Regulations are pushing companies to tackle modern slavery in their end-to-end supply chains

Julia Swales, Senior Editor at Ti, interviewed Nick Wildgoose, CEO of Supplien Consulting, about how regulations are driving companies to assume full responsibility for their supply chains. 

The German Supply Chain Due Diligence Act (SCDDA) is currently in the spotlight and a major milestone in the fight against modern slavery. It entered into force in 2023 and it packs a punch with a hefty fine, which can be up to 2% of a company’s average annual global turnover. The act initially applied to companies with 3,000 or more employees. Now, from the beginning of 2024, it applies to companies with 1,000 or more employees and a registered office or branch in Germany. This will continue to evolve, with smaller businesses also being liable in the near future. The Act obliges companies to design, implement and monitor procedures to ensure that every part of the supply chain, from the extraction of raw materials to the delivery to the final customer, is complying with human rights and environmental requirements. 

Other countries, such as France, Norway and Canada have also been introducing regulations to combat modern slavery in the supply chain. In the UK, the modern slavery act was introduced in 2013. It has a very worthy aim, but it is more of a reporting function – it is currently under review as it needs to carry more weight, but it’s been put on the back burner by politicians for about three years now. In the US, President Joe Biden introduced the Uyghur Forced Labour Prevention Act (UFLPA) in 2021, with the aim of protecting the Uyghur population in China, where there is a history of very poor labour practices. If the US believes there’s been inappropriate labour practices in a company’s supply chain, they ban the import of the goods. There isn’t any compensation for this, so if a company is found to be guilty, this comes at a significant cost.

These new regulations are a positive move forward for seafarers in the shipping industry too, as this vital part of the supply chain needs to come under scrutiny, with companies taking more responsibility. There are a rising number of crew abandonment cases – the Maritime Labour Convention defines this as ‘the non-payment of wages to workers if the shipowner fails to cover the cost of a seafarers’ repatriation, has left them without maintenance or support, or has severed ties with them and failed to pay wages for at least two months’. Abandonment is happening across flags and locations, so it is an industry-wide problem. The International Transport Federation has reported owed wages in excess of $12.1 million. 

There is clearly still a long way to go, but hopefully the German Supply Chain Due Diligence Act will prompt tougher regulations with enforced penalties, instigating global change and putting the abolition of modern slavery in the end-to-end supply chain at the top of all companies’ agendas. 

Author: Julia Swales

Source: Ti Insight

Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry. 

Visit GSCI subscription to sign up today or contact Michael Clover for a free demonstration: [email protected] | +44 (0) 1666 519907