Whether you sell semiconductors to solar panel manufacturers, or toys to big box retailers, the parts that make up your products come from suppliers all over the world.
Beyond logistics and quality assurance, an element often overlooked is who (employee of the supplier) made it, what the factory conditions were like, and the overall business practice standards of that supplier. The latter is what we focus on in the world of social compliance.
Social Compliance Terminology
Social compliance is an umbrella term that covers many aspects of Corporate Social Responsibility (CSR), one of them being ethical sourcing. Ethical sourcing is another broad term that includes fair labor, a fundamental element of modern day slavery.
Continuing down the line of terminology, we arrive at anti-human trafficking - the guidelines and standards companies establish to eliminate modern day slavery from their supply chains. The terminology is rather duplicative, but it’s important to understand anti-human trafficking compliance’s relationship with a company’s overall Corporate Social Responsibility stance.
All companies who are dedicated to Corporate Social Responsibility, need to understand anti-human trafficking compliance and set up a scalable process to combat the risk of modern day slavery going undetected in their supply chain.
Human Trafficking Regulatory Landscape
In the regulatory landscape, there are two anti-human trafficking regulations that companies are commonly in-scope of compliance with:
- SB-657: California Transparency in Supply Chains Act – Check out the regulation guide, here.
- United Kingdom (UK) Modern Day Slavery Act - Check out the regulation guide, here.
Both SB-657 and the UK Modern Day Slavery act have their own set of criteria to determine a company's compliance responsibility. Both regulations, however, require an official statement released by the company that outlines their efforts, in the past fiscal year, to eradicate modern day slavery from their supply chain. Leading companies tend to have a main section of their website dedicated to topics like these, while others will include the statement in a larger section around CSR.
Anti-Human Trafficking Compliance 101
Whether you have a system in place, or are approaching anti-human trafficking compliance for the first time, here are three steps you can take to ensure anti-human trafficking compliance at your company.
Steps
1. Know Your Standards
2. Establish Intentions With Suppliers
3. Measure, Categorize, Repeat.
Know Your Standards
What standards do you want your suppliers to uphold for working conditions? What type of diversity do you want to promote? What type of labor standards do you want to ensure?
Answers to these questions make up your supplier code of conduct. Every supplier you work with should receive and and acknowledge that they conform with the guidelines you’ve outlined in this document.
***Tip - your supplier code of conduct can turn into framework for monitoring supplier behavior and classifying suppliers by risk of human trafficking - we’ll go into more detail shortly.
Establish Intentions With Suppliers
In your research for a new supplier, look beyond the logistics of the part or component. You can learn a lot about a supplier’s dedication to anti-human trafficking by visiting their website, and learning about their business practices - most companies that have processes in place will address the topic on their website.
In addition, a good practice for on-boarding new suppliers is to issue a supplier pre-screening assessment. If developed properly, the assessment can give you a good overview of the supplier’s business practices and their dedication to anti-human trafficking.
*** Tip - In addition to your supplier code of conduct, issuing a pre-screening assessment will establish anti-human trafficking as a high priority for you in the eyes of the supplier. Starting off on the right foot with standards clearly outlined with create a transparent and successful supplier relationship.
Measure, Categorize, Analyze, Repeat.
Communication and regular check-ins with your supply chain are critical to minimize human trafficking risk. A particularly strong form of due diligence is to issue regular assessments to your supply chain. These assessments cover specific elements of ethical sourcing and are designed to help you identify risk through responses.
There are a few different sources you can use to help develop these ethical sourcing assessments:
- Your supplier code of conduct
- International Labor Organization standards
- NGO standards
- State and national fair labor guidelines
***Many companies depend on field audits to ensure supply chain compliance with anti-human trafficking regulations but applying the right technology can alleviate the resource intensive field audit process.
Advantages of Supplier Risk Categorization
Regularly issuing supplier risk assessments allows you to stack numerous data points over rolling time periods. Through this practice, you’ll be able to identify trends (micro or macro) that help you:
- Work with high risk suppliers to develop corrective action plan for substandard practices
- Identify future human trafficking risks at an early stage
- Improve supplier on-boarding practices as your supply chain grows.
How Source Intelligence Can Help
At Source Intelligence, we’ve worked for years on minimizing the risk of human trafficking going undetected in the supply chains of companies all over the world. We developed our Anti-Human Trafficking Program to help companies manage supplier risk utilizing centralized data collection and advanced supplier analytics.
