Op-Ed: The Rising Risk of Modern Slavery in Supply Chains and How to Address It

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Photo courtesy Paul Prescott

As global upheaval continues to make 2017 an unpredictable year for supply chains, another risk factor has arisen as one of the year’s top concerns: massive migration caused by ongoing conflicts, poverty and famine across the globe have triggered an uptick in human trafficking and modern slavery.

Reports about slave labor and abuses aboard fishing vessels in Thailand are making the news yet again, joined by headlines about child and forced labor involving Syrian refugees making clothing in Turkey. Government actions to address these issues represent one piece of the puzzle to ending human rights abuses and modern slavery.

On one side of the Atlantic, stepped-up immigration enforcement under the new Trump Administration is causing human rights organizations to cry foul, as they note this only serves to make migrants more vulnerable to human trafficking and abuses. Additionally, the possible repeal of the Dodd-Frank Act’s Conflict Mineral Act is compounding the concern. Global risk analysts Verisk Maplecroft are calling Trump’s actions a “gift to human traffickers,” and warn that these moves by the U.S. government also increase the risk for businesses. Their Human Rights Outlook 2017 says human rights issues have emerged as one of the top risks for businesses in 2017.

On the other side of the Atlantic, the United Kingdom is taking steps to increase enforcement of the U.K. Modern Slavery Act, which is entering its second full year post-implementation. Passed in 2015, section 54 of the Act requires transparency in supply chains for companies over a certain size that conduct business in the U.K.

While the uncertainties of Brexit are causing concern for global supply chains, this legislation isn’t going away, and increasing public awareness of modern slavery makes compliance the only option moving forward. Of course, compliance with the Act brings its own set of issues; not unlike Dodd-Frank in the U.S. which initially stirred up the bee’s nest but soon died down to a low hum.

The Modern Slavery Act requires certain companies to publicly report how they are addressing modern slavery—which includes human trafficking, child and forced labor, and other human rights abuses—within their supply chains. While the U.K. government allows for wide latitude in reporting on a company’s actions to combat modern slavery in their supply chain—including informing the government they’ve taken no action at all—the publication of these reports and ranking by some aggregators means that NGOs, media and the wider public will sit up and take notice of what is reported.

Although the U.K. has said that the actual contents of the submitted statement on modern slavery is up to each company; the Act suggests six areas of focus:

  1. Business structure and summary of operations and supply chain;
  2. Corporate policies relating to modern slavery and human trafficking;
  3. Due diligence processes in place to address and prevent human trafficking and modern slavery;
  4. Identified areas of risk in the supply chain and the steps taken to mitigate those risks;
  5. Effectiveness of current approaches to avoiding human trafficking and modern slavery;
  6. Training about modern slavery and human trafficking, both within the company and supply chain at large.

As of Jan. 31, 2017, the U.K.’s Transparency in Supply Chains (TISC) registry, which publishes the modern slavery statements submitted by organizations, had more than 10,000 organizations in its system. They expect this number to grow upwards of 20,000 by October, which is the final deadline for required compliance for 2016. TISC isn’t the only organization collecting and publishing these reports, which only increases public scrutiny of companies’ actions, and makes defending headlines about modern slavery in their supply chains with claims of ignorance much more difficult.

One answer to complying with the Act is increased and more focused audits, however, many global companies struggle with corrupt or ill-trained auditors, which can increase risk rather than mitigating it.

One of the biggest risk factors to poor auditing is lack of supply chain visibility. Without having a clear picture of every aspect of the supply chain, companies leave themselves open to risk and to the consequences that can befall an unknowing supporter of modern slavery, including supply chain disruption, fines, legal action and public backlash–not to mention having inadvertently contributed to the ongoing human rights crisis.

Cloud-based collaboration and visibility solutions are the best way to shine a light on every aspect of the supply chain, so you can uncover and resolve any potential risk factors before they become public record. Collaborative technology solutions like those found in Global Trade Management (GTM) software are the key to clear visibility up and down the supply chain. GTM solutions for social compliance audit management and restricted party screening can help companies increase supplier collaboration and visibility, ensure supplier accountability, and are a conduit for broader, proactive supplier management activities including traceability.

Armed with solid information about human trafficking and labor conditions in their supplier network, companies will find themselves better positioned to respond to the U.K. Modern Slavery Act and to increased enforcement in the U.S., as well as weather the regulatory changes ahead for 2017.

 

By Nick Boland, Amber Road director of product marketing – EU


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