By Warren Smith & Dianna O’Neill
In a significant move, the U.S. Department of Homeland Security (DHS) announced additional sanctions and measures targeting forced labor practices in China’s Xinjiang region on May 16, 2024. These measures underscore the U.S. government’s commitment to combating human rights abuses and holding bad actors accountable.
They also highlight the growing international pressure on companies to ensure their supply chains are free from forced labor.
The new actions include:
- Imposing visa restrictions on Chinese officials involved in repression and forced labor practices.
- Expanding enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) to cover more products and sectors; a total of 65 China-based firms are now banned under the act.
- Increasing coordination with allies and partners to address forced labor in global supply chains.
The Complexities of Forced Labor in China
Global supply chains are grappling with the significant challenge of the prevalence of forced labor, notably in regions like China’s Xinjiang, a textile manufacturing center. Forced labor in China presents multifaceted challenges, including supply chain complexity, lack of transparency, legal and political obstacles, difficulty tracing raw materials, and the prevalence of subcontracting and informal sectors.
China’s economic landscape is deeply entwined with practices that many international observers and human rights organizations classify as forced labor. The situation in the Xinjiang Uyghur Autonomous Region has garnered particular attention, with reports suggesting that Uyghurs and other ethnic minorities are being coerced into working in various industries, from cotton fields to high-tech manufacturing sectors.
Five Key Strategies for Companies to Mitigate Forced Labor in Global Supply Chains
To address the issue of forced labor in their supply chains, organizations must take proactive measures to mitigate forced labor, and other critical ESG threats. Interos data shows executives estimate that ESG-related cost increases or revenue losses companies at $44M annually.
Here are five actions to prioritize:
- Conduct Comprehensive Supply Chain Mapping: Gain visibility into the extended supply chain, from direct suppliers to nth-tier sub-suppliers, to identify vulnerabilities. AI-first risk intelligence from Interos enables advanced analytics and real-time monitoring to scrutinize supply chains for regulatory violations and other ESG concerns.
- Implement Robust Due Diligence Processes: Develop and enforce rigorous due diligence procedures to complement technology-based assessments. This includes assessing suppliers’ labor practices through audits carried out by accredited third-party agency, worker interviews, and document reviews.
- Leverage Advanced Technology and Data Analytics: Utilize cutting-edge technologies like Interos’ platform, which evolve enterprises from lagging to leading indicators to drive proactive mitigation. Interos’ expanded ESG risk model monitors a range of critical attributes reflecting the multi-faceted nature of ESG threats, including forced labor, emissions, diversity, foreign ownership, and other critical attributes.
- Collaborate with Industry Partners and Stakeholders: Engage with industry associations, non-governmental organizations, and government agencies to share best practices, align efforts, and collectively address forced labor challenges.
- Promote Transparency and Accountability: Implement transparent reporting mechanisms, establish clear policies and codes of conduct, and hold suppliers accountable for violations through corrective action plans or termination of business relationships.
Case Studies: Accelerating Ethical Supply Chains with Interos
Interos survey data shows more than a third of leaders at large enterprises are stepping up their ESG investments, and over half acknowledged supply availability was paramount. Global organizations using Interos have gained a sharper picture of supply chain risks, enabling proactive strategies, yielding clear results:
- A leading global airline leverages Interos to ensure the highest standard of ethics and compliance across its apparel supply chain and other sourcing channels.
- A supermajor oil and gas company leverage Interos to ensure adherence to 30+ EU regulations related to labor, emissions, and other areas.
- A major retailer utilizes Interos’ foreign ownership data to determine, reduce and remove slave labor from its product lines.
Interos is leading a broader supply chain risk revolution towards transparency and ethical responsibility across industry, enhancing corporate brand, reputation, and profitability.
By taking proactive steps and leveraging the Interos platform, organizations can navigate the complexities of forced labor in China, and elsewhere, to foster ethical, responsible, and adaptable supply chains that meet, and surpass, the demands of today’s interconnected economy. Across sector, technology and data will continue to play a crucial role in shaping responsible and risk-resilient supply chains, with companies like Interos, and its innovative global customers and partners, at the forefront of this transformation.
Read more on navigating supply chain ESG risk and complexity HERE.
