Collaborative Compliance: How Purchasing, Supply Chain, and Compliance Teams Can Combat Forced Labor

In the era of globalization, supply chains have grown increasingly complex, with goods and services passing through multiple countries before reaching consumers. This complexity has created challenges in ensuring products are accessible from forced labor. Stricter regulations and tighter customs controls force companies to expand and improve their supply-chain due diligence. Purchasing, supply chain, and compliance teams must work together to navigate these regulations and ensure their organizations are not inadvertently supporting forced labor.

The Legal Landscape

Forced labor is a serious human rights violation, and governments worldwide have enacted laws to prevent goods made with forced labor from entering their markets. In the United States, the Tariff Act of 1930 prohibits the importation of goods made with forced labor. Similar laws exist in the European Union, Canada, and Australia. Companies that fail to comply with these laws risk having their shipments detained or seized and face damage to their reputation and bottom line.

Collaborative Strategies for Compliance

Purchasing, supply chain, and compliance teams must collaborate to ensure their organizations comply with forced labor laws. Here are some strategies these teams can implement:

• Map the Supply Chain: The first step in ensuring compliance is to map the supply chain. This involves identifying all suppliers, subcontractors, and sourcing countries. Particular attention should be paid to countries and industries with a high risk of forced labor.

• Conduct Regular Risk Assessments: Teams should conduct regular risk assessments, prioritizing high-risk suppliers. These assessments should consider factors such as the country of origin, type of product, and labor practices in the industry.

• Implement a Robust Audit Program: Audits are crucial tools for detecting forced labor in the supply chain. They should be unannounced and conducted by independent third parties. They should include interviews with workers, document reviews, and facility inspections.

• Establish a Whistleblower Policy: A whistleblower policy allows workers to report suspicions of forced labor without fear of retaliation. This can provide valuable insights into potential issues in the supply chain.

• Provide Training: Training is essential for ensuring staff understand the signs of forced labor and their role in preventing it. Training should be provided to all employees involved in the supply chain, as well as to suppliers and subcontractors.

Case Studies: The Consequences of Non-Compliance

Companies that fail to take adequate steps to prevent forced labor in their supply chains risk significant consequences. Here are a few examples:

• Cotton On: In 2021, the Australian fashion retailer Cotton On faced allegations that it was sourcing Cotton from the Xinjiang region of China, where Uyghur Muslims have been subjected to forced labor in cotton production. The company's failure to adequately address these allegations led to calls for a boycott and damaged its reputation.

• Patagonia: Over the years, outdoor apparel company Patagonia has faced several allegations of forced labor in its supply chain. In 2020, it suspended sales to a supplier in Turkey due to concerns about Syrian refugees being subjected to forced labor. The company's proactive approach to addressing these allegations has helped mitigate damage to its reputation.

• Inditex: The parent company of Zara, Inditex, faced criticism in 2020 for allegedly sourcing garments from factories in Brazil where immigrant workers were subjected to forced labor. The company's failure to adequately monitor its supply chain led to calls for greater transparency and accountability.

Conclusion

Forced labor is a complex and profoundly entrenched issue that requires the collective efforts of governments, civil society, and businesses to eradicate. Purchasing, supply chain, and compliance teams are critical in ensuring their organizations are not supporting forced labor. By mapping the supply chain, conducting regular risk assessments, implementing robust audits, establishing a whistleblower policy, and providing training, these teams can help prevent forced labor and protect their organization's reputation and bottom line. The consequences of non-compliance, as illustrated by the case studies above, can be severe and long-lasting. Companies must prioritize ethical sourcing and take proactive steps to ensure that the goods and services they provide are made with respect for human rights.