The use of data is making it easier for companies to track and address human trafficking and other social risks within their global supply chains.
Earlier this year, Tradeshift, a platform that connects companies globally and helps them digitise and manage their supply chains, launched a tool that allows its users to analyse purchase data, break up risks and protect corporate values while ensuring compliance with international regulations. The application is built by software company FRDM (formerly Made In A Free World).
Speaking to GTR on the World Day Against Trafficking in Persons, Ron Volpe, Tradeshift’s global vice-president for apps business development, outlines why companies should care about human trafficking risks and how the FRDM application is empowering them to make a change.
GTR: How does the FRDM app work on the Tradeshift platform?
Volpe: FRDM is a supply chain risk analysis and monitoring platform designed to monitor environmental, social and governance risks within supply chains. It is the only platform offering end-to-end risk optics including primary inputs, products, product categories and suppliers.
By using the application on the Tradeshift platform, users can explore their company’s risk through data visualisations and push alerts. They can then explore their FRDM risk assessment by using analytics from the comprehensive federated forced labour database.
After identifying areas of risk, FRDM then assists with reputation management, regulatory compliance and risk mitigation against challenges like forced and child labour in supply chains.
The always-on nature of the app allows users to keep track on actions, updates and their own impact by sharing real-time notifications. Taking it one step further, the app gives users a complete view of their ecosystem by identifying the high-risk industries throughout their supply chain and seeing which suppliers are affected.
Another area where FRDM is very effective is providing companies the data required to comply with governmental reporting requirements, specifically in countries like the UK and Australia, which have enacted strong legislation to combat modern slavery and human trafficking.
GTR: Have you seen much interest from companies in using the solution?
Volpe: We first announced the partnership between FRDM and Tradeshift in January, and we’ve seen interest from a number of companies, large and small, who are looking at integrating the functionality with their existing risk and compliance initiatives. For a lot of these organisations it’s less about uncovering something that is completely surprising, and more about providing an extra layer of reassurance.
For many businesses, the application makes it far easier for internal stakeholders – like chief sustainability officers – to persuade other key players like CIOs, CPOs and CMOs to start approaching supply chain slavery as a priority corporate issue and one that needs immediate and continued attention in order to sustain the health of their entire supply chain.
GTR: Which sectors and regions should companies be particularly aware of when it comes to labour risks?
Volpe: The fact is that there are 25 million people trapped in forced labour globally, and an additional 100 million children considered to be working in unsafe working conditions. These humans are producing everything from “cobalt to condoms”, as FRDM founder Justin Dillon says. It is also not something that is limited to the size of the enterprise. In fact, estimates suggest that 40% of large multinational corporations have instances of forced labour occurring somewhere in the making of their product. Geographically, while Asia is considered the continent with the largest percentage of forced labour, the problem exists on every continent in the world.
The list of high-risk sectors for slavery declared in company statements is often long, including everything from temporary workers in distribution to agency labour in logistics operations. The most shocking forms of exploitation typically appear where economic, legal and moral responsibility has been neglected.
Today’s supply chains are long, multi-dimensional and complex – they often cross several borders and rely on an array of subcontractors and middlemen. This impedes traceability and makes it challenging to verify that goods and services are untouched by modern-day slaves.
As a rule of thumb, if you’re being offered a service for much less than you would expect to pay for it within the given region, it’s highly likely that someone is being exploited.
GTR: What options do companies have if the FRDM tool spots a high risk in their supply chain?
Volpe: FRDM allows Tradeshift customers to leverage their digital connections, as the technology imports connected suppliers and provides an analysis of potential labour risks based on location, industry and product-level details. After analysing several factors, such as high-risk materials and categories of spend, FRDM aggregates and identifies risks, and then works with businesses to take action on these high-risk suppliers, such as creating custom mitigation and developing action plans.
FRDM provides ongoing, multi-level supply chain monitoring into every supplier, allowing businesses to do away with tedious and ineffective one-time audits.
GTR: Why should a company care about this issue?
Volpe: Forced labour occurs in industries across agriculture, construction, domestic work and manufacturing – touching everyday products consumers are buying and using. 97% of millennial consumers claim loyalty to transparent brands focused on social and environmental issues, and investors are increasingly measuring how their portfolio companies are addressing social issues.
No company thinks that making money off the back of slavery is OK, but the deliberately opaque nature of these activities can make it difficult to spot evidence of slavery in complex global supply chains.
Consumers are increasingly switched on to how global supply chains work. They want reassurances about where their goods have come from, so there’s a reputational imperative for companies to put in place systems that build transparency. And by the same token, employees want to know that they’re working for an organisation that cares enough about these issues to do something about it.
More than this, legislation from the US to the UK to Australia requires businesses to provide transparency into their operations by reporting on the actions they are taking to address modern slavery in their business and supply chain.