Modern slavery: Now is the time to identify risks in your supply chain
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Increasingly complex global supply chains create more risks, including those stemming from pandemics, business interruption, weather-driven shocks, cyber, and climate change. In addition, companies could face reputational damage, shareholder lawsuits and personal liability of their management, especially if they fail to adhere to regulations on compliance with social standards along the supply chain.
Now more than ever, there is a rising demand for transparency at every step of the chain – and not just to satisfy regulators. Consumers increasingly expect to know the source of their products and expect companies to adhere to ethical and environmental standards.
The demand for supply chain transparency is closely tied to an ongoing humanitarian challenge: The United Nations' International Labor Organisation estimates that around 16 of the 40 million people trapped in modern slavery globally are exploited in the private sector such as domestic work, construction or agriculture.
Bills such as the Supply Chain Law in Germany or the Modern Slavery Act in the UK put additional pressure on companies to take on more responsibility for ethical practices along their supply chains. These regulations could increase litigation risks associated with modern slavery. Identification of exploitation could potentially lead to liability claims, in particular with respect to director & officer covers. This raises the need for corporate risk managers to have a much more focused approach to supply chain management.
Find out more about the risks associated with ethical practices along the supply chain in Swiss Re Institute's new SONAR 2021 report: "Modern slavery – pressure on supply chains".
Supply chain transformation was already underway before the COVID-19 pandemic hit. With the crisis exposing many fault lines in global supply chains, efforts to make them more sustainable are now likely to be accelerated.
The prize is huge for those that get it right: helping create a more respectful, more ethical, more resilient system for workers along the supply chain and standing out as a truly responsible corporate citizen.
Download the full SONAR report 2021 and get full overview of new and emerging risks.