Child Labor in Supply Chains: Understanding and Overcoming the Risks

The existence of child labor within global supply chains presents a troubling reality that demands immediate attention, both to save lives and protect your business.

The widespread problem involves 160 million children aged 5 to 17. The ILO Child Labour Global Estimates 2020 report shows the scale of the issue: 86.6 million children in Sub-Saharan Africa, 26.3 million in Central and Southern Asia, and significant numbers in other regions are affected. Notably, 70% of these children work in agriculture, and nearly half are involved in hazardous work. These figures underscore the urgency for businesses to address this problem in their supply chains​​.

What’s more, regulations are demanding supply chain transparency to prevent child labor used at any step of production, including Bill S-211 in Canada and the German Supply Chain Act. Some of the restrictions are also included as part of international laws against modern slavery.

The Slave-Free Alliance‘s recent webinar, Child Labor in the Supply Chain, shed light on this pressing issue, and expert insights from it are covered in this article. As the strategic technology partner of Slave-Free Alliance, we’re also offering the webinar to watch on demand.

[WATCH THE ON-DEMAND WEBINAR NOW]

Understanding the Child Labor Problem

In general, child labor refers to work that is mentally, physically, socially or morally dangerous and interferes with a child’s education. Hazardous child labor can involve dangerous substances or machinery, long hours, and underground or confined spaces.

Child labor in supply chains is multifaceted, with economic, social and legal dimensions that can vary by country. While international law defines anyone under 18 as a child, developing countries have set the minimum age for work at 14. Some branches of economic activity are also exempt, such as family farms producing for local consumption without hired help.

Businesses must recognize that this issue can be present in any part of the world and in various industries. In a recent case in the United States, a California poultry processor was fined $3.8 million for illegal labor practices, including endangering young workers.

“Global supply chains are interconnected, and even companies with the most stringent policies can find themselves unknowingly complicit in these practices,” said Marc Stanton, Director of Slave-Free Alliance.

Three Ways to Mitigate Child Labor Risks in Supply Chains

Here are three ways to approach identifying and mitigating risks of child labor while building resilience in supply chains:

1. Enhanced due diligence and transparency:

Combining screening capabilities with inherent risk assessments and supplier-provided data can offer a holistic approach to risk assessment​​.

This level of detail is crucial for identifying and addressing areas where child labor may be present​​.

“Where we may have the belief that we’re free from child labor — particularly in the United States — we at times are not,” said Skyler Chi, Global Head of Enterprise Accounts at Exiger. “We need to be able to identify who exactly is in our supply chain. And that transparency allows for a very comprehensive review of where we may be impacted.”

2. Advanced technology and data analysis:

Businesses should track their supply chains down to the smallest supplier. Utilizing next-generation artificial intelligence capabilities to identify child labor risks from both structured and unstructured data sources in real time is essential. This involves screening millions of records, and human-based research cannot complete this task in a timely way.

One solution that can manage these tasks is the 1Exiger platform. Exiger has built the world’s largest and most comprehensive corporate and supply chain dataset and data partner network to enable the identification and mapping of entire supply chains from Tier 1 suppliers to the raw material level. This end-to-end visibility allows for identifying and mitigating child labor risks in all tiers.

3. Continuous monitoring and workflow integration:

Implementing automated workflows can increase operational efficiency and ensure supplier alignment with policy standards and program requirements. Ongoing monitoring is crucial to identify new or material changes in risk across the global supplier population over time​​.

All three actions are challenging, but Stanton stressed a good first step: prioritize.

“You won’t be able to do all of this at once,” he said. “So prioritize which supply chain, which commodity, which product you’re going to focus on and investigate. Be transparent in any reporting that you do as to why you’ve chosen and prioritized those particular products.”

Responsible Supply Chain Due Diligence

While due diligence is essential, some efforts can have unintended adverse consequences. In certain cases, stringent policies against child labor have led to the sudden termination of livelihoods for families, driving them deeper into poverty.

“While our intentions are noble, we must be mindful of the socioeconomic impact of our actions,” cautioned Quintin Lake, Director of FiftyEight, which partners with businesses and governments to take action to address exploitation in the supply chain. He suggested responsible due diligence means not only removing children from labor but also providing alternatives that support their families and communities.

Creating a Lasting Impact to Reduce Child Labor

To create sustainable change, companies must integrate ethical considerations into their core business strategies. This involves not only adhering to local laws but also going beyond compliance to embrace a culture of responsibility and care.

“Every business has a role to play in eradicating child labor in supply chains,” Lake said. “It’s not just about doing good; it’s about doing right by your business, your consumers, and, most importantly, the children affected by these practices.”

For more, watch the on-demand webinar.

More resources:

• White Paper: Finding the Right Supplier Risk Management Solution for Your Business
• Govern the Full Range of ESG Risk in Supply Chains Today
• Supply Chain Resilience: 6 Factors to Watch for in 2024