ESG and Human Rights in Global Supply Chains: Laws and Technology

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Spend Matters begins a new series that examines how a combination of process and technology can help eradicate and combat forced labor and modern slavery in global supply chains. We’ll look at understanding and managing the regulatory environment, the role technology can play in bringing issues to light, and the leading providers of solutions that enable that transparency. Today, we start with the evolution of the regulatory frameworks in which we have to work.

June 2022: the Uyghur Forced Labor Prevention Act (UFLPA) of the United States comes into force. Importers must demonstrate “by establishing, with clear and convincing evidence” that the imports are not the product of forced labour.

January 2023: the German supply chain law “Lieferkettensorgfaltspflichtengesetz” (in English: “Law on due diligence obligations of companies for the prevention of human rights violations in supply chains”) will come into force. Companies with more than 3,000 employees must ensure that their supply chain is free from human rights abuses.

Sourcing poses a major ethical hurdle in global supply chains, and global governments are stepping up their examination of the capacity and speed with which organizations are able to meet the challenge. The issue we focus on is that of human rights, in particular forced labour/modern slavery within global supply chains.

The two laws mentioned above are just the latest in a series of legislative decrees that apply to human rights and supply chains. They are not the first, nor will they be the last. They illustrate a global movement to bring order to supply chains. This movement is fueled by governments creating regulations that require companies to examine what they produce, buy and buy, even (and especially) when the goods come from abroad.

Part of the conundrum for procurement and supply chain professionals is that while all of these laws attempt to tackle the same problem, they do so differently. The scope, definitions, means of enforcement/control, sanctions, etc. vary from country to country. However, they all represent the same core challenges: supply chain transparency and compliance requirements.

For these reasons, our series will explore this critical topic to provide contextual detail: the legal frameworks in place and the important developments to come. We will then see, in part 2, what this means for procurement professionals in terms of issues and approaches. In Part 3, we will also delve deeper into the purchase activation and support technologies available in the market.

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