US fashion executives say managing forced labour risk is one of the biggest challenges they are facing

Executives in the US fashion industry are noting managing forced labour risks in the supply chain as one of their top business challenges in 2024. The United States Fashion Industry Association (USFIA) surveyed fashion executives across the US in 2024 - including brands, retailers, and wholesalers - and their new report showed managing forced labour risks was the second top business concern for respondents, behind inflation.?

New data validates this concern as key sourcing markets for supply chains showed higher risk for forced labour instances this year, even with a heightened focus from governments regulating forced labour instances in supply chains worldwide. Regions that reported higher forced labour risk in 2024 include China, Netherlands, United States, Australia, United Kingdom, India, and more, according to data from our EiQ platform, which leverages onsite audit data and civil society research to produce ESG risk insights from global supply chains.?

Companies operating in regions with high forced labour risk face legal and regulatory consequences and are vulnerable to sourcing malpractice connected to human rights violations, putting the reputation and integrity of their business at risk. As forced labour issues continue to persist worldwide, businesses must increase visibility and vigilance to manage these risks in their supply chains.?

To address this concern, businesses are turning their focuses to improved risk mapping and risk mitigation strategies. “More than 90 percent of respondents say they are ‘making more efforts to map and understand our supply chain,’” including the raw materials sourcing for their finished products, the USFIA report said.?

Read more about the top ESG risks from sourcing markets this year in our latest global risk outlook.

ESG 101: How to monitor your suppliers and supplier risks?

It’s about mastering supply chain visibility. Expanding oversight of every link of your operations and supplier base is a key component for?both regulatory compliance?and overall risk management best practice. ??

A 2022 McKinsey survey of supply chain leaders across the globe showed that 45% of respondents say they either have zero visibility into their upstream suppliers or can only see up to their first tier.??

So, how can you start improving this supplier visibility and better manage your supply chain ESG risks? The same McKinsey survey said companies that implemented digital dashboards to monitor their suppliers were twice as likely as others to avoid supply chain problems caused by the disruptions that year.?

LRQA’s supply chain due diligence platform EiQ supports near real-time monitoring of supply chain performance and ESG risks. Through its data collection, analytics, benchmarking capabilities, and risk alerts, EiQ allows for ongoing risk monitoring, serving as a fitness tracker for supply chain health.????

These high-level tools, conducted in EiQ, can get you started in improving visibility over your supply chain operations:

Supplier media scanning: We know that once-a-year supplier audits are not sufficient to achieve supply chain visibility. EiQ's Sentinel tool scans supplier names through thousands of media channels to detect when adverse ESG incidents connected to suppliers have been picked up in media. Through monthly Sentinel scans, businesses can monitor supplier risks in near real time and gain insights into supply chain partners that go beyond annual assessments.?

Site scorecards: Scorecards assess sites based on their degree of risk exposure, such as if it operates in a high-risk region, and a site's risk management, which is derived from each site’s audit performance.

Grievance mechanisms: Our global grievance mechanisms offer a transparent, independent, and safe channel for workers to report health, safety, social/labour, and environmental issues anytime, anywhere. Scalable from single sites to entire sectors and geographies, our model aligns with international frameworks like UNGPs and CSDDD.

Get a free demo of EiQ to understand your supply chain’s ESG risk exposure.?

Keeping up with the CSDDD: What you need to know

Confused about getting started with the European Union's Corporate Sustainability Due Diligence Directive (CSDDD)?

The EU posted a Frequently Asked Questions (FAQs) for the new directive to help businesses with initial guidance for the law.

The EU Corporate Sustainability Due Diligence (CSDDD) lays down mandatory due diligence requirements which companies must implement regarding the environmental and human rights impacts along their chain of activities. Under the CSDDD, companies need to exercise due diligence and publicly communicate on it – and they need to do so in accordance with the Corporate Sustainability Reporting Directive (CSRD), if they are in scope. Companies will also have to adopt a plan to ensure that their business strategy is compatible with limiting global warming to 1.5°C, in line with the Paris Agreement.?

The Directive was published in the Official Journal of the European Union on 5 July and entered into force on 25 July 2024.?Member States have until 26 July 2026 to transpose the Directive into national law.??One year later, on 26 July 2027, the rules will start to apply to companies, with a gradual phase-in between three and five years after entry into force.??

To find out more about how to prepare for the new law, watch our latest webinar.

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