At EU level, the European Commission has also proposed new corporate due diligence requirements which could oblige around 17,000 companies active in the EU to monitor their entire supply chains for violations of human rights, among other issues. As colleague Dr Eike W. Grunert has previously highlighted, the proposed directive sets a further cornerstone to the ever rising international and national legislation addressing human rights and environmental risks in the supply chain, such as the UK and Australian Modern Slavery laws, and the Dutch Labor and French Duty of Vigilance Laws. The combination with climate protection requirements makes the proposed EU directive a unique piece of ESG legislation.
Due diligence and supplier oversight in practice
With modern slavery risks increasing due to labour shortages and in a developing regulatory landscape, there is a need for organisations to respond.
Businesses should conduct regular modern slavery risk assessments that cover their own operations and those across their supply chains.
Businesses will want to consider whether they or their suppliers operate in high-risk jurisdictions, perhaps where there is limited regulation around employment practices and human rights. However, modern slavery can take place anywhere. Businesses active only in countries that have adequate labour protections cannot afford to be complacent. There are particular risks associated with operating in high-risk sectors, such as food processing or clothes manufacturing, and where suppliers rely on lower skilled migrant workers.
Businesses should keep due diligence procedures under regular review. They should consider what checks, assurances and investigations they will conduct or accept when entering into contracts with new suppliers or renewing existing supplier contracts. Contractual controls should be put in place to obtain undertakings from suppliers that they will comply with modern slavery laws, and contractual rights should give businesses rights to audit their suppliers in this respect.
Businesses should develop and regularly update modern slavery policies and procedures, including employment policies, and ensure there are effective modern slavery reporting channels in place.
Regular staff training is also important to ensure staff can spot the signs of modern slavery and how to respond to red flags.
Red flags and the role for corporate and forensic intelligence
Corporate and forensic intelligence experts can help businesses address modern slavery risks, both when onboarding new suppliers and in undertaking ongoing monitoring.
Open-source intelligence and data analysis can be helpful in identifying possible concerns. This can involve comprehensive media research, litigation searches, social media scoping, and targeted internet reviews, for example.
