Modern Slavery, A Corporate Saga: Coming Soon To A Firm Near You

Modern Slavery, A Corporate Saga: Coming Soon To A Firm Near You

At the beginning of 2024, Verdantix predicted that we would see major lawsuits against at least five large firms for human rights abuses in their supply chains over the year to come (see Verdantix Market Insight: 10 Predictions For ESG And Sustainability In 2024 And Beyond). In line with our prediction, six months into the year, the dominos have already fallen:

• A Milan court placed LVMH's Christian Dior brand under judicial administration for a year after an investigation found two of its Chinese-owned subcontractors based outside Milan had exploited their workers.
• A former Chinese prisoner sued Milwaukee Tool, alleging that he was part of a crew of prison labourers forced to make Milwaukee Tool-branded gloves in 2022, under the threat of beatings and electric shock.
• A consumer advocacy group sued Starbucks for continuing to purchase from suppliers in Guatemala, Kenya and Brazil, despite documented human rights and labour abuses.
• Eight former employees sued Kanye West, and his firm, Yeezy, for "forced labour and cruel inhuman, or degrading treatment".

As an ever-growing number of firms face global scrutiny of human rights abuses, governments across the world are upping the ante by introducing more - as well as stricter - regulations on forced labour and modern slavery (see Verdantix Strategic Focus: Unpacking The S In ESG Regulations). In May 2024, the EU gave the final approval to the Corporate Sustainability Due Diligence Directive (CSDDD), which mandates that organizations in its scope identify and address adverse human rights in their value chains. The UK House of Lords Select Committee on the Modern Slavery Act 2015 is set to report in November 2024 on the impact of the act and whether it requires improvement - signalling a tougher regulatory regime in the works. The Australian government has also begun its search for its first anti-slavery commissioner, following recent updates to its Modern Slavery Act, indicating that increased regulatory scrutiny and penalties are on the horizon there as well.

Businesses should use this point in time as an opportunity to truly integrate sustainability - especially social sustainability - into their core strategies and future-proof their value chains. Though this can be a daunting task, organizations should use an intentional and systematic approach to translate social performance ambitions into action. Engaging diverse internal and external stakeholders - including suppliers - can drive sustainability performance improvements. Businesses can also leverage digital technologies to access ESG insights in the supply chain and enlist consulting firms to understand and enhance social impact (see Verdantix Smart Innovators: Supply Chain Sustainability Software and Verdantix Green Quadrant: ESG And Sustainability Consulting 2024).

For more information about how to integrate social into ESG and sustainability strategies, watch this space for upcoming report, Verdantix Best Practices: Weaving Social Into ESG And Sustainability Strategies.