Empowering Ethical Sourcing: Eliminating Forced Labor with Supply Chain Intelligence

Navigating the complexities of global supply chains reveals a troubling reality: The prevalence of forced labor is more common and obscured than many businesses realize.

Deciphering the Signs of Forced Labor Within Complex Supply Chains

With over 49.6 million people entangled in forced labor, a significant portion — approximately 27 million — are caught within the supply chain ecosystems of multinational corporations. This stark reality is at odds with the growing consumer demands for ethical sourcing, a preference echoed by 81% of consumers, and aligns with the increasing legislative measures aimed at eradicating forced labor worldwide.

 

The stats come from a presentation on ethical sourcing by Exiger CEO Brandon Daniels and Hope for Justice CEO Tim Nelson at the 2024 Gartner Supply Chain Symposium. The session explored how leveraging advanced supply chain intelligence technologies is critical for identifying and combating these unethical practices. These technologies are pivotal for ensuring compliance with evolving global regulations and for achieving supply chain visibility across an organization’s entire supply chain network.

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Illegal global profits generated each year by human trafficking
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People in forced labor, sexual exploitation, domestic servitude, organ harvesting and forced marriage worldwide

Modern slavery may not exist at the end of every supply chain; but the line between legitimate work and forced labor is often fluid, and the extent of exploitation can vary over time. From poor health and safety and excessive working hours to late payments and cramped living conditions — all of these fall within the exploitation spectrum and should be clear indicators that much greater issues are taking place within the business itself. 

“It is estimated that this issue is the second biggest grossing funding model for organized crime. In the last year alone, it was estimated by the International Labor Organization that $236 billion was made globally for these enterprises,” says Nelson.

This presents a major risk to organizations — not only from a regulatory perspective, but also from an investigative and reputation perspective — because worker exploitation may not be wholly evident at first glance. Gaining better supply chain visibility is the first step to identifying potential red flags and avoiding the possibility of being an unwitting participant in modern slavery.

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Value of 8,000 suspended shipments suspected to have links to forced labor since 2022 by US Customs and Border Protection
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Consumers said ethical sourcing of items they purchase matter in their buying decisions, per a survey featured in Forbes

Navigating the Evolving Landscape of Anti-Slavery Laws

Growing consumer advocacy for ethical sourcing has helped spur global anti-slavery legislations. These include statutes such as the UK Modern Slavery Act, the German Supply Chain Due Diligence Act, and the Uyghur Forced Labor Prevention Act — signaling a paradigm shift in how supply chain ethics are governed.

 

The impact of these legislative efforts is evident in the actions taken by U.S. Customs and Border Protection, which suspended over 8,000 shipments valued at up to $3.2 billion between June 2022 and April 2024 due to suspected links to modern slavery in the Xinjiang Uyghur Autonomous Region (XUAR).

 

The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) further exemplifies the stringent regulatory landscape by mandating thorough investigations into supply chains to identify and address instances of forced labor. Non-compliant companies risk facing fines of up to 5% of their global revenues, and compliance could soon be mandatory for the awarding of EU public contracts.

 

“You’re going to have a lot more visibility directed toward the decision-making that you’re making, which could potentially be sitting on the risk register for your multinational corporation,” says Nelson.

“Because you’ve aggregated this data from your own infrastructure and from open-source data, you’re able to ask simple questions: Who are my 10 riskiest suppliers? Why are they risky? What actually produces the risk here? From there, you can get answers telling you how that risk is, how it evolves, and how it impacts you.”

Exiger CEO Brandon Daniels

The Growing Demand for Proactive Supply Chain Intelligence

To comply with these stringent regulations and to effectively combat forced labor, organizations need advanced technology to not only improve their supply chain visibility, but also map their acquired data against the expanding, fragmented, and conflicting set of jurisdictional regulations.

 

“The size of your organization no longer speaks to your operational capability,” says Daniels. “Up to 95%  of a company’s operational process is their supply chain. And what regulators are telling us is that you own that supply chain.”

 

To meet the many requirements of the regulations, it’s necessary to transform your due diligence process into a strategic intelligence capability. This includes asking the right questions and finding the right tools that will not only help you parse through aggregated data to identify risks from the nth-tier associations that truly matter, but also validate that data and surface new insights to help you make better risk decisions in the long run.

 

The Tantalum Conundrum: Why Supply Chain Visibility Matters

Tantalum is a metallic element with a major role in global supply chains due to its unique properties and widespread applications across various industries. It is utilized in diverse end products such as medical implants, aerospace components, capacitors, aircraft engines, gas turbines, GPS devices, and smartphones. Its impact is so great that over 224,000 companies are only three tiers away from tantalum suppliers, as Daniels discovered using Exiger’s technology.  

 

Yet, despite its crucial role, the extraction of tantalum poses ethical challenges, as a significant portion is sourced from small-scale mines where child labor and exploitation are prevalent. So, how can organizations identify and address unethical practices effectively to ensure that their operations do not inadvertently support forced labor?

 

The answer is to curate, prioritize, evaluate, and monitor your supply chain — as this provides access to critical data that can make due diligence a less cumbersome process. The process is too cumbersome to handle manually, but AI solutions like the 1Exiger platform can efficiently process the volume of data involved.

 

“Let’s say you’ve got 22 Tier 1 suppliers and 1,500 Tier 3 suppliers,” Daniels said. “You can see where they are and where they’re located. So, you can get visibility into each of the subsequent tiers of your supply chain. And then, because you’ve aggregated this data from your own infrastructure and from open-source data, you’re able to ask simple questions: Who are my 10 riskiest suppliers? Why are they risky? What actually produces the risk here? From there, you can get answers telling you how that risk is, how it evolves, and how it impacts you.”

 

Proactive Intelligence: Empowering Ethical Sourcing Decisions

Exiger’s Proactive Intelligence capability helps stakeholders answer those important questions so they can take action to manage risk. Created to bridge the gap between third-party and supply chain data and the insights necessary to guide decision-making, Exiger’s innovative intelligence capability streamlines the approach to ethical sourcing by providing the insights you need to focus resources on the critical areas that impact you most.

 

The Proactive Intelligence capability is part of the 1Exiger platform that uses powerful AI technology to uncover risks in all tiers of the supply chain. The platform analyzes millions of supply chain and open-source records and screens findings against watchlists and our proprietary forced labor database, the largest in the world. The results generate risk-scored assessments and predictive insights that enable quick, informed decisions for ethical sourcing and boost resilience.

 

“Improving visibility into all levels of the supply chain will help you not only reduce compliance risk and thrive in today’s complex market but also help eliminate forced labor worldwide,” Daniels says.

 

Exiger’s tools facilitate ongoing oversight, allowing organizations to track changes and emerging supply chain risks in real-time. This proactive approach helps businesses stay ahead of potential disruptions and maintain compliance with evolving regulatory requirements.

 

Contact us to learn how Exiger’s advanced tech solutions can help ensure ethical sourcing in your organization.

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