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Business Risks
Articles
Executive summary
Regulating global supply chains to ensure fair living wages and acceptable working conditions is an ethical maze. With varying employment laws challenging transparency and workers' rights differing between international jurisdictions, collective action and industry-wide partnership arguably are needed to tackle the issue head on.
Implementing tighter due diligence processes to ensure all links in the chain are fully compliant with local regulations and delivering against human rights performance metrics is gradually helping to improve the supplier selection process.
While positive progress is being made in certain quarters to improve workers' rights and make ethical supply chains more visible and transparent, concerns continue to be raised on whether sufficient improvements are being made and initiatives are truly moving the needle.
This report presents a range of considerations and perspectives for corporate risk managers, procurement teams, sustainability officers and key decision-makers seeking to strengthen due diligence processes and de-risk their supply chain, while considering the broader social and environmental impact of their international operations.
Headlines
- Transparency remains a challenging agenda for CEOs and brands globally, with the practical issues associated with trying to establish a 100% view of the end-to-end supply chain, and local customs and regulations varying between jurisdictions making it harder to level-set benchmarking of fair work conditions.
- Supply chain visibility: Demonstrated commitment to ethical supply chains has become an 'insurability' consideration as insurance providers and underwriters place closer scrutiny on reputation risk and social and environmental performance.
- A growing number of organizations are reporting on the success of their social impact initiatives. However, with only 3% of the companies surveyed in the 2021 Just Transition Assessment disclosing their decarbonization plans and the protection of workers, the findings suggest there's still significant ground to be covered.
- Thinking beyond the immediate supply chain. Broadening the due diligence criteria to include the extended supply chain — the suppliers of direct supply chain vendors —could be of value for higher-risk exposed industries such as tech, food production, mining & minerals and fashion, where a network of interconnected suppliers is likely to be working with varying workplace practices.
- Local community partnership and engagement: Building close ties and investing in the local community can help to identify and successfully manage emerging worker and workplace risks, forming part of an audit and compliance framework.