The State of Ethical Sourcing
The State of Ethical Sourcing
Forced Labor, in its most contemporary form, affects over 21 million people and spans across some of the most globalized industries in the world. From electronics to automobile manufacturing, forced labor has taken an increasing presence in supply chains, and is becoming a serious issue that companies need to be aware of.
The leading SME business magazine in the UK, Business Matters, recently commented on a reported on modern day slavery in the construction industry. The report called, Hidden in Plain Site - Modern Slavery in the Construction Industry, published by LexisNexis Business Insight Solutions came to the conclusion that modern slavery is common, concealed and subject to inadequate prevention, policing, and prosecution in the construction industry. The report continued to explain that the construction industry employs around 7% of the global workforce, and the overwhelming presence of modern day slavery in construction supply chains puts thousands of workers at risk.
Many areas of the world have taken a proactive role and implemented compliance regulations to mitigate risk, but modern day slavery still prevails. So how does a globalized economy attempt to formally mitigate slavery from supply chains?
The United States took a strong stance on ethical sourcing in supply chains back in 2010 when California passed the California Transparency in Supply Chains Act (SB-657). SB-657 stipulates that any company doing business in California, with revenue over $100 million, must report their efforts to mitigate slavery in their supply chain.
The United Kingdom recently joined anti-slavery compliance efforts and implemented the UK Modern Day Slavery Act. Similar to California's SB-657, The UK Modern Day Slavery Act stipulates that any company doing business in the UK with revenue over 36 million pounds is required to report their efforts to mitigate slavery in their supply chain. To build on this, the new UK Prime Minister Teresa May committed to spending 33 million pounds on global initiatives to tackle modern day slavery in supply chains.
The European Union was also in the spotlight for ethical sourcing compliance regulations during the beginning of 2016, as there was much pressure to pass a conflict minerals law. The EU spent the beginning of 2016 negotiating a law to make companies have to report the origin of tin, tantalum, and tungsten used to produce good in their supply chains. While the law is still in its final stages of implementation, the EU passing conflict minerals legislation is a positive step forward for global ethical sourcing efforts concerning conflict minerals. The Ethical sourcing of Conflict minerals has also been addressed by the US with the Dodd-Frank Act, section 1502. Section 1502 states publicly traded companies must report the origin of 3TG used in their products to the Securities and Exchange Commission.
While countries and regions of the world have taken a proactive approach to mitigating the risk of unethical sourcing in supply chains, there is still much more work to do. What truly makes a difference is companies taking a proactive approach to mitigating risk. This is no easy task. Companies should know that there are many tools and resources available, to optimize their compliance efforts. Every company that puts compliance and ethical sourcing as a top priority can make a positive change on terrible issues like modern day slavery and conflict minerals. To learn more on how software tools can optimize compliance, click here.