You already know you need to assess your company’s supply chain for modern slavery risk, but you probably don’t know how. It’s hard enough working out who your suppliers are. Identifying the highest risk ones may seem impossible, but it’s not. But don’t worry, we have put this guide together to explain what a modern slavery risk assessment is and how to undertake one.
Modern slavery risk assessment is the evaluation of the likelihood that a good or service your company buys is made fully, or in part, by slave labour.1 Once you have assessed your supply chain, you should address issues that you have identified and continue to monitor for new risks.
It’s important to note that you are not expected2 to know everything that’s going on in your supply chain. In most cases, that’s impossible. Rather, you should employ a risk-to-people based approach to identify the highest risks areas of your supply chain.
You will need backing from leadership and support from colleagues to conduct a slavery risk assessment. The best way to win this support is by making a good pitch. Our clients tell us that they do this by combining ethical reasons with business ones to make a compelling case. Here’s how:
The ethical case:
It’s simple really. There are 17 million victims of modern slavery being exploited in business supply chains today. The risk that it’s present in your company’s supply chain is a real one. To end this abuse, companies like yours need to act. Your colleagues are humans. Once you make them aware of these facts, they will likely want to take action.
The business case:
You need to support the ethical case with the business one. There are lots of reasons why tackling slavery makes good business sense, including:
To conduct a modern slavery risk assessment of your supply chain, you need to identify appropriate risk indicators.
There is no prescriptive list of risk indicators. Rather you should select those that you think are most relevant to you supply chain and viable to assess. In making that selection, remember that the objective is to assess risk to people, not to your company. Where you can, enhance your indicators with qualified third-party expert data sources.
As an example, RightsDDact, our modern slavery due diligence platform, uses the following risk indicators:
Once you have identified the relevant risk indicators for your organization, you need to capture relevant supply chain data and create a risk assessment matrix consisting of your suppliers and selected risk indicators.
Consider giving a higher weighting to more important indicators. For example, product and service risk should provide a more precise indicator than a industry risk indicator and should be weighted accordingly.
Document the process, the rationale for any potentially controversial aspects of it, and its outcomes. You may be required to justify why you took certain decisions months or years after you have conducted your modern slavery risk assessment. If that happens, you will be thankful for the documentation you have made.
This is a quick overview of how to address your identified risks.
Typically risks fall into three categories:
Clearly, risks that fall into the first category should be a priority. But every category of risk should be addressed.
The United Nations Guiding Principles on Business & Human Rights advise that companies should try to work with suppliers to address identified issues and improve workers’ conditions. This may not be viable in some situations however, in which case you may have to stop buying from a given supplier.
Supply chains are constantly changing. Your company will gain new suppliers and lose old ones. Ideally you should put a process in place to assess all prospective suppliers before you buy from them.
Likewise, the risk profile of your supply chain will shift over time. Your risk assessment process should therefore monitor, and respond to, new developments. For example, solar panels were considered at low risk of modern slavery in 2020; new research in 2021, however, revealed that over 40% of global manufacturing capacity is reliant on forced labour.
You should engage with relevant stakeholders, including suppliers, during the risk assessment.
Once you have completed the assessment phase, you can communicate the results to your colleagues. If your company is subject to the reporting requirements of the Australian and/ or UK Modern Slavery Acts, you should include an overview of your assessment process and its outcomes in your modern slavery statement. Even if your company is not legally obliged to report, it may be advantageous to communicate what you have done, and plan to do, externally. Be transparent about what you have done and its limitations. By doing so, you will better position the company in the eventuality that one of your suppliers is linked to modern slavery by the press.
Finally, avoid claiming that your supply chain is free of modern. In a decade working with companies on human rights risk, I’ve never advised a company to make this claim.
Consider developing an incident response plan to deal with modern slavery issues that may arise in the future. RightsDD can assist if required.
1 In this article we focus on assessing supply chains for modern slavery, but its important to note that you should also ensure that there is no modern slavery in your own company’s operations as well.
2 As confirmed in The United Nations Guiding Principles on Business & Human Rights.
3 Global Estimates of Modern Slavery: The International Labour Office and The ILO Indicators of Forced Labour