New report raises alarm of modern slavery in supply chains
The latest Risk Index Report from BSI identifies China, India, Vietnam, Bangladesh and Myanmar as the five highest risk countries for human rights violations.
The report highlights the significant rise in organisations breaching international human rights regulations over the last quarter as key Asian economies adapt to tougher economic conditions.
Rising labour costs in China have led companies to diversify their supply chains into other high-risk countries that now account for 48 per cent of global apparel production, 53 per cent of global apparel exports, and 26 per cent of global electronics exports.
The latest BSI Risk Index report warns that efforts by Asian governments to boost their economies are having the unintended consequence of allowing child labour abuses to become more present in supply chains. Also highlighted were proposed changes to labour laws that may incentivise firms to restructure as “family enterprises”, making it easier to employ under-age workers in a country where 4.4 million children are already put to work. Two thirds of child workers are found in agriculture (69.5 per cent), and 17.5 per cent in industries such as garment manufacturing.
The Quarterly BSI Risk Index is based on intelligence from BSI’s Supply Chain Risk Exposure Evaluation Network (SCREEN) tool. The tool identifies major CSR concerns, such as brand protection risks and changes to global regulation including the US legislation aimed at eliminating forced child labour, EU draft conflict minerals law, and the UK’s Modern Slavery Act. All of which relate directly to complex supply chains worldwide and can subject an organisation to prosecution if their suppliers exploit human rights.
Those companies found in breach (legal repercussions notwithstanding), will also have to worry about brand reputation and the compromise of consumer trust. The latest generation of consumers, millennials, are focused on buying from ethical and responsible businesses, thus highlighting the increased importance for organisations to adopt a supply chain risk management program and implement risk-based sourcing strategies.
Likewise the ability to ascertain country-level threats provides the needed intelligence to filter risk to underpin a socially compliant and responsible supply chain. On this very subject Mike Bailey, EMEA Director of Professional Services, BSI commented: “Some organisations underestimate the damage that can be caused by not adopting and enforcing ethical practices across their supply chain. Command and control from the centre means nothing if it is not rigorously monitored and enforced. For too long, extended supply chains have obscured ethically questionable practices, tools such as SCREEN highlight country level corporate social responsibility risks helping increase visibility and awareness, and enforce a responsible and ethical supply chain.”
Mike continued: “Organisations can no longer turn a blind eye to the actions of their suppliers. The laws we are seeing today may only apply to larger firms, but they set a benchmark for the industry and smaller organizations will be forced to comply to work with the larger companies, by default. Products assembled or services provided by child labour or depending on minerals from conflict zones have no place in the modern world.”
