Is Your Supply Chain at Risk for Modern Slavery Violations?

A proactive stance is not only good business—it’s good for business

Ryan E. Day

August 14, 2017

What do cocoa, socks, and smartphones have in common? If you guessed risk of slavery in the manufacturing supply chain, you are correct. Does your organization have an international supply chain? Then it’s at risk. What are you doing to address the risks associated with modern slavery in your supply chain?

What is modern slavery?

The International Labor Organization (ILO) defines forced labor as “All work or service, which is exacted from any person under the menace of any penalty for which said person has not offered himself voluntarily.” Approximately 45 million people in the world live in slavery according the Global Slavery Index.

A few of the listed forms of slavery posted by Anti-Slavery International are:
• Forced labor
• Debt bondage
• Descent-based slavery
• Child slavery

How does slavery show up in my supply chain?

Although developing countries are high-risk as an entry point for slavery in your supply chain, modern slavery is not limited to the developing world. Due to high unemployment rates, and increasing political and economic unrest all over the world, countries like the United Kingdom are experiencing an influx of people searching for a better life, many of which are highly vulnerable to exploitation.

It’s easy to assume that something as egregious as slavery would be apparent. Unfortunately, that’s not the case.

According to the Modern Slavery Act Review, “Modern slavery is a particularly difficult crime to detect, investigate, and bring to justice because of the nature of the crime and the impact that it has on survivors.”

Victims of slavery are often either hidden or intentionally isolated from the public, both physically and/or emotionally. The difficulty in identifying physical detention aids offenders in keeping their practices secret. Due to the abusive treatment they are subject to, victims of slavery often won’t cooperate with authorities for fear of reprisal against themselves and their families.

Although your immediate tier one suppliers may provide a measure of transparency sufficient to assure no slavery is involved in its own manufacturing processes, the same may not hold true at the tier two and three levels. It is there that relaxed monitoring methods can put your supply chain at risk.

“Organizations can be implicated in modern slavery both directly and indirectly in a variety of ways,” says Catherine Beare, Director EMEA –Supplier Management, Intertek. “In their own operations, through their global supply chains, and through their involvement with any of their business partners.”

Want to find out what steps you can take to manage the risk of slavery in your supply chain? Check out this free seminar Understanding Modern Slavery in Your Supply Chain.

Anti-slavery legislation, standards, and your organization

Although slavery is publicly eschewed in many countries, the reality of slave labor in the lower echelons of manufacturing and service industries is highlighted in the news all too frequently. Reports continue to surface about slavery in sectors as diverse as fishing, mining, textiles, and construction.

The governments of some countries are fighting to reduce these inhumane crimes with legislation.

The Modern Slavery Act 2015 has been developed in the UK to create positive change by holding organizations accountable for their practices. According to the Sedex Modern Slavery Briefing, “The UK Modern Slavery Act is one of the most recent far-reaching pieces of legislation in the world addressing issues of slavery. The Act consolidates current slavery and human trafficking offenses, and introduces new preventive measures, support systems, and a regulatory body to oversee the issue. The legislation includes new measures including trafficking reparation orders, which encourage the courts to use seized assets to compensate victims and prevention orders to ensure that those who pose a risk of committing modern slavery offenses cannot work in relevant fields. The Modern Slavery Act also includes a Transparency in Supply Chains clause requiring organizations operating in the UK to address the issue of modern slavery in their supply chain.” This requirement for transparency has been created to clean up supply chains and enable organizations to disclose their progress with eliminating slavery from their practices.

“The Act also includes a Transparency in Supply Chains Clause,” says Beare. “The clause requires any company with a turnover of more than £36 million that ‘supplies goods and services’ and ‘carries on a business, or part of a business, in any part of the UK’ to publish an annual slavery and human trafficking statement.”

In passing the California Transparency in Supply Chains Act, the CA state legislature declared the “intent of the State of California to ensure that large retailers and manufacturers provide consumers with information regarding their efforts to eradicate slavery and human trafficking from their supply chains, educate consumers on how to purchase goods produced by companies that responsibly manage their supply chains, and, thereby, improve the lives of victims of slavery and human trafficking.” (S.B. 657, § 2, subd. (j).)

Basically, if your organization is doing large amounts of business with the UK or California—the seventh largest economy in the world—or is a supplier to such a company, you need to pay attention to compliance with these requirements.

What can I do about it?

If your business is engaged in international commerce, you need to be aware of the day-to-day realities for these people. Workers in your supply chain might be coerced, deceived, and abused in several ways. You want to be proactive with risk-based management tools and audit solutions to assess and benchmark your suppliers.

“What this means is you need to publish an annual “Slavery and Human Trafficking Statement,” explains Beare. “Those who fail to publish a statement could be liable to court action for failing to comply. It will most likely be policed by employees, stakeholders including investors, NGOs, and the media.”

It’s your responsibility to demonstrate good corporate governance across your supply chains. It’s your job to measure business risk, capacity and capabilities, workplace conditions, product quality and safety, security, and environmental sustainability throughout your supply chain.

There’s no question that this requirement for a more in-depth risk management places additional burden on your organization, but non-compliance could be catastrophic for your company’s brand and ultimately, profits.

Want to find out what steps you can take to manage the risk of slavery in your supply chain? Check out this free seminar Understanding Modern Slavery in Your Supply Chain.

About The Author

Ryan E. Day’s picture

Ryan E. Day

Ryan E. Day is Quality Digest’s project manager and senior editor for solution-based reporting, which brings together those seeking business improvement solutions and solution providers. Day has spent the last decade researching and interviewing top business leaders and continuous improvement experts at companies like Sakor, Ford, Merchandize Liquidators, Olympus, 3D Systems, Hexagon, Intertek, InfinityQS, Johnson Controls, FARO, and Eckel Industries. Most of his reporting is done with the help of his 20 lb tabby cat at his side.