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The U.K.’s Modern Slavery Act of 2015 was a groundbreaking step toward the goal of ending modern slavery throughout the supply chains of all large companies. One year later, a Thomson Reuters report surveying global leaders revealed that 62 percent only conducted due diligence on the first tier of their third-party networks and just 16 percent labeled themselves “sufficiently knowledgeable” about slavery and forced labor. Despite noble intentions to stamp out unethical labor practices, an onslaught of high-profile modern slavery scandals in the past two years alone shows that compliance in this area is still woefully lacking.
The disturbing supply chain of a beloved staple
A recent high-stakes investigation by the BBC has revealed that multiple tea farms supplying popular brands including Lipton are falling afoul of labor laws. An undercover reporter bravely put her own physical safety on the line to corroborate the reports of more than 70 women workers that their supervisors were perpetrating sexual abuse.
The shocking report has led to multiple retailers denouncing the company in question–James Finlay and Co. Sainsbury’s promises to take “robust action to safeguard workers” while Tesco is opening “constant dialogue”. Starbucks even went as far as to suspend purchasing from the company altogether.
As these retailers scramble to find alternative suppliers or force James Finlay and Co to come into compliance, it’s clear that intensified and expanded due diligence will have to take precedence in the process.
Dangerous third-party activity
Across the Atlantic, the United States is experiencing its own series of violations revolving specifically around child labor. Packers Sanitation Services Inc. LTD has paid a fine of $1.5 million for employing more than 100 minors in hazardous occupations that exposed them to heavy machinery and dangerous chemicals. Packers provided services to major companies including Cargill Inc. and JBS Foods.
Late last year it was revealed that Hyundai Motor Co.’s supply chain was rife with child labor violations, from their own assembly lines to at least four major third-party suppliers. Hyundai initially argued that there were just a few isolated, accidental incidents–however once it was uncovered that there were multiple violations at multiple sites, the argument fell flat. Hyundai will divest from the Alabama subsidiary and has conducted its own audits of 29 suppliers to ensure compliance going forward.
These major events are part of the overall rise in child labor violations that has resulted partially from increased reliance on migrant workers in a time of dwindling labor availability. When large companies put pressure on third parties to keep the supply chain going, they must also lean heavily into ensuring those third parties don’t cut corners on employment standards.
Spotlight on underutilized tools
The dramatic rise of modern slavery incidents makes it clear that despite global efforts to stem unethical labor practices, there’s a missing piece that’s holding companies back. If multinational companies are struggling to maintain proper governance and protocols in regard to third parties, it’s almost a given that smaller companies with fewer resources are experiencing even more difficulty gaining comprehensive visibility into supply chains.
As compliance requirements continue to expand, it’s clear that the only way to keep regulators satisfied without pouring immense resources into risk and compliance expansion is to leverage the growing body of compliance technology.
Ethixbase360 provides the comprehensive due diligence that companies of all sizes require to bring clarity to supply chains, with due diligence tools including a Modern Slavery Questionnaire. This Questionnaire makes it simple to vet third parties for compliance with modern slavery regulations including the German Due Diligence Act.
Embracing the portable due diligence model
It’s clear that the burden of compliance in terms of modern slavery has placed a mounting strain on companies in all industries. Rather than expanding risk and compliance teams to tackle vetting manually, many organizations are opting to use the portable model of due diligence, in which third-party candidates complete their own due diligence and receive a report they can bring to as many companies as they want.
By altering our approach to modern slavery compliance and leveraging developing technologies, companies the world over can simplify the mission to end modern slavery.
