A new way to end worker abuse in supply chains
You can be liable for abuse by your suppliers. ES3G gets smart about spotting it.
PreSeed Now brings you an in-depth profile of a different B2B or deep tech startup every Tuesday and Thursday. Subscribe to get it straight to your inbox.
Keeping their supply chains clean of human rights abuses is an increasingly important concern for a wide range of businesses.
New laws around the world have made them more than just a PR risk.
Today’s startup believes it has a scalable solution to the problem. It collects regular data from those who should know about any problems the most–the workers themselves–in an interesting way.
Scroll down to read all about ES3G.
Oh, and if you’ve recently signed up to PreSeed Now, you’ve joined us at a good time. Over the summer we’ll be working on some exciting additions to our offering, including new types of content and improvements to our popular Startup Tracker.
ES3G wants to stamp out bad behaviour in supply chains… with help from workers
As we’ve explored in the past, supply chains can pose a tricky risk for businesses. If one of your suppliers is abusing their workers, you could be breaking all manner of human rights laws around the world that have hit the statute books in recent years.
ES3G is a startup looking to help businesses manage this risk and track suppliers’ progress in fixing issues. An abusive company isn’t necessarily going to be honest about any changes they’re making, so ES3G goes directly to the people who know best; the workers themselves.
Workers download an app that surveys them on how they’re being treated. It asks them about any harassment, discrimination, modern slavery, child labour, health and safety, cleanliness, pay, and working time issues.
These questions are asked on an ongoing basis, incentivised with prize draws, to track the way the picture might change over time.
The resulting data is then fed back to companies up the supply chain (ES3G’s customers) so they have a hopefully credible source of information they can use to show they’re complying with the law.
The software offers a dashboard with ‘traffic lights’ that highlight where there are any problems. Founder Tim Nicolle describes ES3G as like Trustpilot or Yelp for workers.
Listening to workers
So far, so clear and simple. But an obvious question springs to mind: won’t already abused workers be discouraged from using such an app?
Nicolle says ES3G’s approach to ensuring its data is credible is to work with the workplaces.
“We get to the workplaces through their stakeholders, their international corporate customers.”
For example, a major supermarket chain will have suppliers all over the world. As part of its legal compliance process, it would tell those suppliers that they will only get business if they implement ES3G to survey their staff.
The supplier then sends ES3G a list of relevant employees and asks those workers to install the app on their personal phones. Workers typically sign up with their payroll number and date of birth, which are checked against the list provided by their employer.
“If you are a supplier to even quite small companies, especially in Europe or the US, you're already used to social compliance processes, onboarding processes, providing documents, or having auditors turn up periodically,” says Nicolle. “So this is just something which workplaces are used to.”
“Social auditors will tell you most factories smell of fresh paint when you turn up with notice,” says Nicolle, suggesting factories will often be cleaned up to show auditors a staged version of reality.
“And often the auditors are actually paid by the factories themselves, so it's a circular, self-serving tick-box process… it doesn't really get to the bottom of whether there are issues. That's what continuous monitoring achieves, which is what we deliver.”
Engaging with workers
To encourage workers to take part, ES3G uses a prize draw game mechanic. Workers must answer 10 random questions from a total of 75, every time they take part in the draw.
“Each time they run the app they have a chance to win a prize, and they find out [if they’ve won] next time the app runs. They also get rewards for streaks and other activities in the app,” says Nicolle.
“With 75 questions, most workers will have answered all the questions two or three times each month. We typically see more than 40% of a workforce providing feedback on a continuous basis and we would expect the proportion to go up if there are matters arising.”
But isn’t there a chance that already abused workers would be further abused into returning false results? Nicolle explains that there are two possibilities at play here.
Firstly, workers might be worried their factory would lose work if they tell the truth about the conditions they suffer, and they’ll lose their job in turn. Secondly, they might worry they’ll face harassment and abuse for telling the truth.
Nicolle says the app is designed to keep individual workers’ identities anonymous.
“We go to great lengths to keep everything confidential. We don't know names, email addresses, and phone numbers of workers. We take no [device] permissions in the app at all,” says Nicolle.
“We have a charter that's publicly posted in the workplace–signed by us, signed by the workplace, and signed by the stakeholder that initiated our involvement–which sets out workers rights. So we have an agreement with the workers directly, and we keep all that information confidential.”
He adds that while the ES3G dashboard lets users drill down into cohorts of workers, it’s designed to make it very difficult for companies to link a specific response to a particular worker.
“It's about confidence and trust. In the end, these processes work best when workers experience improvements. So if they are complaining that they don't have long enough to eat their food at lunchtime, or the toilets are dirty, or there's discrimination, and they see the workplace then taking actions to deal with that, trust builds and we're in a virtuous circle.”
The story so far
Rather than coming from a human rights background, Nicolle worked in banking before founding PrimaTrade, a software company working in the supply chain space. Observing supply chain data, he says they spotted an opportunity.
“We could see that there were significant deficiencies in the way workers’ work or treatment is monitored today with the tools available today. And we invented a technology solution to fill in the gaps.”
ES3G was spun out as a new company, with Nicolle as founder and chief product officer. Kris Van Broekhoven is CEO and comes from a banking background with a focus on trade and commodity finance.
“Our software doesn't replace the existing audit processes, it can make them more safely be done less frequently. So there's an opportunity to save money in the social audit budget. But at the same time, there's a big gap in the market here,” says Nicolle.
“Asking workers how they're treated is much more efficient, and much more likely to reveal the truth, than asking workplaces to do a tick-box compliance exercise about what their policies are.”
But the initial version of ES3G didn’t quite hit the target. It was priced too high for the market to bear. They went back to the drawing board and developed an automated system that could be delivered at a suitable price point.
They also had to change the kinds of questions they were asking workers. Nicolle devised the initial set of questions himself based on existing social audit frameworks. But users’ feedback noted that the startup needed to spend time with people who have deep expertise in the field and devise better questions.
And so ES3G brought in experienced human rights professionals to work on the product.
“They have completely destroyed version one of our platform. The algorithm is the same, the frameworks the same, the UI is the same, but the guts of it have been ripped out and re-engineered with their expertise in human rights due diligence,” says Nicolle.
“I've had to swallow a lot of pride, but that's okay. The important lesson here is to listen to the market, listen to your customers. Don't be too pigheaded about things; no sacred cows, be ready to rebuild.”
The new version of the product is set to launch next month, Nicolle says, with a major retailer deploying it at 30 sites.
Go deeper on ES3G
Much more on their funding, vision, competition, and challenges: