Forced Labour Implications in Global Supply Chain

The battle against forced labour in global supply chains has gained momentum in recent times, not least thanks to coverage of the dramatic situation of the Uyghur population in the province of Xinjiang in China and the legislative proposals which have emerged in reaction, writes Thomas Lobert (pictured), Solutions Consultant Global Trade Intelligence at Descartes.

In the United States, the Uyghur Forced Labor Prevention Act (UFLPA) has, for example, prohibited the import of goods manufactured in whole or in part by forced labour and originating from the autonomous region of Uyghur since June 21, 2022. At the European level, a much-debated bill will be voted on by MEPs with implementation expected at the start of 2024. In Germany the law on corporate responsibility in the supply chain came into force on January 1, 2023. Similar laws are in force or in preparation in other countries in Europe.

Meanwhile, in the UK, what are the implications of forced labour in the management of international supply chains? And what can businesses do to create more ethical and responsible supply chains in this regard?

1. Forced labour: reinforcement of UK regulation
Forced labour is considered a serious crime in the UK. In 2009, a standalone offence of holding a person in slavery, servitude or forced labour was included in section 71 of the Coroners and Justice Act, while a House of Lords private members bill was proposed in July 2021, that would have seen significant amendments to the Modern Slavery Act 2015 (MSA), significantly increasing accountability for abuses occurring in the supply chain of UK multinational corporations. Unfortunately, little seems to have happened since those amendments were tabled, and meanwhile, the UK’s risk rating for critical violations has increased, according to the Supply Chain ESG Risk Ratings Report 2023.

Despite this lack of regulatory enforcement, UK businesses cannot afford to maintain a ‘laissez-faire’ attitude to forced labour within their supply chains. According to research from Deloitte, amongst the changes consumers are making in their purchasing decisions, sustainable and ethical practices are becoming more important, with consumers actively choosing brands with ethical practices / values ; ceasing to purchase certain brands or products because of ethical concerns ; and even contacting brands to raise an issue regarding sustainability or ethics.

2. Identifying forced labour: a complete ecosystem
Forced labour refers to situations where workers are forced or threatened in any way to work against their will, often in inhumane and abusive conditions. This can happen at any time in the supply chain: from sourcing raw materials to manufacturing products, including distribution. It is a serious violation of human rights and a form of modern slavery that affects millions of people around the world.

This concern is not limited to the practices of a company alone, but extends to its suppliers and external service providers. The entire chain must be able to be audited. We must be vigilant about working conditions and the location of the company and its suppliers. For a Chinese supplier, for example, is the production plant close to a Uyghur forced labour camp?

As global supply chains are infinitely complex and constantly in motion, establishing long-term, reliable risk monitoring and visibility is challenging. Additionally, government agencies do not publish lists of companies suspected of using forced labour, further complicating background checks on potential suppliers.

3. Take action NOW
Despite its perceived complexity, there are actions and practices businesses can put in place to bolster the fight against the use of forced labour within their supply chains:-
· Identify risks: be alert to the circumstances that may encourage the use of forced labour
· Diversify sources of information to understand working conditions within your supply chain (talk with your suppliers’ employees, examine your internal policies in detail, collaborate with NGOs, etc.)
· Always be aware of the laws in force on slavery and forced labour
· Review and implement internal compliance plans (ICP): the control measures required to monitor the compliance of exports and international trade are increasingly taken into account.

Thorough monitoring is essential in the fight against forced labour. Analysis firms like Kharon have developed their own research methods and their network of international experts to identify companies at risk, particularly with regard to forced labour. This information can then be implemented into a due diligence solution to continuously analyse all third parties in the supply chains.

Conclusion

Today, based on a list of 50 entities sanctioned by a government, it is possible to identify more than 8,600 companies associated with these 50 entities. Every company in the world should be able to guarantee that their supply chain is free of forced labour. This includes identifying at-risk suppliers, promoting fairer supply chains and implementing solutions to ensure all suppliers meet these working standards. Not taking action is no longer no option.