Five ways to address modern slavery risk in procurement

A key challenge of any Chief Procurement Officer is to address the risks of forced or child labour hidden within the layers of their supply chain or procurement operation. 

Increasing visibility through the tiers of the change is proving to be valuable in identifying malpractice, but it may not be enough to eradicate it completely. 

Addressing modern slavery risk in procurement is a key priority

Seventy-one percent of sustainable procurement leaders consider addressing modern slavery risk a key priority, but just half report making effective progress on the issue, according to a survey by Gartner, Inc.

Achieving improved supply chain visibility alone is not enough for Chief Procurement Officers in their efforts to combat the presence of modern slavery, where adults or children suffer from forced labour. Instead, CPOs must continuously implement a range of proactive measures to prevent or rectify instances of forced labour occurring within their supply chains.

“Modern slavery is a risk to almost all supply chains,” said Laura Rainier, Senior Director Analyst in Gartner’s Supply Chain Practice. “It’s also one of the most challenging risks CPOs have to address; rooting out the practice requires visibility into multiple tiers of suppliers and a willingness to address issues in areas of the supply chain that traditional due diligence processes often fail to reach.”  

Five ways to mitigate modern slavery risks for CPOs

• Set and cascade policies: Ensure expectations around forced labour and modern slavery are clearly outlined in the supplier code of conduct. Suppliers must understand the nature and importance of the risk and how to comply. Suppliers must also cascade the supplier code of conduct and related policies around modern slavery to their suppliers.

• Conduct supplier trainings: Ensure that suppliers are aware of policies, especially when they go beyond the legal requirements. Support suppliers to identify risk factors. Train them to conduct due diligence on their recruitment agencies and upstream suppliers.

• Assess suppliers: Traditional supplier assessments often miss risks associated with forced labour. Mechanisms must be put in place to verify that local site auditors speak the language of workers and additional, non-traditional assessments should be contemplated with high-risk markets or commodities.

• Remedy issues: When issues are uncovered in audits it is critical for organizations to be ready to respond. Forging partnerships ahead of time, including with specific membership organizations focused on modern slavery, can help in ensuring best practices are followed in providing remedy or mitigating risk factors. Remedies should address the root cause of the issue and consider whether earlier steps in the plan, such as ensuring policies set for suppliers, are being adhered to.

• Embed risk mitigation throughout the supplier lifecycle: Starting with supplier selection and onboarding, embed modern slavery risk mitigation into the supplier life cycle starting with the RFP process, through supplier onboarding, contracts, scorecards and remediation policies.

Gartner conducted a worldwide survey involving 104 procurement leaders who had recently taken part in a sustainability initiative to assess their organisations' advancements in addressing the risk of modern slavery. The research suggests that procurement leaders frequently encounter challenges in their pursuit of progress on this issue after investing in supplier visibility and associated technological initiatives. These challenges often stem from limitations in resources, strategy, or capability.

“Procurement leaders who have made progress on multi tier supplier visibility should feel encouraged as accomplishing this step alone can be an overwhelming task,” said Rainier. “Once a baseline of visibility is achieved, however, procurement leaders need to embrace the ongoing work that is required to accurately monitor and mitigate the risks associated with the use of forced labour in global supply chains.”

Read more about how to navigate procurement complexity and risk.

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Other magazines that may be of interest - Supply Chain Magazine | Sustainability Magazine

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