they impact income generation in less privileged communities. Specifically, I have been working with female entrepreneurs in Pakistan and Ghana to examine how they might improve their situations – and one area that often comes up is digital inequality. While many of the people I spoke to – as well as their customers – have smartphones and use Facebook, Instagram, and other social media platforms, they do not exploit them for commercial advantage. In the UK, and in many other countries, small businesses can often rely on custom built on a social media presence, here that is not the case. I wanted to know why, and see how we might help these female business owners expand. MAKING NO PROGRESS In Pakistan, I conducted interviews and focus groups with women entrepreneurs from impoverished settings. I wanted to understand how inequalities impact their business activities, and how they might stop them making progress. As one woman said to me, “I’ve been doing this work for 10 years, but I feel I’m standing in the same place in my life where I was ten years ago.” The various inequalities mutually reinforce each other to limit the possibilities of progress. Because of their disadvantage, these women are not receiving support from the government or other authorities. They are on their own, and the disadvantage perpetuates. It was quite disheartening. Their business audience was restricted, neighbourhood-based. Those who would be passing by would be their only customers. Many of our participants were doing stitching or tailoring. They would make dresses, and sell them in a little shop, but only to people who knew them. A DIGITAL PLATFORM In Ghana, we are working with the NGO Girls Education Initiative Ghana (GEIG). They work with impoverished communities, looking at girls, and women’s education and supporting them. There are women who are already doing some business work, but mainly to meet their daily needs. Some were doing stitching, others embroidery, handicrafts, making traditional items, painting, running beauty salons, selling biscuits, juices, cakes, food items. All are vulnerable. Where they are, where they were born, the context in which they are living, mean they do not have any way forward to challenge their current circumstances. If they are able to better succeed in business, they might have that opportunity. We wanted to see how we can make it less vulnerable, less precarious. We believe that challenging the social digital inequalities can help them. It is about helping them understand the disadvantages they are experiencing. Because they have been living in that context, their disadvantage is in the background. They do not think about it. They do not question ‘why are we in this setting? How can we overcome this? What kind of support is available?’ By offering digital literacy programmes, we want to highlight how disadvantages are impacting their income generation, and the practical things they could do to circumvent those challenges and increase their business revenue. What about expanding their customer base? They had not thought about that, nor did they have the skills to do so. They did not know how to use Facebook to reach out to wider audiences, to increase their revenue. Almost all of them have mobile phones, and some have smartphones. But they use them for communication, making calls or sending messages on WhatsApp. They might connect with sellers or suppliers, but not use them to enhance their business activity. Social media platforms will not necessarily dramatically transform their lives, but they might provide additional opportunities. That is worth exploring; that could be valuable. Their potential customers use Instagram and Facebook, and other platforms, in Ghana and in Pakistan, to buy products. It could be their products. WORKING TOGETHER Beyond helping themselves, some of the women we spoke to were quite experienced, and all of them were keen to help others. Governments or NGOs seemed distant, and because of their daily financial troubles, many of the 28 |
entrepreneurs felt discouraged to go; they were not sure what kind of help they would get. What came to mind was creating a network able and willing to connect with one another and share insights. We interviewed one woman who had been in business for 15, 20 years in difficult circumstances, for instance. She was struggling with illness, and her family members were not really interested in taking the business forward. Here was a woman who has developed a rich understanding, and that knowledge would be lost. Why are we not privileging this knowledge? Why are we not creating some kind of platform where others are able to connect with her and learn from her? There was no such mechanism available in Pakistan or Ghana. If we can create these platforms, connect these women, generate digital literacy, then firstly it would help them expand their customer base, and hopefully increase their financial compensation. Also, it would allow them to connect with their peers to understand how they tackle issues, and to share ideas. We do not want someone from a privileged background to come and tell those from an impoverished background what to do. There is just such a disconnect, a social disconnect, a class disconnect. We want something where these women can share insights with one another and benefit from those who have successfully overcome significant challenges in their daily lives and in their business. GIVING THEM A CHANCE What I take issue with is that these entrepreneurs do not know about the opportunities open to them. We need to give them access to that information through networks and wider connections, help them develop the skillset to access information and explore possibilities for themselves, through social media and other channels. We should not assume they are incapable of using these platforms. They are managing businesses in difficult circumstances, they have abilities, so we should give them an opportunity to explore avenues for helping themselves. FIFTY FOUR DEGREES | 29 Dr Uzair Shah is a Lecturer in the Department of Organisation, Work and Technology. s.shah2@lancaster.ac.uk
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