Manage Human Rights in the Supply Chain with Due Diligence

Human rights due diligence (HRDD) is a phrase surfacing more and more as supply chain practices come under increased scrutiny and officials implement more regulations to prevent human trafficking, child labor, and slavery in supply networks. The California Transparency in Supply Chains Act is one regulatory example in the United States, and a few related regulations already exist in the European Union (EU) — with more likely coming down the pike.

What does the act entail?

The main goal of the California Transparency in Supply Chains Act is to ensure consumers can easily access information on companies’ supply chain due diligence efforts. The act pertains wholly to reporting, requiring each company executive to include a prominent website home page link that leads to information about the executive’s efforts for guaranteeing the company’s supply chain is free of human trafficking and slavery. According to an article in The National Law Review, “Subject companies should review their disclosures and ensure that they are compliant.” Although the act is not new — it took effect in January 2012 — it is garnering attention as industry insiders focus anew on domestic and international human rights management.

Growing supply chain scrutiny

With legislation on supply chain human rights management becoming a global reality, supply chain leaders in the U.S. and worldwide should pay attention. Governments in France, Switzerland, Australia, the Netherlands, and Germany, among others, have released regulations on the books or in development. According to the Ergon article, “It will be interesting to see how much companies will decide to publish about the risks they have uncovered, and what they intend to do about it.” In addition to legislators, consumers are increasingly demanding sustainable and respectable practices, using their buying power to support companies whose leaders make efforts toward operating sustainable, respectable supply chains.

Burden or opportunity?

In this digital era of increasing integrity and reputation risks, a lack of supply chain HRDD can be very damaging. In fact, it can lead to fines and penalties as well as brand damage resulting in lost business from both other supply chain partners and end consumers. And with more technology solutions increasing visibility and enhancing supply chain transparency, do logistics leaders have good excuses for not making an effort?

Rather than viewing human rights management as a burden, savvy supply chain decision-makers see an opportunity to make safer, more positive impacts on the world. According to an article in The Wall Street Journal, “As the workforce is engaged and involved in bringing these issues to light, companies are asking, ‘What are we doing about human trafficking in our supply chains?’” Mitigating risk areas is key to effective supply chain management, and a lack of HRDD is a big risk area. According to the Supply Management article, industry insiders are increasingly aware of and worried about the practices of other suppliers in their networks — which can ultimately help hold more company executives accountable.

Ignorance is no longer an excuse in the eyes of the law or consumers, and guilt by association can be devastating. Why not proactively manage HRDD, gaining market recognition while optimizing supply chain operations? It could be an impactful and significant win-win.

[cta]nVision Global is a worldwide business logistics partner whose experts can help you optimize your supply chain now and into the future. To learn more about nVision Global, visit us at nvisionglobal.com or call 770.474.4122.[/cta]