Too many brands have long taken a lackadaisical approach to ensuring their supply chains are free of forced labor risk. That is no longer an option if they intend to walk their ethical talk.
An important shift is taking place when it comes to monitoring labor, environmental and human rights risks. Previously, companies acted because of pressure from consumers — such as with the famous child-labor sweatshop campaigns of the 1990s, which led to drastic changes in how companies such as Nike sourced labor. Then, the primary driver was loss of sales, due to fear of reputational risk.
Now, the risk is even greater and more direct. Last year, the Uyghur Forced Labor Prevention Act (UFLPA) came into effect, passed with bi-partisan support. It was a response to well-documented and verified reports that goods being produced by Uyghur workers in Xinjiang, China, under conditions of forced labor, were being imported into the United States.
According to CNBC, since late June 2022, the US government has seized $961 million worth of goods over suspected ties to forced labor. This mainly consists of shipments of cotton and textiles — but also solar panels, agricultural products and more.
“The message is clear: Forced labor is a top-tier compliance issue, and no longer the provenance of weak codes of conduct or CSR measures,” Anasuya Syam, director of human rights and trade at the non-profit Human Trafficking Legal Center, said in a press statement. “What changed? The advent of substantial legal and enforcement risk.”
For companies, the UFLPA is prompting them to materially enhance their capabilities to identify forced labor risks or face a potentially costly blocked shipment, which could have severe impacts across their supply chain. Already, the solar industry has seen significant lost revenue due to the UFLPA.
Many brands are turning to sourcing tools to help them identify high-risk suppliers. One of them is TrusTrace — which is currently supporting several of the world's largest fashion brands with data collection for UFLPA compliance.
“A lot of companies had not worked on their understanding of supply chain monitoring and measuring; and they were caught off guard,” TrusTrace co-founder and CEO Shameek Ghosh told Sustainable Brands®. “So since then, they have started investing a lot into collecting this data — which is where we see a significant amount of interest by companies to use our platform.”
Trustrace was co-founded by Ghosh in 2016, with the goal of bringing together data and providing a clearer way for companies to dig deeper into their supply chains — as often, forced labor risks are found among indirect suppliers with whom brands often have no relationship.
“As a brand, you have a sphere of influence — which is going to tier three, tier four; but maybe the cotton is at tier six or seven, where it is getting exposed to the Uyghur forced labor camps,” Ghosh explains.
Other tech tools aiming to empower brands with data include FRDM — which seeks to automate supply chain due-diligence tasks; and Sourcemap, which has launched a due-diligence solution specifically aimed at helping companies comply with the UFLPA.
They’ll have to evolve to deal with emerging challenges, such as what researchers at Sheffield Hallam University uncovered — the deliberate routing of tainted Xinjiang cotton to third countries, and several instances of brands unknowingly importing this cotton to the US and Europe. There is a push to get the government to also monitor this.
“[The US government] may be missing shipments containing inputs from the Uyghur Region that enter the United States from other countries,” Syam said. “The agency should have a specific strategy to address the shipment of Uyghur Region-origin goods via third countries — a critical element of which must be a robust program of on-site, third-country verification of the provenance of goods.”
Other sectors need to watch what is happening, too; and as mandatory due-diligence requirements and the need for detailed visibility in a supply chain will only grow. The solar industry was, despite being warned years ago, unprepared for the impact of the UFPLA; and to this day is calling for weakening import restrictions. Even major companies including Apple, Coca-Cola and Nike pushed against the law — despite their stated commitments to human rights and ethical sourcing.
It will likely go beyond the US, too. Last week, the European Council formally adopted a new law that will prevent products linked to deforestation from entering the European market. This will require those importing several of the world’s most widely traded agricultural commodities — coffee, cacao, palm oil, timber, soya and rubber — to prove they aren’t violating environmental standards in order to enter the world’s largest economic market.
“Companies should be ensuring that their business activities are not linked to adverse environmental impacts at home or abroad; but they are not currently being compelled to do so,” said ClientEarth’s Clotilde Henriot, in a press statement. “Binding requirements for corporate governance across the entire length of a company’s value chain is the key way to bring about appropriate action.”
For now, TrusTrace is focusing on the apparel and textile sectors — meaning there is plenty of space for others to deliver new solutions to address all supply chains now seeing mandatory due-diligence requirements due to laws in the US and Europe.
Unfortunately for Uyghurs, the situation remains dire. The region has become nearly inaccessible to journalists and researchers, making it harder to see if laws such as the UFLPA have had any impact. But a recent report in Foreign Policy found that Uyghur forced labor is getting less visible, but more intense. Too many brands have, for too long, taken a lackadaisical approach to ensuring their supply chains are free of forced labor risk. That is no longer an option if they want to walk their ethical talk.