Executive summary

Human Right in the Global Supply Chain
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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.

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Published September 2023

Disclaimer

CONDITIONS AND LIMITATIONS Gallagher's global operations, including a network of correspondent brokers and consultants, offers client-service capabilities in more than 130 countries around the world. This report and supporting information is not intended to provide legal or financial advice and reflects our understanding as of September 2023. It should not be regarded as a comprehensive statement of the law and/or market practice in the regions covered. You should not act upon information in this publication nor determine not to act, without first seeking specific legal and/or specialist insurance and risk management expertise. Should you require advice about your specific insurance arrangements or claim circumstances, please contact your Gallagher account representative.

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