Elevating expectations

Thought Leadership

Considerations for forward-thinking supply chain professionals addressing modern slavery

Procurement and risk management professionals are on the precipice of a seismic shift as Canada’s new legislation against modern slavery sets a high bar for compliance. Starting this year, what might seem like a bureaucratic obligation at first glance carries profound implications that can either fortify or unravel supply chain integrity, reputation, and social responsibility.

The Fighting Against Forced Labour and Child Labour in Supply Chains Act, passed in 2023, moves Canadian organizations into a realm of heightened scrutiny. No longer can we afford to turn a blind eye to the 28 million individuals worldwide coerced into work (1), many of whom contribute to products reaching Canadian markets.

And contrary to outdated notions, modern slavery isn’t confined to distant corners of the world; it lurks in supply chains even within nations like Canada. The United Nations recently criticized Canada’s temporary foreign worker program for enabling forced labour, and highlighted the need for worker protection (2).

Supply chain and procurement managers bear the weighty responsibility of unravelling the web of exploitation, which ranges from coercion and isolation to debt bondage, perpetuating a cycle of suffering. The ripple effects of non-compliance are palpable: goods impounded at borders, damage to reputations, and legal repercussions loom large for organizations failing to meet the evolving standards of human rights protection. Already this year, US authorities have seized luxury vehicles (3) and Canadian authorities have impounded solar modules over suspected forced labour links (4). The European Union’s provisional agreement (5) to ban the entry of products made with forced labour signals its members’ commitment to push for increased due diligence and transparency.

The first-year disclosures represent the tip of the iceberg in terms of Canada’s regulatory requirements. This initial phase serves as a foundational step, prompting organizations to begin assessing their supply chains for risks related to forced labour and child labour. Looking ahead, several indicators suggest the future will bring more stringent standards, and regulators will have an increased ability to scrutinize the supply chain, and introduce higher penalties for non-compliance. These indicators include:

  • Evolving international standards: Canada will continue to align with international norms and best practices, which are likely to continue to expand.
  • Advancing technologies: Blockchain, artificial intelligence, and data analytics are reshaping supply chain management—they’re also offering unprecedented capabilities for tracing product origins, detecting anomalies, and verifying ethical sourcing practices.
  • Increasing complexity: Demonstrating year-over-year effectiveness of the organization’s compliance program and the incremental steps being taken to prevent forced labour will become as complex as the supply chains themselves. Characterized by global sourcing networks, subcontracting arrangements, and diverse supplier ecosystems, modern supply chains pose inherent challenges to ensuring transparency and accountability throughout its many tiers.

And because modern supply chains present fertile ground for bad actors to exploit their multiple layers and conceal unethical practices such as modern slavery, organizations must go beyond mere compliance and adopt a strategic approach that addresses the web of supply chain intricacies. This means a shift toward proactive measures that extend beyond current regulatory reporting obligations, such as:

  • Collaborating with NGOs and industry peers for deeper insights
  • Implementing supply chain transparency initiatives
  • Conducting regular site visits and audits for due diligence
  • Developing a supplier code of conduct with anti-modern slavery clauses
  • Educating employees and suppliers on ethical sourcing practices

Against the backdrop of regulatory evolution and societal expectation, the 2024 Deloitte perspective A new era of supply chain transparency seeks to be a guiding light. The report doesn’t just illuminate the path to compliance, but also emphasizes the transformative potential of embracing this new era.

It’s essential to recognize that compliance is just the starting point. True impact lies in catalyzing meaningful change, upholding human rights, and safeguarding the dignity of every individual within the global supply chain ecosystem. This necessitates a multifaceted approach encompassing ethical procurement policies, stakeholder engagement, technological innovation, and continuous improvement initiatives.

Procurement and risk management professionals are at a pivotal moment in history, where their actions can reshape supply chain dynamics and contribute significantly to the fight against modern slavery. Considering this challenge as an opportunity for positive transformation is not just a moral imperative but also a strategic imperative for sustainable business success in the 21st century.

[1] International Organization for Migration, “50 Million People Worldwide in Modern Slavery,” news release, Sept. 12, 2022
[2] UN News, “UN expert sounds alarm over ‘contemporary forms of slavery’ in Canada,” news release, Sept. 6, 2023
[3] Financial Times, “US Porsche, Bentley and Audi imports held up over banned Chinese part,” Feb. 24, 2024
[4] pvbuzz media, “Canada’s Border Services intensifies crackdown on solar module containers: CBSA provides insight to pvbuzz,” news release, Mar. 6, 2024
[5] Reuters, “EU Parliament, Council agree to ban products made with forced labour,” news release, Mar. 5, 2024