Despite greater consumer awareness, regulatory response and corporate action to curb modern slavery, cases grew by 25% over the last five years, according to a joint Walk Free and International Labour Organization (ILO) report.

Roughly 50 million people worldwide are caught in some form of modern slavery, with more than 52% in upper middle-income and high-income nations. Six G-20 nations, including the U.S., reportedly have the largest number of people living in slave-like conditions. Recent cases in Georgia and Virginia hit home.

Although the global business community has been confronting modern slavery for years, it hasn’t been able to slow its rise. But there is an opportunity for that to change. Procurement leaders and their teams can play a major role in taking corporate anti-slavery measures to the next level. By driving more visibility into their extended enterprise, procurement can shine a light on dark practices, and work with all stakeholders to combat modern slavery.

Challenges, Opportunities Ahead

According to the 2023 Gartner Sustainable Procurement Pulse Survey, 71% of sustainable procurement leaders consider modern slavery risk important or highly important, but only 50% feel they are effectively making progress to address the risk.

Meanwhile, modern slavery continues to rear its ugly head, from farming and fishing to manufacturing of renewable energy products. Procurement leaders must shift priorities to address this risk and overcome persistent business challenges that have stood in their way. Many procurement teams still lack sufficient processes and technology solutions that: 

• Increase visibility into their supply chains or outside of their department — the number-one issue keeping chief procurement officers up at night, according to Deloitte’s 2023 CPO Study.
• Increase collaboration with suppliers — the CPO’s top strategy to deliver the most value for 2023, according to the same study.
• Put more granular supplier or third-party risks on their radars, which separates leading procurement teams from laggards, per the Deloitte study. 

Procurement teams that lack supply chain visibility not only expose their businesses to modern slavery risk, they may also be non-compliant with anti-slavery and human rights due diligence (HRDD) laws. The Australian, Canadian, and U.K. Modern Slavery Act, the Uyghur Forced Labor Prevention Act, and other HRDD laws require covered companies to gain visibility into their supply chains and conduct supplier due diligence to uncover, document or avoid sourcing from suppliers engaged in forms of modern slavery.

Either way, business leaders worldwide need to address the rise of modern slavery in their extended enterprise and prioritize fostering effective strategies and processes, along with digitally enabling their workforce to mitigate the threat. 

Tackling Modern Slavery Head-On

Anti-slavery is becoming an indispensable component of a company’s overall effort to run an ethical and profitable supply chain that fuels growth. But to do that, business leaders must ensure their organization’s values and culture scale to their extended enterprise, so leaders can pursue strategies, objectives and relationships that drive ethical and profitable business practices.

Consider the impact to the: 

• Buy side. Procurement teams have to balance initiatives to cleanse their supply chains of slavery and maintain their slavery-free status to drive maximum financial value, in the form of reduced costs, increased savings and profit, and bottom-line impact. Recent research shows that, broadly speaking, sustainable companies see a 3% higher EBITDA over companies that aren’t sustainable.
• Regulatory side. Complying with anti-slavery and HRDD laws and regulations will help businesses mitigate legal risks and avoid potential fines, seized shipments at ports of entry, and operational disruption. But compliance does not equal risk mitigation — it’s the bare minimum for due diligence initiatives. “Good enough for government work” may not be good enough to effectively combat modern slavery in supply chains.
• Supplier side. Business leaders may have little to no visibility into their sourcing methods, including sub-tier suppliers. CPOs may be starting from zero with current suppliers or giving their business behaviors and labor practices closer looks. If that’s the case, assume nothing and question everything.

Your suppliers are critical to the success of your anti-slavery, due diligence, and compliance efforts. You rely on them for ground-level intelligence and need them to make good-faith efforts to comply with laws and regulations. The last thing you want to do is alienate them or make them less responsive to your requests. But without the proper frameworks and tools, you might just do that.

Procurement leaders need a scalable third-party risk management (TPRM) program for driving visibility into their extended enterprise and managing modern-slavery risks, without overburdening their suppliers. The TPRM program should enable procurement teams to cover their first, second, and nth-tier suppliers and third parties, which can be hundreds or thousands of companies, and enable procurement teams to:

• Conduct supplier due diligence. You can thoroughly evaluate new suppliers by examining industry certifications, third-party audits, supplier surveys, and past performance evaluations. This lays the groundwork for your business and the supplier, fostering enhanced future periodic reviews and adherence to pertinent laws and regulations.
• Automate supplier information sharing and risk management. TPRM initiatives provide a centralized system of record for all supplier and vendor data. They ease the third-party lifecycle management process by enabling suppliers to directly upload certificates, ratings, responses to requests for information, and signed supplier codes of conduct. TPRM drives visibility into the extended enterprise, and enables procurement to monitor supplier due diligence, risk management and regulatory compliance.
• Integrate third-party risk intelligence for enhanced due diligence and continuous monitoring. Enrich supplier risk reviews by integrating third-party risk intelligence, such as cyber; environmental, social and governance (ESG), or financial health data. This will boost your supplier due diligence efforts by enabling you to continuously monitor changes in risks, and work with your third-parties to mitigate with corrective actions.
• Align with your suppliers on regulatory compliance. From the start of your relationship, make regulatory compliance, specifically with anti-slavery and HRDD laws, an indispensable part of your relationship. Set the parameters, expectations and review periods for how closely they comply with said laws; reward compliant suppliers, and hold all others accountable. This includes putting non-compliant suppliers on notice with remediation plans, or terminating relationships with egregious violators. 

Toward a Slavery-Free Supply Chain

To eradicate modern slavery from supply chains, procurement leaders need to address the data and visibility challenges that often preclude meaningful risk mitigation and change from occurring. They need to break down data silos and supplement in-house data with additional supplier or third-party data to gain a view of their supply chain risk that is both wide and deep. 

Procurement leaders also need to break down the operational barriers that hinder sustainable anti-slavery risk mitigation, such as supplier resistance or reluctance to address the problem in-house or at the sub-tier level.

Reducing, or eliminating, the risk of modern slavery has wide-ranging benefits for people and profits. Thus, procurement leaders should track their success as they deliver on performance metrics and impact the business – financially and non-financially.

Dean Alms is chief product officer with Aravo.