Strengthening Supply Chain Resilience: The Critical role of Modern Slavery Due Diligence April 2024

When you think about supply chain resilience, what springs to mind? Flexibility, robustness, diversification, transparency, continuity, risk management, security of supply? Flashbacks to loo roll gate, or PPE or building materials shortages during COVID-19 anyone?

From my experience, modern slavery due diligence rarely gets a mention when businesses talk about supply chain resilience. Yet supply chains rely on people to keep them going – they’re our most valuable resource. If people in our supply chains are being exploited or in forced labour, this represents a significant risk factor, a vulnerability that can compromise the integrity and stability of our supply chains.

With an estimated 50 million people living in slavery worldwide and with G20 countries estimated to be importing US$468 billion of goods at risk of containing modern slavery, the sad reality is that no supply chain can be considered risk-free.

Unfortunately, these risks are growing – as global conflicts escalate and the impacts of climate change worsen, more people are becoming displaced and vulnerable. These vulnerabilities make them prime targets for exploiters and traffickers, who prey on their desperation.

Modern slavery due diligence is all about identifying, preventing, mitigating and remediating the risks of forced labour and other forms of exploitation, in both our operations and supply chains.

So, what’s the link between supply chain resilience and modern slavery due diligence, and why do businesses need to prioritise both?

Legal compliance

The waves of global due diligence legislation are coming in thick and fast. German Supply Chain Due Diligence Act, The Uyghur Forced Labour Prevention Act, the EU Corporate Sustainability Due Diligence Directive and the EU Forced Labour Regulation to name a few (the last two hot off the press).

Failing to comply with these regulations may result in seizures, sanctions and financial penalties – up to 2% of global turnover in some cases.

How confident are you that there’s no forced labour in the products and materials you’re importing? If you’re involved in procuring solar PV you’re probably all too familiar with this conversation. In 2021 approximately $20 million worth of solar panels were detained by U.S. Customs and Border Protection over suspected ties to forced labour. Other categories considered high risk include electronics, garments, food and drink…the list goes on…

Risk mitigation

Instances of slavery or labour exploitation can disrupt operations, leading to production delays, and damage to brand reputation. Think about the garment workers striking in Bangladesh over worker exploitation – thousands of factories were forced to halt their production due to the protests, disrupting supply chains for many top global fashion brands.

In your quest for efficiency and cost-effectiveness, think carefully before you ditch your modern slavery due diligence and go with the cheaper alternative – it could turn out to be a risk you wish you’d not taken.

Reputation management

Consumers, investors and stakeholders increasingly expect companies to uphold ethical standards and demonstrate a commitment to social responsibility. Look at the recent CCLA Good investment Modern Slavery UK Benchmark and their Find it, Fix It, Prevent it initiative as an example of investors taking the lead on this.

If slavery or labour exploitation is uncovered in your supply chain, can you, hand on heart, demonstrate to key stakeholder groups that your business is proactive in its approach to preventing, identifying, managing and mitigating modern slavery risks in your supply chain?

Businesses shouldn’t be vilified for finding instances of exploitation – we need to get better at the ‘find it, fix it, prevent it’ approach, instead of claiming that there’s no slavery in our supply chains. But if you do find it and you can’t demonstrate this proactive approach, then your reputation could be in serious trouble.

Supply chain collaboration and partnership working

Integrating modern slavery due diligence into supply chain management strategies builds a culture of responsibility, transparency and accountability. Working with your supply chain collaboratively to address modern slavery and labour exploitation risks rather than risk dumping (‘you’ve signed our code of conduct – it’s over to you now’) helps foster stronger partnerships – the kind that are invaluable in volatile, uncertain times. And I think we’ll all agree that we’ve got plenty of those ahead of us.

Let’s act now to prioritise modern slavery due diligence in our operations and supply chains. Safeguarding human rights and upholding ethical standards isn’t just nice to have – it’s a strategic necessity. Let’s get better at articulating the business case for action and ensuring supply chain resilience forms part of this.

A robust business case for modern slavery due diligence isn’t just beneficial, it’s the cornerstone of an effective strategy. Without it, successfully integrating modern slavery risk management into your operations and supply chain is unlikely.

Interested in how we can support you with your modern slavery due diligence? Get in touch with us today.