Western countries now high-risk for labour rights

ELEVATE’s Supply Chain ESG Risk Ratings report has uncovered that countries such as the United Kingdom and the United States, traditionally regarded as secure links in the supply chain, are increasingly exposed to severe ESG violations. A significant cause of this heightened exposure can be attributed to the exploitation of foreign migrant workers.

The ELEVATE report reveals a concerning trend based on the outcomes of approximately 20,000 global supplier audits conducted annually, which amassed over 45 million data points from onsite visits. Nearly half of the sourcing countries around the world now fall into the ‘high risk’ category, an alarmingly high proportion.

Certain European countries, namely the UK, Germany, Portugal, and Italy, have now been classified as ‘high risk’ when it comes to some of the most severe forms of ESG violations. These include forced labour, child labour, freedom of association, and wage-related violations.

The UK, in particular, has seen a significant downturn in its Forced Labor Index, with a decrease of 58% in the last year alone. This coincides with the UK’s recent welcoming of refugees, mainly from Ukraine. Unfortunately, these vulnerable groups often become the target of forced labour.

Kevin Franklin, Managing Director – Advisory at ELEVATE, an LRQA company, reflected on the findings, stating, “Even historically lower-risk Western markets have started to slip. It is now clear that simply homeshoring or nearshoring manufacturing in countries previously thought to be ‘safe’ from egregious ESG risks is not enough.”

“Systematic and proactive supply chain risk assessment, monitoring and management should be applied in all sourcing locations to avoid negative business impacts and trade disruption.”

Supply chain assessment

The report’s findings reiterate the necessity for asset managers to continually reassess supply chain risk evaluations.

Tools like SI Engage play an instrumental role in navigating these risks. By providing comprehensive insight into ESG risk factors, SI Engage enables asset managers to anticipate potential risks, streamline their management approach, and make more informed decisions. Only through continued diligence can they safeguard their operations from these escalating risks and contribute to a fair and equitable global supply chain.

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